Illinois Freedom to Work Act Restricts Non-Competes for Some Low Wage Workers

Illinois Governor Bruce Rauner has signed into law the Illinois Freedom to Work Act (Public Act 099-0860). The Act prohibits private sector employers from entering into non-compete restrictions with “low-wage employees” and renders any such agreements “illegal and void.” The Act applies to non-compete agreements entered into on or after the law’s effective date, January 1, 2017.

Under the Act, a “low-wage employee” is any employee who earns the greater of (1) the hourly minimum wage under federal (currently, $7.25 per hour), state (currently, $8.25 per hour), or local law (currently, $10.50 per hour in Chicago) or (2) $13.00 per hour. As a practical matter, until the hourly minimum wage is increased above $13.00 per hour, the law prohibits non-compete agreements with any employee making $13.00 or less per hour.

The Act prohibits an employer from entering into an agreement that restricts the “low-wage employee” from performing:

  • any work for another employer for a specified period of time;
  • any work in a specified geographical area; or
  • work for another employer that is similar to such low-wage employee’s work for the employer included as a party to the agreement.

Unless an employer has workers who are making less than $13.01 per hour and requires them to sign non-competes, the Freedom to Work Act has no impact on its business. In addition, the Act does not affect non-disclosure or other agreements targeted at protecting confidential information.

Richard Lofgren
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Richard Lofgren
Richard Lofgren
Richard Lofgren has twenty eight years of legal experience working with businesses on the issues they face daily during their business cycles. Acting in the capacity of an outside general counsel, he helps business owners to make smarter decisions, build stronger relationships and make and save money.