Illinois has passed into law the “Illinois Freedom To Work Act.” It takes effect on January 1, 2017. Section 10 of the Act prohibits employers from entering into covenants not to compete with any low-wage employee. Any such agreement is declared illegal and void.
A “low wage employee” is defined as an employee who earns the greater of (1) the hourly rate equal to the minimum wage required by the applicable federal, state, or local minimum wage; or, (2) $13.00 per hour. Employer retains the definition provided for in the Illinois Minimum Wage law. However, it does not include governmental or quasi-governmental bodies.
The Act defines a covenant not to compete as an agreement entered into after January 1, 2017 that restricts the employee from performing work for (1) another employer for a specified period of time; (2) any work in a specified geographical area; or, (3) work that is similar to the work of any employer that is a party to the agreement.
Clearly, corporate policies will have to adapt for low wage earning employees. Employers will no longer be allowed to tie employment to a covenant not to compete or restrictive covenant. Which employees fall within the scope of this Act will likely change as the applicable federal, state or local minimum wage continues to climb. Yearly review of this policy should be included in any annual policy review currently performed.
If you have any questions about this or any other employment-related issue, please contact Joseph F. Spitzzeri at 312-984-0683.