Business & Work

Non-compete and non-solicitation agreements are used by employers to protect their interests when employees leave the job. They can be used only in certain circumstances. 

Non-compete agreements

When an employee starts a new job, the employer may ask the employee to sign a non-compete agreement. This agreement is also called a “covenant not to compete” or a “restrictive covenant.” It is a contract between an employee and their employer that states the employee will not do similar work for a competitor of the employer for a certain period of time or in a certain location.

Non-compete agreements are a way that companies try to protect their information and relationships. Sometimes they are legal, but they have to be reasonable. 

For example, a contract that prevents the employee from ever working in the same industry anywhere in the world is too restrictive. If that kind of non-compete agreement was challenged in court, a judge would likely call it unreasonable and not enforce Taking legal steps to make someone do what the court tells them to do it. However, a non-compete agreement for 2 years that restricts the employee from doing the same job in the same region as their current job is much more reasonable.

Non-solicitation agreements

A non-solicitation agreement, or “covenant not to solicit,” prevents an employee from reaching out ("soliciting") and trying to do business with the current employer’s:

• Current or prospective clients,
• Current or prospective customers,
• Current or prospective vendors,
• Current or prospective suppliers,
• Current employees to offer employment, or
• Other business relationships. 

Restrictions on non-compete and non-solicitation agreements

Employers must advise an employee in writing to consult with a lawyer Someone who represents clients in courts or who gives legal advice before agreeing to a non-compete or non-solicitation agreement. The employee must have at least 14 days to review the agreement. At any time, if an employee thinks such agreements are unreasonable, they should talk to a lawyer. To be valid, the employee must receive something of value in return, such as employment for at least 2 years after signing the agreement or other benefits. The agreement must not cause hardship on the employee.

The Illinois Freedom to Work Act puts other limits on these agreements.

• Non-compete agreements cannot be used if an employee earns less than $75,000 per year. (Note: this salary baseline increases in 2027 and every 5 years after that.)
• Non-solicitation agreements cannot be used if the employee earns less than $45,000 per year. (Note: this salary baseline increases in 2027 and every 5 years after that.)
• Non-compete and non-solicitation agreements with a licensed mental health professional are not enforceable if the agreement would cause an increase in cost or difficulty for a veteran or first responder seeking mental health services. This applies to agreements entered into after January 1, 2025.
• Some employees in unions can’t be required to sign a non-compete agreement.
• Some employees working in construction can’t be required to sign a non-compete or non-solicitation agreement, regardless of whether they are part of a union.
• Employers usually cannot enforce these agreements if they lay off employees for business reasons related to the Covid-19 pandemic or under similar circumstances. To do this, the employer has to pay the employee their base salary for the non-compete or non-solicit period minus the income they get from their new job.

Some employers have additional restrictions on non-compete agreements. For instance, nurse agencies cannot enter into such agreements with nurses and certified nurse aides if they are assigned to work at a health care facility for less than 2 years.

Leaving a job

You may be subject to non-competition or non-solicitation restrictions if you are leaving your current employer. This includes when you leave to start a new business or work for a potential competitor. 

Before leaving a job, review your employment agreement, employee handbook, and other agreements that you may have with your employer.

Consult with an employment attorney before starting a competing business or working for a potential competitor. An employment attorney will be helpful if you plan to contact your current employer's customers or employees for any reason.