Two bills were recently introduced in the Illinois legislature that seek to limit or preclude the use of restrictive covenants for Illinois employers.

First, on February 19, 2021, the Illinois House of Representatives introduced House Bill 3066 (accessible here), which seeks to eliminate the use of non-competition and non-solicitation restrictive covenants against Illinois employees unless certain salary thresholds and notice requirements are met.  More specifically, if passed, the bill would amend the Illinois Freedom to Work Act (820 ILCS § 90) to:

  • Prohibit the use of covenants not to compete unless the employee’s actual or annualized earnings exceed $75,000 per year;
  • Prohibit the use of covenants not to solicit (both employee and client non-solicitation restrictions are included) unless the employee’s actual or annualized earnings exceed $45,000 per year;
  • Render covenants not to compete and covenants not to solicit unenforceable unless employers: (i) advise employees to consult with counsel before agreeing to the restrictive covenant; and (ii) provide an employee with a copy of the covenant at least fourteen calendar days before the commencement of the employee’s employment; and
  • Prevent employers from enforcing covenants not to compete against any employee who is terminated or furloughed due to the COVID-19 pandemic, or under any circumstances that are similar to the COVID-19 pandemic, unless the employee receives compensation equivalent to his or her base salary during the enforcement period minus compensation earned elsewhere during the enforcement period.

The bill also has a fee-shifting provision.  It would allow an employee to pursue reasonable attorneys’ fees and costs if the employee prevails in a lawsuit brought by an employer to enforce a covenant not to compete or a covenant not to solicit.

Second, on February 22, 2021, the Illinois House of Representatives introduced House Bill 3449 (accessible here), which also seeks to amend the Illinois Freedom to Work Act. Significantly, this bill seeks to prohibit the use of covenants not to compete for all Illinois employees, regardless of an employee’s salary, which are entered into after the date the bill were to become law.

We will continue to monitor developments relating to these proposed laws.  In the meantime, Illinois employers would be well-advised to begin reviewing whether and how the proposed laws may impact their use of restrictive covenants going forward.

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Photo of Steven J. Pearlman Steven J. Pearlman

Steven J. Pearlman is a partner in the Labor & Employment Law Department and Co-Head of the Whistleblowing & Retaliation Group and the Restrictive Covenants, Trade Secrets & Unfair Competition Group.

Steven’s practice covers the full spectrum of employment law, with a particular…

Steven J. Pearlman is a partner in the Labor & Employment Law Department and Co-Head of the Whistleblowing & Retaliation Group and the Restrictive Covenants, Trade Secrets & Unfair Competition Group.

Steven’s practice covers the full spectrum of employment law, with a particular focus on defending companies against claims of employment discrimination, retaliation and harassment; whistleblower retaliation; restrictive covenant violations; theft of trade secrets; and wage-and-hour violations. He has successfully tried cases in multiple jurisdictions, and defended one of the largest Illinois-only class actions in the history of the U.S. District Court for the Northern District of Illinois. He also secured one of only a few ex parte seizures orders that have been issued under the Defend Trade Secrets Act, and obtained a world-wide injunction in federal litigation against a high-level executive who jumped ship to a competitor.

Reporting to boards of directors, their audit committees, CEOs and in-house counsel, Steven conducts sensitive investigations and has testified in federal court. His investigations have involved complaints of sexual harassment involving C-suite officers; systemic violations of employment laws and company policies; and fraud, compliance failures and unethical conduct.

Steven was recognized as Lawyer of the Year for Chicago Labor & Employment Litigation in the 2023 edition of The Best Lawyers in America. He is a Fellow of the College of Labor and Employment Lawyers.  Chambers describes Steven as an “outstanding lawyer” who is “very sharp and very responsive,” a “strong advocate,” and an “expert in his field.” Steven was 1 of 12 individuals selected by Compliance Week as a “Top Mind.” Earlier in his career, he was 1 of 5 U.S. lawyers selected by Law360 as a “Rising Star Under 40” in the area of employment law and 1 of “40 Illinois Attorneys Under Forty to Watch” selected by Law Bulletin Publishing Company. Steven is a Burton Award Winner (U.S. Library of Congress) for “Distinguished Legal Writing.”

Steven has served on Law360’s Employment Editorial Advisory Board and is a Contributor to Forbes.com. He has appeared on Bloomberg News (television and radio) and Yahoo! Finance, and is regularly quoted in leading publications such as The Wall Street Journal.

The U.S. Chamber of Commerce has engaged Steven to serve as lead counsel on amicus briefs to the U.S. Supreme Court and federal circuit courts of appeal. He was appointed to serve as a Special Assistant Attorney General for the State of Illinois in employment litigation matters. He has presented with the Solicitor of the DOL, the Acting Chair of the EEOC, an EEOC Commissioner, Legal Counsel to the EEOC and heads of the SEC, CFTC and OSHA whistleblower programs. He is also a member of the Sedona Conference, focusing on trade secret matters.

Photo of Edward Young Edward Young

Edward “Eddie” C. Young is a senior counsel in the Labor & Employment Law Department and a member of the following Firm practice groups: Restrictive Covenants & Trade Secrets; Discrimination, Harassment & Title VII; and Whistleblowing & Retaliation.

Eddie represents employers in all…

Edward “Eddie” C. Young is a senior counsel in the Labor & Employment Law Department and a member of the following Firm practice groups: Restrictive Covenants & Trade Secrets; Discrimination, Harassment & Title VII; and Whistleblowing & Retaliation.

Eddie represents employers in all aspects of employment law, with a concentration on litigating complex employment disputes of all types before federal and state courts throughout the country, the U.S. Equal Employment Opportunity Commission, state and local human rights commissions and arbitral tribunals (e.g., FINRA and AAA).  In particular, Eddie has successfully litigated employment-related disputes alleging breach of non-compete agreements, theft of trade secrets, discrimination, sexual harassment, whistleblower retaliation, wage and hour violations, including employee misclassification claims, breach of contract, defamation, fraud and other business-related torts.  Eddie has obtained a world-wide injunction to enforce a client’s non-competition restriction on a former executive, successfully defended a client through summary judgment and appeal against retaliation claims brought by a former General Counsel, represented Fortune 500 companies in defense of high-profile harassment claims associated with the #metoo movement, and provided representation to several professional sports leagues.  He also has significant appellate experience, including successfully representing clients before the U.S. Circuit Court of Appeals for the First, Second and Seventh Circuits, as well as before the United States Supreme Court.  Eddie often draws on his litigation experience to help clients avoid the courtroom by effectuating positive change in the workplace through impactful training, counseling and developing robust employment policies.

Working in a wide range of industries, Eddie represented clients in food services, financial services, medical devices, telecommunications, higher education, sports, retail, real estate and others.

Eddie has been recognized as “One to Watch” by Best Lawyers in America since 2021 and as a “Rising Star” by Super Lawyers since 2017. He also regularly advises clients, writes and speaks on cutting-edge legal issues, including the use of Artificial Intelligence in the workplace, and legal issues arising from the collection and use of employee biometric information.

Eddie maintains an active pro bono practice, including on-going representation of a certified class of approximately 65,000 visually disabled Chicagoans in litigation challenging the City’s lack of accessible pedestrian crosswalks.  Eddie is also a member of the Firm’s Pro-Bono Committee and is a three-time recipient of the Firm’s “Golden Gavel” award for his significant pro bono contributions.

Prior to joining Proskauer, Eddie was a cum laude graduate from Loyola University Chicago School of Law. He also obtained a Master’s Degree in Human Resources and Industrial Relations from Loyola University Chicago Graduate School of Business. He began his practice at a national management-side employment law firm, and has also worked in the corporate human resources department of a national tax consulting firm and as a Fellow with the Illinois Human Rights Commission.

Photo of Dakota D. Treece Dakota D. Treece

Dakota is an associate in the Labor and Employment Law Department and a member of the Employment Litigation & Arbitration Group. She regularly defends employers in single-plaintiff actions involving discrimination, harassment and retaliation claims under statutes such as Title VII and the Americans…

Dakota is an associate in the Labor and Employment Law Department and a member of the Employment Litigation & Arbitration Group. She regularly defends employers in single-plaintiff actions involving discrimination, harassment and retaliation claims under statutes such as Title VII and the Americans with Disabilities Act, as well as under various Illinois state laws. She has handled such cases before state and federal courts, the U.S. Equal Employment Opportunity Commission, the Illinois Department of Human Rights, and the Illinois Department of Labor. In addition, Dakota conducts employment-related investigations.

Dakota also provides day-to-day counseling to employers to heighten compliance and minimize the risk of litigation.  Her counseling focuses on issues related to hiring and firing, personnel policies and leave and accommodation requests. She also has experience drafting employee handbooks and company policies. Dakota is a frequent contributor to Proskauer’s Law and the Workplace blog.

While in law school, Dakota served as a law clerk at the International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America (UAW), where she worked on a variety of labor relations issues. She also was a member and published author in the DePaul Law Review.