SB3430 101ST GENERAL ASSEMBLY

LRB101 17408 JLS 66813 b

101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
SB3430

Introduced 2/14/2020, by Sen. Heather A. Steans

SYNOPSIS AS INTRODUCED:

820 ILCS 90/5
820 ILCS 90/15 new
820 ILCS 90/20 new
820 ILCS 90/25 new

Amends the Illinois Freedom to Work Act. Extends the applicability of the Act to all employees. Provides that a covenant not to compete is illegal and void if the employee does not receive adequate consideration and the covenant is ancillary to a valid employment relationship. Requires covenants not to compete to be no more expansive than required for the protection of legitimate business interests, to not impose undue hardship on the employee, and to not be injurious to the public. Specifies notice and an opportunity for review to be given to the employee. Authorizes employees to recover costs and attorney's fees.

A BILL FOR

AN ACT concerning employment.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Freedom to Work Act is amended by changing Section 5 and by adding Sections 15, 20, and 25 as follows:

(820 ILCS 90/5)

Sec. 5. Definitions. In this Act:

"Covenant not to compete" means an agreement:

(1) between an employer and an a low-wage employee that restricts the such low-wage employee from performing:

(A) any work for another employer for a specified period of time;

(B) any work in a specified geographical area; or

(C) work for another employer that is similar to the such low-wage employee's work for the employer included as a party to the agreement; and

(2) that is entered into after the effective date of this amendatory Act of the 101st General Assembly.

"Covenant not to compete" also means an agreement that by its terms imposes adverse financial consequences on a former employee if the employee engages in competitive activities after the termination of the employee's employment with the employer.

"Employee" has the meaning ascribed to that term in Section 2 of the Wage Payment and Collection Act.

"Employer" has the meaning given to such term in subsection (c) of Section 3 of the Minimum Wage Law. "Employer" does not include governmental or quasi-governmental bodies.

"Low-wage employee" means an employee whose earnings do not exceed the greater of (1) the hourly rate equal to the minimum wage required by the applicable federal, State, or local minimum wage law or (2) $13.00 per hour.

(Source: P.A. 99-860, eff. 1-1-17; 100-225, eff. 8-18-17.)

(820 ILCS 90/15 new)

Sec. 15. Enforceability of a covenant not to compete.

(a) A covenant not to compete entered into between an employer and employee is illegal and void unless (i) the employee receives adequate consideration and (ii) it is ancillary to a valid employment relationship.

(b) An employee has not received adequate consideration from an employer for a covenant not to compete unless (i) the employee worked for the employer for at least 2 years from the date the employee signed the covenant not to compete or (ii) the employer provided the employee with some other fair and reasonable consideration specifically bargained for in exchange for the covenant not to compete.

(c) A covenant not to compete entered into between an employer and employee is illegal and void unless it (i) is no greater than is required for the protection of a legitimate business interest of the employer, (ii) does not impose undue hardship on the employee, and (iii) is not injurious to the public. Whether a legitimate business interest exists is based on the totality of the facts and circumstances of the individual case. Factors to be considered in this analysis include, but are not limited to, the near-permanence of customer relationships, the employee's acquisition of confidential information through the employee's employment, and time and place restrictions.

(820 ILCS 90/20 new)

Sec. 20. Ensuring employees are informed about their obligations.

(a) A covenant not to compete entered into between an employer and employee is illegal and void unless the employer advises the employee in writing to consult with an attorney before entering into the covenant not to compete.

(b) A covenant not to compete entered into between an employer and employee is illegal and void unless (i) the employer provides the employee with a copy of the covenant not to compete at least 10 business days before the commencement of the employee's employment or (ii) the employer provides the employee with at least 21 days to review the covenant not to compete.

(820 ILCS 90/25 new)

Sec. 25. Remedies. In a civil action initiated by an employer involving a covenant not to compete, in addition to any remedies available under any agreement between an employer and an employee, a prevailing employee shall recover costs and all reasonable attorney's fees.