Illinois Non-Compete Law: When Agreements Are Enforceable

A non-compete holds up in Illinois only when the employee’s pay, the scope of the restriction, and the employer’s signing process all meet the requirements of the Illinois Freedom to Work Act. This article covers the earnings thresholds, the enforceability test, the consideration requirement, the notice rules, and the categories of workers the law exempts outright. It sits alongside the other subjects covered in the guide to Illinois employment law.

When an Illinois Non-Compete Is Enforceable

The starting point is the employee’s pay. Under 820 ILCS 90/10, an employer cannot enter into a covenant not to compete with any employee unless that employee’s actual or expected annualized earnings exceed $75,000 per year. A non-compete signed below that line is void and unenforceable, regardless of how reasonable its terms might otherwise be.

The threshold is not fixed. It rises to $80,000 on January 1, 2027, to $85,000 on January 1, 2032, and to $90,000 on January 1, 2037. A separate, lower floor governs covenants not to solicit: those are void unless the employee earns more than $45,000 a year, rising to $47,500 in 2027 and in steps thereafter.

“Earnings” is defined broadly. It includes salary, earned bonuses, earned commissions, and other taxable compensation reported on the W-2, plus elective deferrals such as 401(k) and 403(b) contributions and health savings account amounts, under 820 ILCS 90/5. That definition matters because a base salary just under $75,000 can still clear the threshold once bonuses and deferrals are counted.

The Five-Part Enforceability Test

Clearing the earnings threshold is necessary but not sufficient. 820 ILCS 90/15 makes a covenant not to compete or not to solicit illegal and void unless all five of the following are true: the employee receives adequate consideration; the covenant is ancillary to a valid employment relationship; the covenant is no greater than required to protect a legitimate business interest of the employer; the covenant does not impose an undue hardship on the employee; and the covenant is not injurious to the public.

Whether a restriction protects a legitimate business interest is judged on the totality of the circumstances. The Illinois Supreme Court set that standard in Reliable Fire Equipment Co. v. Arredondo, which rejected rigid tests in favor of weighing factors such as the employer’s near-permanent customer relationships, the employee’s acquisition of confidential information, and the time and geographic limits of the restriction. No single factor controls, and the same clause can be reasonable in one job and unreasonable in another.

1. Confirm the earnings threshold

   Check whether the employee’s annualized earnings exceeded $75,000 (for a non-compete) or $45,000 (for a non-solicit) when the agreement was signed, using the broad W-2-plus-deferrals definition. Below the line, the analysis ends: the covenant is void.

2. Check for adequate consideration

   Determine whether the employee worked at least two years after signing, or received other professional or financial benefits sufficient to support the promise. Without adequate consideration, the covenant fails.

3. Verify the signing process

   Confirm the employer advised the employee in writing to consult an attorney and allowed at least 14 calendar days to review the agreement. A missing step voids the covenant.

4. Weigh the reasonableness factors

   Assess the legitimate business interest, the breadth of the time and geographic limits, the hardship on the employee, and any harm to the public. A court reviews these together, not in isolation.

Adequate Consideration and the Two-Year Rule

Illinois treats continued employment as consideration only if it lasts long enough. Under the definition in 820 ILCS 90/5, “adequate consideration” means the employee worked for the employer at least two years after signing the covenant, or the employer otherwise provided consideration adequate to support the agreement, which can consist of a period of employment plus additional professional or financial benefits, or those benefits alone.

The practical effect is that an at-will employee who signs a non-compete and then leaves, or is let go, within two years may have given nothing the law recognizes as consideration unless the employer paid a signing bonus or other benefit tied to the covenant. This rule interacts with Illinois’s at-will employment framework, under which either side can usually end the relationship at any time. A short tenure is therefore common, and the two-year benchmark is one of the most frequent reasons Illinois non-competes fail.

Notice Rules Before Signing

The Freedom to Work Act imposes procedural requirements that stand independent of the covenant’s substance. Under 820 ILCS 90/20, a covenant is illegal and void unless the employer both advises the employee in writing to consult with an attorney before signing and provides a copy of the covenant at least 14 calendar days before employment begins, or gives the employee at least 14 calendar days to review it.

These requirements took effect January 1, 2022, when Public Act 102-358 amended the Act. Agreements entered into before that date are governed by the common-law rules that applied at the time, so the signing date determines which framework controls.

Workers Non-Competes Cannot Bind

Several categories of workers cannot be bound by a non-compete in Illinois no matter what an agreement says. Under 820 ILCS 90/10, covenants not to compete are void and illegal for individuals covered by a collective bargaining agreement under the Illinois Public Labor Relations Act or the Illinois Educational Labor Relations Act, and for individuals employed in construction, apart from those in management, engineering, architectural, design, or sales roles or who hold an ownership interest.

The statute also protects workers displaced by economic disruption. An employer cannot enforce a non-compete against an employee terminated, furloughed, or laid off because of business circumstances or government orders related to the COVID-19 pandemic, or similar circumstances, unless the employer pays the equivalent of the employee’s base salary for the enforcement period, minus what the employee earns elsewhere. Workers in that position may also have separate claims if the firing was unlawful, a subject covered in wrongful termination in Illinois. A later amendment added protection for licensed mental health professionals who serve veterans and first responders, where enforcement would raise the cost of or reduce access to care.

What Happens When a Non-Compete Is Challenged

When an employer sues to enforce a covenant, the court measures it against the earnings floor, the consideration requirement, the notice rules, and the five-part reasonableness test. If the agreement fails any of them, it is void. Courts have limited authority to reform, or “blue-pencil,” an overbroad restriction rather than strike it entirely, but the statute discourages employers from drafting deliberately sweeping clauses in the hope a court will narrow them.

The Act also shifts the cost of a losing enforcement action onto the employer. Under 820 ILCS 90/25, an employee who prevails in a civil action or arbitration the employer filed to enforce a covenant recovers all costs and reasonable attorney’s fees. The Illinois Attorney General’s office also enforces the Act and accepts worker complaints through its Workplace Rights Bureau.