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September 17, 2021
The Act is not retroactive, but, beginning on January 1, 2022, the Act:
For both a covenant not to compete and a covenant not to solicit employees or customers:
The Act codifies the rules set forth in Illinois case law regarding noncompete and nonsolicitation provisions. Specifically, the Act codifies the rule set forth in Reliable Fire Equipment Co. v. Arredondo, 965 N.E.2d 393 (Ill. 2011), that the “legitimate business interest of the employer” is a totality-of-circumstances test that should evaluate factors such as scope of restrictions and “the employee’s exposure to the employer’s customer relationships.”
To enforce a noncompete or nonsolicitation agreement, the employer will have to show that:
The Act adopts the rule set forth in Fifield v. Premier Dealer Servs., 993 N.E.2d 938 (Ill. App. Ct. 1st Dist. 2013). The Act defines “adequate consideration” as either (a) two years of continuous employment after signing the agreement; or (b) alternative consideration, such as “a period of employment plus additional professional or financial benefits or merely professional or financial benefits adequate by themselves.”
The Act is designed to protect low wage earners. Therefore, appropriate compensation alone after 2022 will be adequate consideration. To enforce a restrictive covenant entered into before January 1, 2022, an employer will likely need to prove continued employment for some appreciable period of time coupled with non-illusory benefits and a legitimate business interest that the employer has been seeking to protect.