Full Text of SB0672 102nd General Assembly
SB0672ham001 102ND GENERAL ASSEMBLY | Rep. Kelly M. Burke Filed: 5/24/2021
| | 10200SB0672ham001 | | LRB102 10211 JLS 26819 a |
|
| 1 | | AMENDMENT TO SENATE BILL 672
| 2 | | AMENDMENT NO. ______. Amend Senate Bill 672 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 7, 15, 20, | 6 | | 25, 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 | 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 consideration can consist of a period | 15 | | of employment plus additional professional or financial | 16 | | benefits or merely professional or financial benefits adequate |
| | | 10200SB0672ham001 | - 2 - | LRB102 10211 JLS 26819 a |
|
| 1 | | by themselves. | 2 | | "Covenant not to compete" means an agreement : (1) between | 3 | | an employer and an a low-wage employee that is entered into | 4 | | after the effective date of this amendatory Act of the 102nd | 5 | | General Assembly that restricts the such low-wage employee | 6 | | from 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 | 17 | | an employer and an employee, entered into after the effective | 18 | | date of this amendatory Act of the 102nd General Assembly, | 19 | | that by its terms imposes adverse financial consequences on | 20 | | the former employee if the employee engages in competitive | 21 | | activities after the termination of the employee's employment | 22 | | with the employer. | 23 | | "Covenant not to compete" does not include (1) a covenant | 24 | | not to solicit, (2) a confidentiality agreement or covenant, | 25 | | (3) a covenant or agreement prohibiting use or disclosure of | 26 | | trade secrets or inventions, (4) invention assignment |
| | | 10200SB0672ham001 | - 3 - | LRB102 10211 JLS 26819 a |
|
| 1 | | agreements or covenants, (5) a covenant or agreement entered | 2 | | into by a person purchasing or selling the goodwill of a | 3 | | business or otherwise acquiring or disposing of an ownership | 4 | | interest, (6) clauses or an agreement between an employer and | 5 | | an employee requiring advance notice of termination of | 6 | | employment, during which notice period the employee remains | 7 | | employed by the employer and receives compensation, or (7) | 8 | | agreements by which the employee agrees not to reapply for | 9 | | employment to the same employer after termination of the | 10 | | employee. | 11 | | "Covenant not to solicit" means an agreement that is | 12 | | entered into after the effective date of this amendatory Act | 13 | | of the 102nd General Assembly between an employer and an | 14 | | employee that (1) restricts the employee from soliciting for | 15 | | employment the employer's employees or (2) restricts the | 16 | | employee from soliciting, for the purpose of selling products | 17 | | or services of any kind to, or from interfering with the | 18 | | employer's relationships with, the employer's clients, | 19 | | prospective clients, vendors, prospective vendors, suppliers, | 20 | | prospective suppliers, or other business relationships. | 21 | | "Earnings" means the compensation, including earned | 22 | | salary, earned bonuses, earned commissions, or any other form | 23 | | of taxable compensation, reflected or that is expected to be | 24 | | reflected as wages, tips, and other compensation on the | 25 | | employee's IRS Form W-2 plus any elective deferrals not | 26 | | reflected as wages, tips, and other compensation on the |
| | | 10200SB0672ham001 | - 4 - | LRB102 10211 JLS 26819 a |
|
| 1 | | employee's IRS Form W-2, such as, without limitation, employee | 2 | | contributions to a 401(k) plan, a 403(b) plan, a flexible | 3 | | spending account, or a health savings account, or commuter | 4 | | benefit-related deductions. | 5 | | "Employee" means any individual permitted to work by an | 6 | | employer in an occupation. | 7 | | "Employer" has the meaning given to such term in | 8 | | subsection (c) of Section 3 of the Minimum Wage Law. | 9 | | "Employer" does not include governmental or quasi-governmental | 10 | | bodies. | 11 | | "Construction" means any constructing, altering, | 12 | | reconstructing, repairing,
rehabilitating, refinishing, | 13 | | refurbishing, remodeling, remediating, renovating, custom | 14 | | fabricating, maintenance, landscaping, improving, wrecking, | 15 | | painting, decorating, demolishing, and adding to or | 16 | | subtracting from any building, structure, highway, roadway, | 17 | | street, bridge, alley, sewer, ditch, sewage disposal plant, | 18 | | water works, parking facility, railroad, excavation or other | 19 | | structure, project, development, real property or improvement, | 20 | | or to do any part thereof, whether or not the performance of | 21 | | the work herein described involves the addition to, or | 22 | | fabrication into, any structure, project, development, real | 23 | | property or improvement herein described of any material or | 24 | | article of merchandise. | 25 | | "Low-wage employee" means an employee whose earnings do | 26 | | not exceed the greater of (1) the hourly rate equal to the |
| | | 10200SB0672ham001 | - 5 - | LRB102 10211 JLS 26819 a |
|
| 1 | | minimum wage required by the applicable federal, State, or | 2 | | local 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 | 6 | | determining the legitimate business interest of the employer, | 7 | | the totality of the facts and circumstances of the individual | 8 | | case shall be considered. Factors that may be considered in | 9 | | this analysis include, but are not limited to, the employee's | 10 | | exposure to the employer's customer relationships or other | 11 | | employees, the near-permanence of customer relationships, the | 12 | | employee's acquisition, use, or knowledge of confidential | 13 | | information through the employee's employment, the time | 14 | | restrictions, the place restrictions, and the scope of the | 15 | | activity restrictions. No factor carries any more weight than | 16 | | any other, but rather its importance will depend on the | 17 | | specific facts and circumstances of the individual case. Such | 18 | | factors are only non-conclusive aids in determining the | 19 | | employer's legitimate business interest, which in turn is but | 20 | | one component in the 3-prong rule of reason, grounded in the | 21 | | totality of the circumstances. Each situation must be | 22 | | determined on its own particular facts. Reasonableness is | 23 | | gauged not just by some, but by all of the circumstances. The | 24 | | same identical contract and restraint may be reasonable and | 25 | | valid under one set of circumstances and unreasonable and
|
| | | 10200SB0672ham001 | - 6 - | LRB102 10211 JLS 26819 a |
|
| 1 | | invalid under another set of circumstances. | 2 | | (820 ILCS 90/10)
| 3 | | Sec. 10. Prohibiting covenants not to compete and | 4 | | covenants not to solicit for low-wage employees . | 5 | | (a) No employer shall enter into a covenant not to compete | 6 | | with any employee unless the employee's actual or expected | 7 | | annualized rate of earnings exceeds $75,000 per year. This | 8 | | amount shall increase to $80,000 per year beginning on January | 9 | | 1, 2027, $85,000 per year beginning on January 1, 2032, and | 10 | | $90,000 per year beginning on January 1, 2037. A covenant not | 11 | | to compete entered into in violation of this subsection is | 12 | | void and unenforceable. No employer shall enter into a | 13 | | covenant not to compete with any low-wage employee of the | 14 | | employer. | 15 | | (b) No employer shall enter into a covenant not to solicit | 16 | | with any employee unless the employee's actual or expected | 17 | | annualized rate of earnings exceeds $45,000 per year. This | 18 | | amount shall increase to $47,500 per year beginning on January | 19 | | 1, 2027, $50,000 per year beginning on January 1, 2032, and | 20 | | $52,500 per year beginning on January 1, 2037. A covenant not | 21 | | to solicit entered into in violation of this subsection is | 22 | | void and unenforceable. A covenant not to compete entered into | 23 | | between an employer and a low-wage employee is illegal and | 24 | | void.
| 25 | | (c) No employer shall enter into a covenant not to compete |
| | | 10200SB0672ham001 | - 7 - | LRB102 10211 JLS 26819 a |
|
| 1 | | or a covenant not to solicit with any employee who an employer | 2 | | terminates or furloughs or lays off as the result of business | 3 | | circumstances or governmental orders related to the COVID-19 | 4 | | pandemic or under circumstances that are similar to the | 5 | | COVID-19 pandemic, unless enforcement of the covenant not to | 6 | | compete includes compensation equivalent to the employee's | 7 | | base salary at the time of termination for the period of | 8 | | enforcement minus compensation earned through subsequent | 9 | | employment during the period of enforcement. A covenant not to | 10 | | compete or a covenant not to solicit entered into in violation | 11 | | of this subsection is void and unenforceable. | 12 | | (d) A covenant not to compete is void and illegal with | 13 | | respect to individuals covered by a collective bargaining | 14 | | agreement under the Illinois Public Labor Relations Act or the | 15 | | Illinois Educational Labor Relations Act and individuals | 16 | | employed in construction. This subsection (d) does not apply | 17 | | to construction employees who primarily perform management, | 18 | | engineering or architectural, design, or sales functions for | 19 | | the employer or who are shareholders, partners, or owners in | 20 | | any 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 | 24 | | covenant not to solicit. A covenant not to compete or a | 25 | | covenant not to solicit is illegal and void unless (1) the |
| | | 10200SB0672ham001 | - 8 - | LRB102 10211 JLS 26819 a |
|
| 1 | | employee receives adequate consideration, (2) the covenant is | 2 | | ancillary to a valid employment relationship, (3) the covenant | 3 | | is no greater than is required for the protection of a | 4 | | legitimate business interest of the employer, (4) the covenant | 5 | | does not impose undue hardship on the employee, and (5) the | 6 | | covenant is not injurious to the public. | 7 | | (820 ILCS 90/20 new) | 8 | | Sec. 20. Ensuring employees are informed about their | 9 | | obligations. A covenant not to compete or a covenant not to | 10 | | solicit is illegal and void unless (1) the employer advises | 11 | | the employee in writing to consult with an attorney before | 12 | | entering into the covenant and (2) the employer provides the | 13 | | employee with a copy of the covenant at least 14 calendar days | 14 | | before the commencement of the employee's employment or the | 15 | | employer provides the employee with at least 14 calendar days | 16 | | to review the covenant. An employer is in compliance with this | 17 | | Section even if the employee voluntarily elects to sign the | 18 | | covenant before the expiration of the 14-day period. | 19 | | (820 ILCS 90/25 new) | 20 | | Sec. 25. Remedies. In addition to any remedies available | 21 | | under any agreement between an employer and an employee or | 22 | | under any other statute, in a civil action or arbitration | 23 | | filed by an employer (including, but not limited to, a | 24 | | complaint or counterclaim), if an employee prevails on a claim |
| | | 10200SB0672ham001 | - 9 - | LRB102 10211 JLS 26819 a |
|
| 1 | | to enforce a covenant not to compete or a covenant not to | 2 | | solicit, the employee shall recover from the employer all | 3 | | costs and all reasonable attorney's fees regarding such claim | 4 | | to enforce a covenant not to compete or a covenant not to | 5 | | solicit, and the court or arbitrator may award appropriate | 6 | | relief. | 7 | | (820 ILCS 90/30 new) | 8 | | Sec. 30. Attorney General enforcement. | 9 | | (a) Whenever the Attorney General has reasonable cause to | 10 | | believe that any person or entity is engaged in a pattern and | 11 | | practice prohibited by this Act, the Attorney General may | 12 | | initiate or intervene in a civil action in the name of the | 13 | | People of the State in any appropriate court to obtain | 14 | | appropriate relief. | 15 | | (b) Before initiating an action, the Attorney General may | 16 | | conduct an investigation and may: (1) require an individual or | 17 | | entity to file a statement or report in writing under oath or | 18 | | otherwise, as to all information the Attorney General may | 19 | | consider necessary; (2) examine under oath any person alleged | 20 | | to have participated in or with knowledge of the alleged | 21 | | violation; or (3) issue subpoenas or conduct hearings in aid | 22 | | of any investigation. | 23 | | (c) Service by the Attorney General of any notice | 24 | | requiring a person or entity to file a statement or report, or | 25 | | of a subpoena upon any person or entity, shall be made: |
| | | 10200SB0672ham001 | - 10 - | LRB102 10211 JLS 26819 a |
|
| 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 | 11 | | investigative demands under this Section through an order by | 12 | | any court of competent jurisdiction. | 13 | | (d)(1) In an action brought under this Act, the Attorney | 14 | | General may obtain, as a remedy, monetary damages to the | 15 | | State, restitution, and equitable relief, including any | 16 | | permanent or preliminary injunction, temporary restraining | 17 | | order, or other order, including an order enjoining the | 18 | | defendant from engaging in a violation, or order any action as | 19 | | may be appropriate. In addition, the Attorney General may | 20 | | request and the court may impose a civil penalty not to exceed | 21 | | $5,000 for each violation or $10,000 for each repeat violation | 22 | | within a 5-year period. For purposes of this Section, each | 23 | | violation of this Act for each person who was subject to an | 24 | | agreement in violation of this Act shall constitute a separate | 25 | | and distinct violation. | 26 | | (2) A civil penalty imposed under this subsection shall be |
| | | 10200SB0672ham001 | - 11 - | LRB102 10211 JLS 26819 a |
|
| 1 | | deposited into the Attorney General Court Ordered and | 2 | | Voluntary Compliance Payment Projects Fund. Moneys in the Fund | 3 | | shall be used, subject to appropriation, for the performance | 4 | | of any function pertaining to the exercise of the duties of the | 5 | | Attorney General, including but not limited to enforcement of | 6 | | any law of this State and conducting public education | 7 | | programs; however, any moneys in the Fund that are required by | 8 | | the court or by an agreement to be used for a particular | 9 | | purpose 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 | 13 | | compete or a covenant not to solicit may be against the public | 14 | | policy of this State and a court may refrain from wholly | 15 | | rewriting contracts. | 16 | | (b) In some circumstances, a court may, in its discretion, | 17 | | choose to reform or sever provisions of a covenant not to | 18 | | compete or a covenant not to solicit rather than hold such | 19 | | covenant unenforceable. Factors which may be considered when | 20 | | deciding whether such reformation is appropriate include the | 21 | | fairness of the restraints as originally written, whether the | 22 | | original restriction reflects a good-faith effort to protect a | 23 | | legitimate business interest of the employer, the extent of | 24 | | such reformation, and whether the parties included a clause
| 25 | | authorizing such modifications in their agreement. |
| | | 10200SB0672ham001 | - 12 - | LRB102 10211 JLS 26819 a |
|
| 1 | | (820 ILCS 90/97 new) | 2 | | Sec. 97. Severability. The provisions of this Act are | 3 | | severable under Section 1.31 of the Statute on Statutes.
| 4 | | Section 99. Effective date. This Act takes effect January | 5 | | 1, 2022.".
|
|