Illinois employers have long relied on non-compete and non-solicitation agreements to protect trade secrets, client relationships, and competitive advantages. But the Illinois Freedom to Work Act (IFWA), effective January 1, 2022, fundamentally changed the rules — and many employers are still operating under outdated assumptions.
The New Landscape
The IFWA introduced several critical requirements for restrictive covenants:
Income thresholds. Non-compete agreements are unenforceable against employees earning less than $75,000 per year (adjusted upward every five years). Non-solicitation agreements require a minimum annual compensation of $45,000. These thresholds apply to the employee's actual earnings, not their projected compensation.
Adequate consideration. The Act codified what courts had long debated: for existing employees, continued employment alone is no longer adequate consideration. Employers must provide at least two years of continued employment after the agreement is signed, or provide other adequate consideration such as a raise, bonus, or additional benefits.
Counsel advisement. Employers must advise employees in writing to consult with an attorney before signing a restrictive covenant and provide at least 14 calendar days to review the agreement before execution.
What This Means in Practice
For employers drafting new agreements, the IFWA requires a more intentional approach:
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Verify eligibility. Before presenting a non-compete, confirm the employee's annualized compensation exceeds the applicable threshold. Document the calculation.
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Identify adequate consideration. For new hires, the offer of employment itself may constitute adequate consideration. For existing employees, identify specific additional consideration — a raise, promotion, bonus, or access to confidential information not previously available.
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Include the advisory language. Every restrictive covenant must include the statutory advisement to consult with counsel and the 14-day review period. Failure to include this language can render the entire agreement unenforceable.
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Tailor the restrictions. Illinois courts continue to evaluate non-competes under traditional reasonableness standards. A blanket two-year, nationwide restriction is far more vulnerable than a carefully scoped agreement tied to specific clients, territories, or business activities.
Beyond Non-Competes
Many employers find that non-solicitation and confidentiality agreements provide more practical protection with fewer enforceability risks. A well-drafted non-solicitation agreement — prohibiting the solicitation of specific clients or employees for a defined period — is often more defensible than a broad non-compete, particularly for roles below the executive level.
Confidentiality agreements, which are not subject to the IFWA thresholds, remain the most broadly enforceable tool for protecting proprietary information and trade secrets under the Illinois Trade Secrets Act.
Action Items for Employers
If you haven't reviewed your restrictive covenant agreements since January 2022, now is the time:
- Audit all existing non-compete and non-solicitation agreements for IFWA compliance
- Update template agreements to include required advisement language and review periods
- Verify that compensation thresholds are met for each employee subject to a restrictive covenant
- Consider whether non-solicitation or confidentiality agreements better serve your business objectives
- Document adequate consideration for every agreement with an existing employee
The cost of a compliance review is a fraction of the cost of discovering your agreements are unenforceable when you need them most.