Make a Illinois Non-Compete Agreement

Applicable State Laws - Illinois Freedom to Work Act 820 ILCS

According to Illinois state law, no employer may require an employee who makes $13 per hour or less to enter into a non-compete agreement. This is because individuals making less than that are considered to be low-wage employees. The Bright-Line Rule is also applied in some instances. It states that if an employee works for their former employer for less than two years, adequate consideration may not exist and, therefore, the non-compete agreement may not be valid. This decision was handed down through the Illinois Appellate Court, First District, in its decision in Fifield v. Premier Dealer Services, Inc., 2013 IL App (1st) 120327. However, it is not always used since the matter remains unheard by the Illinois Supreme Court.

This highlights the importance of business owners establishing an attorney-client relationship to help create a non-compete agreement that suits their needs, has a reasonable restraint of trade, and is a reasonable restriction on the geographical area. A lawyer will also ensure the business owner understands the burden of proof they may be required to meet when trying to protect their customer relationships.

Remember, this document may not generally be used with minimum wage employees.

Protect your Illinois business by also using an Illinois non-disclosure agreement form. Download an Illinois non-disclosure agreement form now!

How to Write an Illinois Non-Compete Agreement

To write an Illinois non-compete agreement, review the Illinois Freedom to Work Act and the Bright-Line Rule. Include the following clauses in your Illinois non-compete agreement:

• Purpose. This clause explains the purpose of the non-compete agreement: to protect the confidential information and trade secrets of your business. It identifies the parties, the effective date, and may also state that confidential information may be referred to as "proprietary information."
• Non-competition. This clause explains the restrictions on time, geographic area, general and specific business practices, solicitation of clients or customers, general and specific business activities, working for general or specific competitors, and solicitation of employees.
• Time period. This clause may restate the restriction on time, but it also states when the time period begins. The time period may begin either when the employee begins working for your business or when the employment relationship ends.
• Purchase option. This clause states whether your business will allow the employee or independent contractor to buy their way out of the contract. If so, the amount that must be paid is listed in this clause.
• Jurisdiction. This clause states that Illinois laws govern the non-competition agreement.
• Confidential information. This clause states the term "confidential information" as it is used through the agreement means any and all technical and non-technical information provided by your business includes, and is not limited to, any data or other proprietary information related to products, inventions, plans, methods, processes, developmental products, experimental products, intellectual property, software, databases, customer lists, vendor lists, supplier lists, marketing methods, reports, business plans, financial information, or other matter about your business or any of your clients or customers, consultants, or licensees that is disclosed to the other party according to the terms of the non-compete agreement.  
• Permitted disclosure. This clause explains when confidential information is no longer confidential. Usually, this happens when information is made public with no fault on the party of the other party. For example, when information is discovered by the other party on their own without the breach of another person or when your business provides written consent for the release of certain information.
• Confidentiality. This clause states the other party acknowledges the information they have access to is confidential and that they agree that they will not directly or indirectly communicate the information to another party without the written consent of your business. They also consent that they will not use the information for any purpose except for the benefit of your business without first receiving written consent.
• Consultants and employees bound. This clause states that the non-compete binds both consultants and employees, that they are on a need-to-know basis for information, and that they must keep what they know under the strictest of confidence.
• Return of materials. This clause states that when the relationship is terminated or when your business requests it, the party will return promptly return all documents and any other tangible material that represents the confidential information of the business and any copies that exist. The clause also states that your business will notify the other party in the event of a discovery of any loss or unauthorized disclosure of the confidential information.
• Remedies. This clause explains the remedies under Illinois law that your business may be entitled to pursue if the other party breaches the non-compete. For example, the recovery of court costs, the recovery of reasonable attorney fees, the award by the Illinois court of a temporary restraining order, the award by the court of a preliminary injunction against the unauthorized use of the information, etc., and any other available remedies as well as any other remedies available to your business because of equity.
• Choice of law. This clause states that the parties agree to choose Illinois law to govern the agreement.
• Entire agreement. This is the final clause of the non-compete. This clause explains that the non-compete agreement may only be modified in writing if the parties sign the amendment.

The parties must sign and print their names. The signatures must be dated. Each party should receive a copy of the executed contract for their records.