Navigating the Changing Landscape of Non-Compete Agreements in the Illinois Job Market

Now that the Illinois Freedom to Work Act is approaching its five-year mark, it’s a good time to revisit where non-compete agreements stand in Illinois. Are non-competes even enforceable anymore?

To start, the days of including a blanket non-compete in an employee handbook are over. In truth, that was never a particularly sound practice. Today, it’s also largely ineffective: under the Act, non-compete agreements are void and unenforceable for employees earning less than $75,000 per year — a threshold that will increase to $80,000 on January 1, 2027.

For employees earning above that threshold, non-competes are still subject to strict scrutiny. Illinois courts apply a five-part test to determine enforceability. Specifically, a non-compete must: (1) be supported by adequate consideration; (2) be ancillary to a valid employment relationship; (3) be no broader than necessary to protect a legitimate business interest; (4) avoid imposing undue hardship on the employee; and (5) not harm the public.

In practice, even well-drafted non-compete agreements can fail in Illinois if they fall short on any one of these factors. As a result, relying on non-competes to protect key personnel has become increasingly risky here in Illinois. Litigation runs a very real risk of being a wasted expense now.

Given these constraints, Chicago employers should begin exploring alternative strategies to protect their business interests. While non-competes may still be appropriate for a narrow category of employees, they are no longer a reliable avenue in Illinois. Forward-looking employers will be better served by developing other methods to retain key talent and safeguard confidential information. Reach out for a free consultation.