Non-Competes in Illinois Illegal if FTC Rule Passes

New regulations may change how non-completes apply to Illinois employees. On January 5, 2023, the Federal Trade Commission proposed a new rule to ban non-compete clauses. If the Rule goes into effect, it would be illegal for employers to:

  • enter into or attempt to enter into a noncompete with a worker;
  • maintain a noncompete with a worker; or
  • represent to a worker, under certain circumstances, that the worker is subject to a noncompete.

In the event this Rule goes into effect (which remains uncertain), this would immediately allow Illinois employees to work anywhere post-termination. This would be true even if the new employer is a direct competitor of the employee’s former employer. There are only a few states, such as California and North Dakota, that currently ban non-competes altogether.

As it stands, the most important non-compete law that apples to Illinois works is the Freedom to Work Act, 820 ILCS 90. The Act, which applies to all non-competes entered after January 1, 2022, prohibits non-competes for employees earning less than $75,000 per year. It also requires that employees receive adequate consideration to sign an agreement, which cannot solely be the worker’s continued employment. There are a myriad of other statues and caselaw that governs Illinois restrictive covenants.

If you are being asked to sign a non-compete, or are concerned how a non-compete will impact you going forward, reach out to our firm now.