Illinois General Assembly - Full Text of SB0672
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Full Text of SB0672  102nd General Assembly

SB0672ham001 102ND GENERAL ASSEMBLY

Rep. Kelly M. Burke

Filed: 5/24/2021

 

 


 

 


 
10200SB0672ham001LRB102 10211 JLS 26819 a

1
AMENDMENT TO SENATE BILL 672

2    AMENDMENT NO. ______. Amend Senate Bill 672 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Illinois Freedom to Work Act is amended by
5changing Sections 5 and 10 and by adding Sections 7, 15, 20,
625, 30, 35, and 97 as follows:
 
7    (820 ILCS 90/5)
8    Sec. 5. Definitions. In this Act:
9    "Adequate consideration" means (1) the employee worked for
10the employer for at least 2 years after the employee signed an
11agreement containing a covenant not to compete or a covenant
12not to solicit or (2) the employer otherwise provided
13consideration adequate to support an agreement to not compete
14or to not solicit, which consideration can consist of a period
15of employment plus additional professional or financial
16benefits or merely professional or financial benefits adequate

 

 

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1by themselves.
2    "Covenant not to compete" means an agreement: (1) between
3an employer and an a low-wage employee that is entered into
4after the effective date of this amendatory Act of the 102nd
5General Assembly that restricts the such low-wage employee
6from performing:
7            (1) (A) any work for another employer for a
8        specified period of time;
9            (2) (B) any work in a specified geographical area;
10        or
11            (3) (C) work for another employer that is similar
12        to such low-wage employee's work for the employer
13        included as a party to the agreement. ; and
14        (2) that is entered into after the effective date of
15    this Act.
16    "Covenant not to compete" also means an agreement between
17an employer and an employee, entered into after the effective
18date of this amendatory Act of the 102nd General Assembly,
19that by its terms imposes adverse financial consequences on
20the former employee if the employee engages in competitive
21activities after the termination of the employee's employment
22with the employer.
23    "Covenant not to compete" does not include (1) a covenant
24not to solicit, (2) a confidentiality agreement or covenant,
25(3) a covenant or agreement prohibiting use or disclosure of
26trade secrets or inventions, (4) invention assignment

 

 

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1agreements or covenants, (5) a covenant or agreement entered
2into by a person purchasing or selling the goodwill of a
3business or otherwise acquiring or disposing of an ownership
4interest, (6) clauses or an agreement between an employer and
5an employee requiring advance notice of termination of
6employment, during which notice period the employee remains
7employed by the employer and receives compensation, or (7)
8agreements by which the employee agrees not to reapply for
9employment to the same employer after termination of the
10employee.
11    "Covenant not to solicit" means an agreement that is
12entered into after the effective date of this amendatory Act
13of the 102nd General Assembly between an employer and an
14employee that (1) restricts the employee from soliciting for
15employment the employer's employees or (2) restricts the
16employee from soliciting, for the purpose of selling products
17or services of any kind to, or from interfering with the
18employer's relationships with, the employer's clients,
19prospective clients, vendors, prospective vendors, suppliers,
20prospective suppliers, or other business relationships.
21    "Earnings" means the compensation, including earned
22salary, earned bonuses, earned commissions, or any other form
23of taxable compensation, reflected or that is expected to be
24reflected as wages, tips, and other compensation on the
25employee's IRS Form W-2 plus any elective deferrals not
26reflected as wages, tips, and other compensation on the

 

 

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1employee's IRS Form W-2, such as, without limitation, employee
2contributions to a 401(k) plan, a 403(b) plan, a flexible
3spending account, or a health savings account, or commuter
4benefit-related deductions.
5    "Employee" means any individual permitted to work by an
6employer in an occupation.
7    "Employer" has the meaning given to such term in
8subsection (c) of Section 3 of the Minimum Wage Law.
9"Employer" does not include governmental or quasi-governmental
10bodies.
11    "Construction" means any constructing, altering,
12reconstructing, repairing, rehabilitating, refinishing,
13refurbishing, remodeling, remediating, renovating, custom
14fabricating, maintenance, landscaping, improving, wrecking,
15painting, decorating, demolishing, and adding to or
16subtracting from any building, structure, highway, roadway,
17street, bridge, alley, sewer, ditch, sewage disposal plant,
18water works, parking facility, railroad, excavation or other
19structure, project, development, real property or improvement,
20or to do any part thereof, whether or not the performance of
21the work herein described involves the addition to, or
22fabrication into, any structure, project, development, real
23property or improvement herein described of any material or
24article of merchandise.
25    "Low-wage employee" means an employee whose earnings do
26not exceed the greater of (1) the hourly rate equal to the

 

 

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1minimum wage required by the applicable federal, State, or
2local minimum wage law or (2) $13.00 per hour.
3(Source: P.A. 99-860, eff. 1-1-17; 100-225, eff. 8-18-17.)
 
4    (820 ILCS 90/7 new)
5    Sec. 7. Legitimate business interest of the employer. In
6determining the legitimate business interest of the employer,
7the totality of the facts and circumstances of the individual
8case shall be considered. Factors that may be considered in
9this analysis include, but are not limited to, the employee's
10exposure to the employer's customer relationships or other
11employees, the near-permanence of customer relationships, the
12employee's acquisition, use, or knowledge of confidential
13information through the employee's employment, the time
14restrictions, the place restrictions, and the scope of the
15activity restrictions. No factor carries any more weight than
16any other, but rather its importance will depend on the
17specific facts and circumstances of the individual case. Such
18factors are only non-conclusive aids in determining the
19employer's legitimate business interest, which in turn is but
20one component in the 3-prong rule of reason, grounded in the
21totality of the circumstances. Each situation must be
22determined on its own particular facts. Reasonableness is
23gauged not just by some, but by all of the circumstances. The
24same identical contract and restraint may be reasonable and
25valid under one set of circumstances and unreasonable and

 

 

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1invalid under another set of circumstances.
 
2    (820 ILCS 90/10)
3    Sec. 10. Prohibiting covenants not to compete and
4covenants not to solicit for low-wage employees.
5    (a) No employer shall enter into a covenant not to compete
6with any employee unless the employee's actual or expected
7annualized rate of earnings exceeds $75,000 per year. This
8amount shall increase to $80,000 per year beginning on January
91, 2027, $85,000 per year beginning on January 1, 2032, and
10$90,000 per year beginning on January 1, 2037. A covenant not
11to compete entered into in violation of this subsection is
12void and unenforceable. No employer shall enter into a
13covenant not to compete with any low-wage employee of the
14employer.
15    (b) No employer shall enter into a covenant not to solicit
16with any employee unless the employee's actual or expected
17annualized rate of earnings exceeds $45,000 per year. This
18amount shall increase to $47,500 per year beginning on January
191, 2027, $50,000 per year beginning on January 1, 2032, and
20$52,500 per year beginning on January 1, 2037. A covenant not
21to solicit entered into in violation of this subsection is
22void and unenforceable. A covenant not to compete entered into
23between an employer and a low-wage employee is illegal and
24void.
25    (c) No employer shall enter into a covenant not to compete

 

 

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1or a covenant not to solicit with any employee who an employer
2terminates or furloughs or lays off as the result of business
3circumstances or governmental orders related to the COVID-19
4pandemic or under circumstances that are similar to the
5COVID-19 pandemic, unless enforcement of the covenant not to
6compete includes compensation equivalent to the employee's
7base salary at the time of termination for the period of
8enforcement minus compensation earned through subsequent
9employment during the period of enforcement. A covenant not to
10compete or a covenant not to solicit entered into in violation
11of this subsection is void and unenforceable.
12    (d) A covenant not to compete is void and illegal with
13respect to individuals covered by a collective bargaining
14agreement under the Illinois Public Labor Relations Act or the
15Illinois Educational Labor Relations Act and individuals
16employed in construction. This subsection (d) does not apply
17to construction employees who primarily perform management,
18engineering or architectural, design, or sales functions for
19the employer or who are shareholders, partners, or owners in
20any capacity of the employer.
21(Source: P.A. 99-860, eff. 1-1-17.)
 
22    (820 ILCS 90/15 new)
23    Sec. 15. Enforceability of a covenant not to compete or a
24covenant not to solicit. A covenant not to compete or a
25covenant not to solicit is illegal and void unless (1) the

 

 

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1employee receives adequate consideration, (2) the covenant is
2ancillary to a valid employment relationship, (3) the covenant
3is no greater than is required for the protection of a
4legitimate business interest of the employer, (4) the covenant
5does not impose undue hardship on the employee, and (5) the
6covenant is not injurious to the public.
 
7    (820 ILCS 90/20 new)
8    Sec. 20. Ensuring employees are informed about their
9obligations. A covenant not to compete or a covenant not to
10solicit is illegal and void unless (1) the employer advises
11the employee in writing to consult with an attorney before
12entering into the covenant and (2) the employer provides the
13employee with a copy of the covenant at least 14 calendar days
14before the commencement of the employee's employment or the
15employer provides the employee with at least 14 calendar days
16to review the covenant. An employer is in compliance with this
17Section even if the employee voluntarily elects to sign the
18covenant before the expiration of the 14-day period.
 
19    (820 ILCS 90/25 new)
20    Sec. 25. Remedies. In addition to any remedies available
21under any agreement between an employer and an employee or
22under any other statute, in a civil action or arbitration
23filed by an employer (including, but not limited to, a
24complaint or counterclaim), if an employee prevails on a claim

 

 

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1to enforce a covenant not to compete or a covenant not to
2solicit, the employee shall recover from the employer all
3costs and all reasonable attorney's fees regarding such claim
4to enforce a covenant not to compete or a covenant not to
5solicit, and the court or arbitrator may award appropriate
6relief.
 
7    (820 ILCS 90/30 new)
8    Sec. 30. Attorney General enforcement.
9    (a) Whenever the Attorney General has reasonable cause to
10believe that any person or entity is engaged in a pattern and
11practice prohibited by this Act, the Attorney General may
12initiate or intervene in a civil action in the name of the
13People of the State in any appropriate court to obtain
14appropriate relief.
15    (b) Before initiating an action, the Attorney General may
16conduct an investigation and may: (1) require an individual or
17entity to file a statement or report in writing under oath or
18otherwise, as to all information the Attorney General may
19consider necessary; (2) examine under oath any person alleged
20to have participated in or with knowledge of the alleged
21violation; or (3) issue subpoenas or conduct hearings in aid
22of any investigation.
23    (c) Service by the Attorney General of any notice
24requiring a person or entity to file a statement or report, or
25of a subpoena upon any person or entity, shall be made:

 

 

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1        (1) personally by delivery of a duly executed copy
2    thereof to the person to be served or, if a person is not a
3    natural person, in the manner provided in the Code of
4    Civil Procedure when a complaint is filed; or
5        (2) by mailing by certified mail a duly executed copy
6    thereof to the person to be served at his or her last known
7    abode or principal place of business within this State or,
8    if a person is not a natural person, in the manner provided
9    in the Code of Civil Procedure when a complaint is filed.
10    The Attorney General may compel compliance with
11investigative demands under this Section through an order by
12any court of competent jurisdiction.
13    (d)(1) In an action brought under this Act, the Attorney
14General may obtain, as a remedy, monetary damages to the
15State, restitution, and equitable relief, including any
16permanent or preliminary injunction, temporary restraining
17order, or other order, including an order enjoining the
18defendant from engaging in a violation, or order any action as
19may be appropriate. In addition, the Attorney General may
20request and the court may impose a civil penalty not to exceed
21$5,000 for each violation or $10,000 for each repeat violation
22within a 5-year period. For purposes of this Section, each
23violation of this Act for each person who was subject to an
24agreement in violation of this Act shall constitute a separate
25and distinct violation.
26    (2) A civil penalty imposed under this subsection shall be

 

 

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1deposited into the Attorney General Court Ordered and
2Voluntary Compliance Payment Projects Fund. Moneys in the Fund
3shall be used, subject to appropriation, for the performance
4of any function pertaining to the exercise of the duties of the
5Attorney General, including but not limited to enforcement of
6any law of this State and conducting public education
7programs; however, any moneys in the Fund that are required by
8the court or by an agreement to be used for a particular
9purpose shall be used for that purpose.
 
10    (820 ILCS 90/35 new)
11    Sec. 35. Reformation.
12    (a) Extensive judicial reformation of a covenant not to
13compete or a covenant not to solicit may be against the public
14policy of this State and a court may refrain from wholly
15rewriting contracts.
16    (b) In some circumstances, a court may, in its discretion,
17choose to reform or sever provisions of a covenant not to
18compete or a covenant not to solicit rather than hold such
19covenant unenforceable. Factors which may be considered when
20deciding whether such reformation is appropriate include the
21fairness of the restraints as originally written, whether the
22original restriction reflects a good-faith effort to protect a
23legitimate business interest of the employer, the extent of
24such reformation, and whether the parties included a clause
25authorizing such modifications in their agreement.
 

 

 

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1    (820 ILCS 90/97 new)
2    Sec. 97. Severability. The provisions of this Act are
3severable under Section 1.31 of the Statute on Statutes.
 
4    Section 99. Effective date. This Act takes effect January
51, 2022.".