Illinois Non-Compete Agreement Template

Non-competes are powerful tools to protect a business’s interests. However, they aren’t always enforceable. The non-compete must fall within the rules and guidelines of the state in which the employee resides.

Illinois generally allows non-competes in specific situations and instances. For the most part, Illinois courts prefer non-compete agreements that are narrow in scope and are not unreasonably broad and restrictive. The agreement should specifically protect the business’s interests while still allowing the employee opportunities to continue their career. Learn more about what is and is not enforceable in Illinois when it comes to non-compete agreements.

Table of Contents

• Is a Non-Compete Legally Enforceable in Illinois?
• What’s Protected?
• Reasonable Use and Exceptions
• Non-Compete Illinois Limitations
• Blue Penciling (Reformation)
• Illinois Non-Compete Agreement Sample

Is a Non-Compete Legally Enforceable in Illinois?

Non-compete agreements in Illinois are legally enforceable, but there are limits on what can be enforced. Below are the instances in which a non-compete is and is not allowed.

What’s Protected?

Illinois protections for non-compete agreements depend on when the agreement is reached.

For agreements pre-January 1, 2022: Legitimate business interests are based on the totality of the facts and circumstances of the case. The following are factors:

• Trade secrets
• Confidential information
• Near permanent business relationships

For agreements entered on or after January 1, 2022, the following are factors:

• The employee’s exposure to the employer’s customer relationships or other employees
• The near-permanence of customer relationships
• The employee’s acquisition, use, or knowledge of confidential information through the employee’s employment
• The time restrictions, the place restrictions, and the scope of the activity restrictions.

Reasonable Use and Exceptions

Illinois reasonable use also depends on the date of the agreement:

For agreements pre-January 1, 2022: No greater than required to protect a legitimate business interest; does not impose undue hardship on the employee; not injurious to the public; and reasonable in time, space, and scope. [May require two years of employment before any non-compete can be enforced.]

For agreements entered on or after January 1, 2022: Non-competes are illegal and void unless;

1. the employee receives adequate consideration
2. the covenant is ancillary to a valid employment relationship
3. the covenant is no greater than is required for the protection of a legitimate business interest of the employer
4. the covenant does not impose undue hardship on the employee, and
5. the covenant is not injurious to the public,” and the employee
   1. is advised, “in writing to consult with an attorney”
      and
   2. provided with the covenant at least 14 calendar days’ notice (though the notice is waivable). [1]

Adequate consideration is defined as:

1. the employee worked for the employer for at least 2 years after the employee signed an agreement containing a covenant not to compete

or

1. the employer otherwise provided consideration adequate to support an agreement to not compete…which consideration can consist of the period of employment plus additional professional or financial benefits or merely professional or financial benefits adequate by themselves.

Exceptions to non-compete agreements in Illinois include:

• Broadcasters
• Government contractors
• Physicians
• Low-wage workers
• Certain nurses and certified nurse aides.
•  For agreements entered on or after January 1, 2022: The “low-wage” exemption changes to a wage threshold (all earnings from the employer) of $75,000 (increasing to $80,000 by 2027, $85,000 by 2032, and $90,000 by 2037); individuals covered by collective bargaining agreements under the Illinois Public Labor Relations Act or the Illinois Educational Labor Relations Act or employed in construction with exceptions.

Non-Compete Illinois Limitations

Limitations on Time

Illinois law does not state a specific allowable duration for a non-compete agreement. However, Illinois courts have generally found that agreements that are shorter in duration are preferable. If your agreement is longer than two years, it could be ruled unenforceable if challenged.

Non-compete Agreement Illinois Geographic Limitations

Again, Illinois law does not specifically state geographic limitation rules on non-compete agreements. However, Illinois courts have ruled that broad contracts with large geographic limitations are not enforceable.

• Enforceable when terminated without cause? Yes
• Employee non-solicitation agreement permitted? Yes
• Customer non-solicitation agreements permitted? Yes
• Does continuing employment equal sufficient consideration? Yes

Blue Penciling (Reformation)

Rather than hold the entire non-compete agreement enforceable, a court may reform or sever provisions of a covenant not to compete instead. These decisions are determined by several factors, such as by the fairness of the restraints. [2]

Illinois Non-Compete Agreement Sample

Below, you can download a free Illinois non-compete agreement template in PDF and Word format: