COMP NEWS – Come January 1, 2022, a new Illinois law will change the legal provisions of restrictive covenants in employment agreements. These provisions will continue to gradually adjust through 2037.
The new law will affect non-compete and non-solicitation provisions, as well as enact extra safeguards against employers who were laid off due to Covid-19 as they seek new employment. the non-compete and non-solicitation provisions will adjust year by year through 2037.
Covenants not-to-compete will not be enforced against employees earning the following compensation (which includes bonuses and all sources of taxable income from employment):
Year 2022-$75,000 or less
Year 2027-$80,000 or less
Year 2032-$85,000 or less
Year 2037-$90,000 or less
Non-solicitation provisions will not be enforced against employees earning the following compensation (which includes bonuses and all sources of taxable income from employment):
Year 2022-$45,000 or less
Year 2027-$47,500 or less
Year 2032-$50,000 or less
Year 2037-$52,500 or less
However, there is speculation that the new law is unnecessarily ambiguous in some aspects, leaving questions without clear answers.
The new law leaves many unanswered questions, including: What type and amount of “professional or financial benefits” are adequate consideration for enforcement of restrictive covenants? Will restrictive covenants entered into prior to January 1, 2022 be exempt from the new law if they are renewed or modified after January 1, 2022? Does the new law apply to a restrictive covenant in an employment agreement signed in 2021 for employment commencing in 2022? Will employers be able to enforce agreement provisions that allow them to recover their fees and costs from employees if employers prevail in restrictive covenant litigation?
Read the full story here.
For more comp news, see our recent posts.