97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB5570

 

Introduced 2/15/2012, by Rep. Thomas Morrison

 

SYNOPSIS AS INTRODUCED:
 
New Act

    Creates the Employment Noncompete Agreement Act. Contains a finding that all employers have vested, protectable interests in their customers, clients, and identified prospects which are legitimately protectable through the use of noncompete agreements. Sets forth criteria for a valid noncompete agreement between an employer and an employee. Provides that a noncompete agreement may prohibit any solicitation of an employer's existing customers, clients, identified prospective customers, and other employees during the post-employment restriction period. Provides that the restriction period must have a reasonable relationship to an employee's position and salary at the time of termination and may not exceed specified maximum periods based on annualized compensation. Provides that no specific or additional consideration is required to be paid by an employer to an employee to enforce a noncompete agreement. Establishes remedies.


LRB097 18586 JLS 63818 b

 

 

A BILL FOR

 

HB5570LRB097 18586 JLS 63818 b

1    AN ACT concerning employment.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. Short title. This Act may be cited as the
5Employment Noncompete Agreement Act.
 
6    Section 5. Finding. The General Assembly finds as a matter
7of public policy that all employers have vested, protectable
8interests in their customers, clients, and identified
9prospects which are legitimately protectable through the use of
10noncompete agreements.
 
11    Section 10. Definitions. As used in this Act:
12    "Annualized compensation" means all salary, commissions,
13and cash bonuses received by an employee during the 120-day
14period ending on the last day of the month immediately
15preceding the month in which the employer-employee
16relationship is terminated, multiplied by 3.
17    "Noncompete agreement" means an agreement between an
18employer and an employee that is specifically designed to
19impede the ability of an employee from competing with an
20employer upon the termination of the employment relationship.
 
21    Section 15. Requirements.

 

 

HB5570- 2 -LRB097 18586 JLS 63818 b

1    (a) A noncompete agreement is valid if it meets all of the
2following criteria:
3        (1) The noncompete agreement must be in writing and be
4    signed by both the employee and employer.
5        (2) The noncompete agreement may prohibit any
6    solicitation of an employer's existing customers, clients,
7    identified prospective customers, and other employees
8    during the period of any post-employment restriction
9    period.
10        (3) The duration of a post-employment restriction
11    period must have a reasonable relationship to an employee's
12    position and salary at the time of termination and may not
13    exceed the applicable maximum period as follows:
14                (A) If the employee's annualized compensation
15            at the time of termination is less than $50,000,
16            the maximum period is 6 months.
17                (B) If the employee's annualized compensation
18            at the time of termination is at least $50,000 but
19            less than $100,000, the maximum period is 9 months.
20                (C) If the employee's annualized compensation
21            at the time of termination is at least $100,000 but
22            less than $150,000, the maximum period is 12
23            months.
24                (D) If the employee's annualized compensation
25            at the time of termination is at least $150,000,
26            the maximum period is 18 months.

 

 

HB5570- 3 -LRB097 18586 JLS 63818 b

1    (b) No specific or additional consideration is required to
2be paid by an employer to an employee to enforce a noncompete
3agreement.
 
4    Section 20. Remedies.
5    (a) The prevailing party in a proceeding to enforce a valid
6noncompete agreement is entitled to recover damages, costs and
7expenses, and reasonable attorney's fees.
8    (b) A subsequent employer of an employee who is a party to
9a valid noncompete agreement must honor the noncompete
10agreement. A subsequent employer who aids and abets an
11employee's breach of a valid noncompete agreement is liable for
12damages, costs and expenses, and reasonable attorney's fees
13incurred by the employer who is a party to the valid noncompete
14agreement.
 
15    Section 25. Applicability.
16    (a) This Act applies to noncompete agreements entered into
17on or after its effective date.
18    (b) This Act does not apply to a contract to which the
19Broadcast Industry Free Market Act applies.
20    (c) This Act shall not be construed to affect or amend the
21Illinois Trade Secrets Act.