In a rare move, the Illinois legislature has enacted new legislation establishing a clear rule invalidating non-compete agreements for certain employees. Effective January 1, 2017, employers are prohibited from entering into non-compete agreements with Illinois employees who earn $13 an hour or less.
The “Illinois Freedom to Work Act” (S.B. 3163) applies to “low-wage employees,” i.e., those who earn not more than $13 an hour or the applicable federal, state or local minimum wage (whichever is greater). Since the federal, Illinois and Chicago minimum wage laws are all less than $13 an hour, the law as a practical matter only covers employees who earn no more than $13 an hour.
The law makes “illegal and void” any agreement entered into, on, or after Jan. 1, 2017 that prevents a “low-wage employee” from:
While the law does not expressly apply to agreements to protect confidential information, or not solicit customers or employees, or to agreements executed before Jan. 1, 2017, low-wage earners might argue that its rationale still applies, because the law shows a public policy that the restrictions unduly burden them. Therefore, if your company has post-employment competition restrictions with low-wage earners, you should seek legal guidance on the enforceability of those covenants going forward and possible alternatives.