Full Text of HB0789 101st General Assembly
HB0789ham001 101ST GENERAL ASSEMBLY | Rep. Kelly M. Burke Filed: 1/8/2021
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| 1 | | AMENDMENT TO HOUSE BILL 789
| 2 | | AMENDMENT NO. ______. Amend House Bill 789 by replacing | 3 | | everything after the enacting clause with the following:
| 4 | | "Section 5. The Illinois Freedom to Work Act is amended by | 5 | | changing Sections 5 and 10 and by adding Sections 15, 20, 25, | 6 | | and 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 | 10 | | the employer for at least 2 years after the employee signed an | 11 | | agreement containing a covenant not to compete or a covenant | 12 | | not to solicit or (2) the employer otherwise provided | 13 | | consideration adequate to support an agreement to not compete | 14 | | or to not solicit, which could consist of the period of | 15 | | employment plus additional consideration or merely other | 16 | | consideration 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 | 13 | | an employer and an employee, entered into after the effective | 14 | | date of this amendatory Act of the 101st General Assembly, that | 15 | | by its terms imposes adverse financial consequences on a former | 16 | | employee if the employee engages in competitive activities | 17 | | after the termination of the employee's employment with the | 18 | | employer. "Covenant not to compete" does not include (i) a | 19 | | covenant not to solicit, (ii) a confidentiality agreement or | 20 | | covenant, (iii) a covenant or agreement prohibiting use or | 21 | | disclosure of trade secrets or inventions, (iv) invention | 22 | | assignment agreements or covenants, (v) a covenant or agreement | 23 | | entered into by a person purchasing or selling the goodwill of | 24 | | a business or otherwise acquiring or disposing of an ownership | 25 | | interest, (vi) clauses or an agreement between an employer and | 26 | | an employee requiring advance notice of termination of |
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| 1 | | employment, during which notice period the employee remains | 2 | | employed by the employer and receives compensation, or (vii) | 3 | | agreements by which the employee agrees not to reapply for | 4 | | employment to the same employer after termination of the | 5 | | employee. | 6 | | "Covenant not to solicit" means an agreement that is | 7 | | entered into after the effective date of this amendatory Act of | 8 | | the 101st General Assembly between an employer and an employee | 9 | | that (i) restricts an employee from soliciting for employment | 10 | | the employer's employees or (ii) restricts an employee from | 11 | | soliciting for the purpose of selling products or services of | 12 | | any kind to, or from interfering with the employer's | 13 | | relationships with, the employer's clients, prospective | 14 | | clients, vendors, prospective vendors, suppliers, prospective | 15 | | suppliers, or other business relationships. | 16 | | "Earnings" means the compensation, including earned | 17 | | salary, earned bonuses, earned commissions, or any other form | 18 | | of taxable compensation, reflected or that is expected to be | 19 | | reflected as wages, tips, and other compensation on the | 20 | | employee's IRS Form W-2 plus any elective deferrals not | 21 | | reflected as wages, tips, and other compensation on the | 22 | | employee's IRS Form W-2, such as, without limitation, employee | 23 | | contributions to a 401(k) plan, a 403(b) plan, a flexible | 24 | | spending account, or a health savings account, or commuter | 25 | | benefit-related deductions. | 26 | | "Employee" has the meaning ascribed to that term in Section |
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| 1 | | 2 of the Illinois Wage Payment and Collection Act and includes | 2 | | individuals 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 | 5 | | include governmental or quasi-governmental bodies. | 6 | | "Low-wage employee" means an employee whose earnings do not | 7 | | exceed the greater of (1) the hourly rate equal to the minimum | 8 | | wage required by the applicable federal, State, or local | 9 | | minimum 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 | 13 | | determining the legitimate business interest of the employer | 14 | | (consistent with the decision of the Supreme Court of Illinois | 15 | | in Reliable Fire Equipment Company v. Arredondo, 2011 IL | 16 | | 111871), the totality of the facts and circumstances of the | 17 | | individual case shall be considered. Factors that may be | 18 | | considered in this analysis include, but are not limited to, | 19 | | the employee's exposure to the employer's customer | 20 | | relationships or other employees, the near-permanence of | 21 | | customer relationships, the employee's acquisition, use, or | 22 | | knowledge of confidential information through the employee's | 23 | | employment, the time restrictions, the place restrictions, and | 24 | | the scope of the activity restrictions. No factor carries any | 25 | | more weight than any other, but rather its importance will |
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| 1 | | depend on the specific facts and circumstances of the | 2 | | individual case. Such factors are only nonconclusive aids in | 3 | | determining the employer's legitimate business interest, which | 4 | | in turn is but one component in the three-prong rule of reason, | 5 | | grounded in the totality of the circumstances. Each situation | 6 | | must be determined on its own particular facts. Reasonableness | 7 | | is gauged not just by some but by all of the circumstances. The | 8 | | same identical contract and restraint may be reasonable and | 9 | | valid under one set of circumstances and unreasonable and | 10 | | invalid under another set of circumstances. | 11 | | (820 ILCS 90/10)
| 12 | | Sec. 10. Prohibiting covenants not to compete for low-wage | 13 | | employees. | 14 | | (a) A covenant not to compete shall not be valid or | 15 | | enforceable unless the employee's actual or expected | 16 | | annualized rate of earnings exceeds $75,000 per year. This | 17 | | figure shall increase to $80,000 per year beginning on January | 18 | | 1, 2027, $85,000 per year beginning on January 1, 2032, and | 19 | | $90,000 per year beginning on January 1, 2037. No employer | 20 | | shall enter into a covenant not to compete with any low-wage | 21 | | employee of the employer. | 22 | | (b) A covenant not to solicit shall not be valid or | 23 | | enforceable unless the employee's actual or expected | 24 | | annualized rate of earnings exceeds $45,000 per year. This | 25 | | figure shall increase to $47,500 per year beginning on January |
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| 1 | | 1, 2027, $50,000 per year beginning on January 1, 2032, and | 2 | | $52,500 per year beginning on January 1, 2037. A covenant not | 3 | | to compete entered into between an employer and a low-wage | 4 | | employee is illegal and void.
| 5 | | (c) A covenant not to compete is void and illegal for any | 6 | | employee who an employer terminates or furloughs as the result | 7 | | of business circumstances or governmental orders related to the | 8 | | COVID-19 pandemic, or under circumstances that are similar to | 9 | | the COVID-19 pandemic, unless enforcement of the covenant not | 10 | | to compete includes compensation equivalent to the employee's | 11 | | base salary at the time of termination for the period of | 12 | | enforcement minus compensation earned through subsequent | 13 | | employment 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 | 17 | | covenant not to solicit. A covenant not to compete or a | 18 | | covenant not to solicit is illegal and void unless (i) the | 19 | | employee receives adequate consideration, (ii) the covenant is | 20 | | ancillary to a valid employment relationship, (iii) the | 21 | | covenant is no greater than is required for the protection of a | 22 | | legitimate business interest of the employer, (iv) the covenant | 23 | | does not impose undue hardship on the employee, and (v) the | 24 | | covenant 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 | 3 | | obligations. A covenant not to compete or a covenant not to | 4 | | solicit is illegal and void unless (i) the employer advises the | 5 | | employee in writing to consult with an attorney before entering | 6 | | into the covenant and (ii) the employer provides the employee | 7 | | with a copy of the covenant at least 14 calendar days before | 8 | | the commencement of the employee's employment or the employer | 9 | | provides the employee with at least 14 calendar days to review | 10 | | the covenant. | 11 | | (820 ILCS 90/25 new) | 12 | | Sec. 25. Remedies. In addition to any remedies available | 13 | | under any agreement between an employer and an employee or | 14 | | under any other statute, in a civil action filed by an employer | 15 | | (including, but not limited to, a complaint or counterclaim), | 16 | | if an employee prevails on a claim to enforce a covenant not to | 17 | | compete or a covenant not to solicit, the employee shall | 18 | | recover from the employer all costs and all reasonable | 19 | | attorney's fees regarding such claim to enforce a covenant not | 20 | | to 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 | 24 | | compete or a covenant not to solicit may be against the public |
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| 1 | | policy of this State and a court may refrain from wholly | 2 | | rewriting contracts. | 3 | | (b) In some circumstances, a court may, in its discretion, | 4 | | choose to reform a covenant not to compete or a covenant not to | 5 | | solicit rather than hold such covenant unenforceable. Factors | 6 | | which may be considered when deciding whether such reformation | 7 | | is appropriate include the fairness of the restraints as | 8 | | originally written, whether the original restriction reflects | 9 | | a good-faith effort to protect a legitimate business interest | 10 | | of the employer, the extent of such reformation, and whether | 11 | | the parties included a clause authorizing such modifications in | 12 | | their agreement.
| 13 | | Section 99. Effective date. This Act takes effect June 1, | 14 | | 2021.".
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