New Bill Would Alter Non-Compete Law in Illinois

Illinois General Assembly

Illinois General Assembly considers Illinois Not to Compete Act

Illinois businesses should be aware that Illinois House Bill 4923 would radically alter the law regarding non-competition agreements in Illinois by creating the Illinois Not to Compete Act.  This Act would restrict the enforceability of non-competition agreements in several key respects and create numerous rebuttable presumptions in favor of employees that would make it more difficult for employers to enforce non-competition agreements in Illinois.

The Act would limit covenants not to compete to only “key” employees or independent contractors who either are informed of the non-compete two weeks before their first day of employment or who enter into a non-compete as a result of a promotion or material increase in compensation or bonus.  Further, while Illinois courts have upheld covenants not to compete that are up to three years in duration, this Act would create rebuttal preemptions that any covenant not to compete in excess of one year is void and that any geographic or service area that the contractor did not work in during the year prior to termination of employment is void.  In addition, while the Act would allow courts to modify the terms of overbroad non-competes, courts could not award any damages incurred by employers prior to the date of modification.  Finally if the non-compete contains an attorneys fee provision in favor of the employer, the Act would automatically make the attorneys fee provision mutual and allow courts the discretion to award attorneys’ fees to a prevailing employee in declaratory judgment actions.

A complete copy of House Bill 4923 can be found here.

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