Client Alert
Illinois Enacts Legislation Prohibiting Non-Competes with Low-Wage Workers
Client Alert
Illinois Enacts Legislation Prohibiting Non-Competes with Low-Wage Workers
August 29, 2016
On August 19, 2016, Illinois Governor Bruce Rauner signed S.B. 3163 into law, creating the Illinois Freedom to Work Act. The new law (Public Act 99-0860) bars Illinois employers from entering into non-compete agreements with “low-wage employees.”
The law defines low-wage employees as those paid the greater of $13 per hour or the minimum wage required by federal, state or local statute. A "covenant not to compete" is defined as an agreement: (1) that would bar the low-wage employee from performing: (A) any work for another employer for a specified period of time; (B) any work in a specified geographical area; or (C) work for another employer that is similar to such low-wage employee’s work for the employer included as a party to the agreement; and (2) that is entered into after January 1, 2017.
The Illinois Freedom to Work Act follows public concerns over non-compete terms imposed by a small number of fast-food companies.