Illinois non-compete law: how the Freedom to Work Act changed the rules, the income thresholds that void agreements for lower-wage workers, and the consideration and notice requirements employers must satisfy

Illinois rewrote the rules in 2022

Illinois has always been a reasonableness state for non-compete enforcement, but the landscape changed substantially on January 1, 2022, when the Illinois Freedom to Work Act (820 ILCS 90) took effect. The statute didn't eliminate non-competes. It imposed income thresholds, procedural requirements, and a new adequate-consideration standard that fundamentally altered the enforceability analysis for a significant portion of the Illinois workforce.

Before the Freedom to Work Act, Illinois non-compete law was governed primarily by common-law decisions, most notably the Illinois Appellate Court's influential ruling in Reliable Fire Equipment Co. v. Arredondo (2011) 2011 IL 111871, which established a three-factor test for reasonableness. That common-law framework still applies to agreements above the income thresholds, but the statute added layers of protection that didn't previously exist.

The result is a hybrid system: statutory rules that void certain agreements outright and impose procedural requirements, layered on top of a common-law reasonableness framework that governs everything else.

The income thresholds

The Freedom to Work Act's most significant provision is the income threshold below which non-competes are automatically void.

For non-compete agreements — covenants that restrict an employee from working for a competitor — the threshold is $75,000 in annual compensation. Any non-compete entered into after January 1, 2022 with an employee earning below $75,000 is void and unenforceable regardless of its terms.

For non-solicitation agreements — covenants that restrict an employee from soliciting the former employer's clients or co-workers — the threshold is $45,000 in annual compensation. Non-solicitation agreements with employees earning below $45,000 are similarly void.

"Compensation" for threshold purposes includes salary, bonuses, commissions, and other forms of annualized compensation. The calculation is based on the employee's actual or expected annualized rate at the time the agreement is entered into, not at the time enforcement is sought.

The thresholds are scheduled to increase over time. The $75,000 non-compete threshold increases to $80,000 on January 1, 2027, $85,000 on January 1, 2032, and $90,000 on January 1, 2037. The non-solicitation thresholds follow a parallel escalation schedule. These are legislatively fixed increases, not inflation adjustments, so they'll erode in real terms between the step-ups.

For employees below the thresholds, the analysis is straightforward: the agreement is void. The employer cannot enforce it. For employees above the thresholds, the agreement is subject to the common-law reasonableness framework that Illinois courts have applied for decades, modified by the statute's procedural and consideration requirements.

The adequate consideration requirement

The Freedom to Work Act codified and clarified what constitutes adequate consideration for a non-compete in Illinois — a question that had generated significant litigation under the prior common-law regime.

Under the statute, adequate consideration requires the employee to have worked for the employer for at least two years after signing the non-compete. If the employee is terminated or departs before the two-year mark, the non-compete is not supported by adequate consideration unless the employer provided "other adequate consideration" — meaning something beyond the employment relationship itself.

This two-year rule codified the holding in Fifield v. Premier Dealer Services, Inc. (2013) 2013 IL App (1st) 120327, where the Illinois Appellate Court held that less than two years of continued employment was insufficient consideration for a non-compete. Before Fifield, Illinois courts had been inconsistent on how much continued employment was enough. The statute settled the question at two years.

The "other adequate consideration" alternative gives employers a path to enforce non-competes even when the employee leaves before two years, but the employer must point to something concrete: a signing bonus, equity grant, access to proprietary information, specialized training, or a period of employment plus professional-development expenses. The same at-will employment that doesn't suffice in Texas's ancillary-agreement framework doesn't suffice in Illinois either, though the two states frame the requirement differently.

The notice and attorney-consultation requirements

The Freedom to Work Act imposes procedural requirements that don't exist in most other states.

The employer must advise the employee in writing to consult with an attorney before signing a non-compete or non-solicitation agreement. This advice must be included in the agreement itself or delivered separately in writing before the employee signs.

The employer must provide the employee with a copy of the agreement at least 14 calendar days before the employee is required to sign. If the agreement is presented as a condition of employment — sign this or we rescind the offer — the 14-day clock starts when the employer provides the agreement, and the employee must have the full 14 days to review, consult an attorney, and decide.

These requirements sound procedural, but they have substantive teeth. An agreement that fails to include the attorney-consultation advisement, or that was presented without the 14-day review period, is potentially unenforceable on procedural grounds regardless of its substantive terms. Employers who use template agreements from other states or who present non-competes during onboarding without the required notice period may find their agreements defective.

The common-law reasonableness framework

For agreements that satisfy the income thresholds, consideration requirements, and procedural mandates, enforceability is still governed by the common-law reasonableness framework. The leading formulation comes from Reliable Fire Equipment Co. v. Arredondo, which held that a non-compete is enforceable only if it is supported by adequate consideration, ancillary to a valid employment relationship, and no greater than is required for the protection of a legitimate business interest.

The legitimate business interests Illinois courts recognize are familiar: near-permanent customer relationships, confidential business information, and trade secrets. The "near-permanent customer relationship" standard is distinctive to Illinois — the employer must show not just that the employee had contact with customers, but that the customer relationships are the type that, absent the non-compete, the employee could take with them and the employer could not easily replace.

In Assured Partners, Inc. v. Schmitt (2015) 2015 IL App (1st) 141863, the court articulated the totality-of-the-circumstances approach that Illinois courts now apply, weighing the nature of the employee's role, the extent of customer contact, the degree of access to confidential information, and the scope of the restriction against the employer's demonstrated need.

The specific reasonableness factors are conventional: duration (one to two years is generally reasonable, though Illinois courts have occasionally upheld longer periods), geographic scope (must correspond to the employer's actual competitive footprint), and scope of restricted activity (must be limited to competitive activities, not all employment at a competitor).

The reformation question

Illinois courts have historically applied a blue-pencil approach — the ability to sever unenforceable provisions from an otherwise valid agreement — but the case law is less uniform than in states with clear statutory reformation doctrines like Texas or Florida.

In Reliable Fire, the Illinois Supreme Court indicated that courts have discretion to modify overbroad restrictions rather than voiding them entirely, but emphasized that this discretion should be exercised cautiously. The court noted that automatic reformation could incentivize employers to draft intentionally overbroad agreements, knowing that courts would fix them at no cost.

The practical result is that Illinois courts sometimes reform and sometimes void, depending on the degree of overreach and whether the court believes the employer drafted in good faith. An agreement with a five-year duration when two years would be reasonable might be reformed. An agreement with terms so extreme that they suggest the employer never intended a reasonable restriction might be voided entirely. The uncertainty favors careful drafting — employers can't rely on Illinois courts to save poorly written agreements the way they can in Texas or Florida.

The COVID-era prohibition

The Freedom to Work Act included a provision that voids any non-compete or non-solicitation agreement entered into with an employee who was terminated, furloughed, or laid off as a result of the COVID-19 pandemic or similar circumstances, unless the agreement includes consideration adequate to make it enforceable independent of continued employment.

This provision has limited ongoing significance — most pandemic-era employment disruptions have resolved — but it reflects the legislative principle that enforcement of restrictive covenants against employees who lost their jobs through no fault of their own is disfavored. That principle extends beyond the specific COVID provision and informs how Illinois courts approach enforcement against terminated employees more broadly.

The practical enforcement landscape

Illinois non-compete litigation is concentrated in the Northern District of Illinois federal courts and the Circuit Court of Cook County — both high-volume jurisdictions with substantial case law. Judges in these courts are experienced with non-compete cases and apply the Reliable Fire framework consistently.

Enforcement is common in financial services, technology, professional services, and healthcare — industries where the protectable interests (confidential customer information, trade secrets, near-permanent client relationships) are most readily established. For lower-level employees and employees in industries where customer relationships are transactional rather than relationship-based, enforcement is less common and less likely to succeed.

The cost of litigation matters. Non-compete enforcement in Illinois typically costs $30,000 to $150,000 through preliminary injunction, depending on complexity. Employers pursue enforcement selectively, focusing on departures that threaten specific, identifiable revenue or competitive advantage.

Temporary restraining orders are available in Illinois non-compete cases, but the standard is demanding: the employer must show a clearly ascertained right that needs protection, irreparable harm without the injunction, no adequate remedy at law, and a likelihood of success on the merits. The Reliable Fire reasonableness framework applies at the TRO stage, meaning the employer must demonstrate a protectable interest and reasonable restrictions even for emergency relief.

What Illinois employees should know

The Freedom to Work Act gave Illinois employees three protections that didn't exist before 2022: income thresholds that void agreements for lower-wage workers, a two-year minimum consideration requirement, and procedural mandates that give employees time to review and consult an attorney.

If you earn less than $75,000, your post-2022 non-compete is void. If you were presented with a non-compete without the 14-day review period or without the written advice to consult an attorney, the agreement may be procedurally defective. If you left employment before two years and received no independent consideration beyond the job itself, the agreement may lack adequate consideration.

For employees above the income threshold with agreements that satisfy the procedural and consideration requirements, the common-law reasonableness framework governs. The key question is whether the employer can identify a legitimate business interest — near-permanent customer relationships or genuine confidential information — that the restriction is designed to protect.

If you're in a severance negotiation and the non-compete is on the table, the Freedom to Work Act gives you leverage. The procedural requirements, consideration standards, and income thresholds create genuine enforceability questions that employers may prefer to resolve by releasing the restriction rather than litigating it.

If you were constructively discharged or subjected to employer retaliation, those facts affect the equitable analysis. Illinois courts weigh the circumstances of departure, and an employer who created the conditions that forced the employee out faces a harder case for enforcement.

The overview of non-compete enforceability across states puts Illinois in context relative to the ban states, the employer-friendly states, and the states that apply similar but distinct reasonableness frameworks. Illinois falls in the heavy-restriction category — not a ban, but substantially more employee-protective than pure reasonableness states and dramatically more protective than Florida's employer-favorable framework.