Illinois General Assembly - Full Text of HB0789
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Full Text of HB0789  101st General Assembly


Rep. Kelly M. Burke

Filed: 1/8/2021





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2    AMENDMENT NO. ______. Amend House Bill 789 by replacing
3everything after the enacting clause with the following:
4    "Section 5. The Illinois Freedom to Work Act is amended by
5changing Sections 5 and 10 and by adding Sections 15, 20, 25,
6and 30 and by adding Section 7 as follows:
7    (820 ILCS 90/5)
8    Sec. 5. Definitions. In this Act:
9    "Adequate consideration" means (1) the employee worked for
10the employer for at least 2 years after the employee signed an
11agreement containing a covenant not to compete or a covenant
12not to solicit or (2) the employer otherwise provided
13consideration adequate to support an agreement to not compete
14or to not solicit, which could consist of the period of
15employment plus additional consideration or merely other
16consideration adequate by itself.



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1    "Covenant not to compete" means an agreement:
2        (1) between an employer and an a low-wage employee that
3    restricts the such low-wage employee from performing:
4            (A) any work for another employer for a specified
5        period of time;
6            (B) any work in a specified geographical area; or
7            (C) work for another employer that is similar to
8        the such low-wage employee's work for the employer
9        included as a party to the agreement; and
10        (2) that is entered into after the effective date of
11    this Act.
12    "Covenant not to compete" also means an agreement between
13an employer and an employee, entered into after the effective
14date of this amendatory Act of the 101st General Assembly, that
15by its terms imposes adverse financial consequences on a former
16employee if the employee engages in competitive activities
17after the termination of the employee's employment with the
18employer. "Covenant not to compete" does not include (i) a
19covenant not to solicit, (ii) a confidentiality agreement or
20covenant, (iii) a covenant or agreement prohibiting use or
21disclosure of trade secrets or inventions, (iv) invention
22assignment agreements or covenants, (v) a covenant or agreement
23entered into by a person purchasing or selling the goodwill of
24a business or otherwise acquiring or disposing of an ownership
25interest, (vi) clauses or an agreement between an employer and
26an employee requiring advance notice of termination of



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1employment, during which notice period the employee remains
2employed by the employer and receives compensation, or (vii)
3agreements by which the employee agrees not to reapply for
4employment to the same employer after termination of the
6    "Covenant not to solicit" means an agreement that is
7entered into after the effective date of this amendatory Act of
8the 101st General Assembly between an employer and an employee
9that (i) restricts an employee from soliciting for employment
10the employer's employees or (ii) restricts an employee from
11soliciting for the purpose of selling products or services of
12any kind to, or from interfering with the employer's
13relationships with, the employer's clients, prospective
14clients, vendors, prospective vendors, suppliers, prospective
15suppliers, or other business relationships.
16    "Earnings" means the compensation, including earned
17salary, earned bonuses, earned commissions, or any other form
18of taxable compensation, reflected or that is expected to be
19reflected as wages, tips, and other compensation on the
20employee's IRS Form W-2 plus any elective deferrals not
21reflected as wages, tips, and other compensation on the
22employee's IRS Form W-2, such as, without limitation, employee
23contributions to a 401(k) plan, a 403(b) plan, a flexible
24spending account, or a health savings account, or commuter
25benefit-related deductions.
26    "Employee" has the meaning ascribed to that term in Section



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12 of the Illinois Wage Payment and Collection Act and includes
2individuals currently or formerly employed by an employer.
3    "Employer" has the meaning given to such term in subsection
4(c) of Section 3 of the Minimum Wage Law. "Employer" does not
5include governmental or quasi-governmental bodies.
6    "Low-wage employee" means an employee whose earnings do not
7exceed the greater of (1) the hourly rate equal to the minimum
8wage required by the applicable federal, State, or local
9minimum wage law or (2) $13.00 per hour.
10(Source: P.A. 99-860, eff. 1-1-17; 100-225, eff. 8-18-17.)
11    (820 ILCS 90/7 new)
12    Sec. 7. Legitimate business interest of the employer. In
13determining the legitimate business interest of the employer
14(consistent with the decision of the Supreme Court of Illinois
15in Reliable Fire Equipment Company v. Arredondo, 2011 IL
16111871), the totality of the facts and circumstances of the
17individual case shall be considered. Factors that may be
18considered in this analysis include, but are not limited to,
19the employee's exposure to the employer's customer
20relationships or other employees, the near-permanence of
21customer relationships, the employee's acquisition, use, or
22knowledge of confidential information through the employee's
23employment, the time restrictions, the place restrictions, and
24the scope of the activity restrictions. No factor carries any
25more weight than any other, but rather its importance will



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1depend on the specific facts and circumstances of the
2individual case. Such factors are only nonconclusive aids in
3determining the employer's legitimate business interest, which
4in turn is but one component in the three-prong rule of reason,
5grounded in the totality of the circumstances. Each situation
6must be determined on its own particular facts. Reasonableness
7is gauged not just by some but by all of the circumstances. The
8same identical contract and restraint may be reasonable and
9valid under one set of circumstances and unreasonable and
10invalid under another set of circumstances.
11    (820 ILCS 90/10)
12    Sec. 10. Prohibiting covenants not to compete for low-wage
14    (a) A covenant not to compete shall not be valid or
15enforceable unless the employee's actual or expected
16annualized rate of earnings exceeds $75,000 per year. This
17figure shall increase to $80,000 per year beginning on January
181, 2027, $85,000 per year beginning on January 1, 2032, and
19$90,000 per year beginning on January 1, 2037. No employer
20shall enter into a covenant not to compete with any low-wage
21employee of the employer.
22    (b) A covenant not to solicit shall not be valid or
23enforceable unless the employee's actual or expected
24annualized rate of earnings exceeds $45,000 per year. This
25figure shall increase to $47,500 per year beginning on January



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11, 2027, $50,000 per year beginning on January 1, 2032, and
2$52,500 per year beginning on January 1, 2037. A covenant not
3to compete entered into between an employer and a low-wage
4employee is illegal and void.
5    (c) A covenant not to compete is void and illegal for any
6employee who an employer terminates or furloughs as the result
7of business circumstances or governmental orders related to the
8COVID-19 pandemic, or under circumstances that are similar to
9the COVID-19 pandemic, unless enforcement of the covenant not
10to compete includes compensation equivalent to the employee's
11base salary at the time of termination for the period of
12enforcement minus compensation earned through subsequent
13employment during the period of enforcement.
14(Source: P.A. 99-860, eff. 1-1-17.)
15    (820 ILCS 90/15 new)
16    Sec. 15. Enforceability of a covenant not to compete or a
17covenant not to solicit. A covenant not to compete or a
18covenant not to solicit is illegal and void unless (i) the
19employee receives adequate consideration, (ii) the covenant is
20ancillary to a valid employment relationship, (iii) the
21covenant is no greater than is required for the protection of a
22legitimate business interest of the employer, (iv) the covenant
23does not impose undue hardship on the employee, and (v) the
24covenant is not injurious to the public.



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1    (820 ILCS 90/20 new)
2    Sec. 20. Ensuring employees are informed about their
3obligations. A covenant not to compete or a covenant not to
4solicit is illegal and void unless (i) the employer advises the
5employee in writing to consult with an attorney before entering
6into the covenant and (ii) the employer provides the employee
7with a copy of the covenant at least 14 calendar days before
8the commencement of the employee's employment or the employer
9provides the employee with at least 14 calendar days to review
10the covenant.
11    (820 ILCS 90/25 new)
12    Sec. 25. Remedies. In addition to any remedies available
13under any agreement between an employer and an employee or
14under any other statute, in a civil action filed by an employer
15(including, but not limited to, a complaint or counterclaim),
16if an employee prevails on a claim to enforce a covenant not to
17compete or a covenant not to solicit, the employee shall
18recover from the employer all costs and all reasonable
19attorney's fees regarding such claim to enforce a covenant not
20to compete or a covenant not to solicit.
21    (820 ILCS 90/30 new)
22    Sec. 30. Reformation.
23    (a) Extensive judicial reformation of a covenant not to
24compete or a covenant not to solicit may be against the public



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1policy of this State and a court may refrain from wholly
2rewriting contracts.
3    (b) In some circumstances, a court may, in its discretion,
4choose to reform a covenant not to compete or a covenant not to
5solicit rather than hold such covenant unenforceable. Factors
6which may be considered when deciding whether such reformation
7is appropriate include the fairness of the restraints as
8originally written, whether the original restriction reflects
9a good-faith effort to protect a legitimate business interest
10of the employer, the extent of such reformation, and whether
11the parties included a clause authorizing such modifications in
12their agreement.
13    Section 99. Effective date. This Act takes effect June 1,