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One to Keep An Eye On: HB 789 (Illinois)

 

As with many employment and labor law related cases (and bills) being litigated around the country, there are always a few that stand out.  This s one to keep an eye on.


On January 8th, HB 789 was introduced in the Illinois Legislature which has the potential to impact the use of non-compete agreements in the state.

The legislation proposes amending the Illinois Freedom to Work Act by requiring employers in the state to review their form contracts and modify their procedures for having employees sign these sort of restrictive covenants.  At present, Illinois employers are allowed to require their employees to sign restrictive covenants.  (Many of these restrictive covenants include non-compete agreements, non-solicitation covenants, and confidentiality provisions.)

HB 789 would apply to non-compete agreements and covenants that bar the solicitation of customers.  (HB 789 does not address other restrictive covenants, as currently written.)  Employers would not be allowed to use a non-compete agreement unless the employee’s actual or expected annualized earnings exceeded $75,000.00/year on the effective date of the legislation (with increases in the earning rate to $80,000.00/year in January 2027, $85,000.00/year in January 2032, and $90,000.00/year in January 2037.)  

In addition, HB 789 would bar the use of non-compete agreements for any employee that was terminated or furloughed as a result of circumstances relating to the coronavirus unless enforcement of the non-compete includes compensation equivalent to the employee’s base salary at the time of termination (minus any compensation earned through subsequent employment.)

Should the legislation pass, which many expect to happen in some form or fashion, it would take effect on June 1st.  This is proposed legislation I would suggest Illinois readers pay close attention to as the bill works its way through the Illinois Legislature.


For additional information:  https://www.ilga.gov/legislation/BillStatus.asp?DocNum=789&GA=101&DocTypeID=HB&LegId=115017&SessionID=108

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