Illinois Freedom to Work Act in 2026: Non-Compete Rules, Income Thresholds, and Drafting

An Illinois non-compete is void if the employee's actual or expected annualized earnings do not exceed $75,000 a year, and a non-solicit is void at or below $45,000. A drafter who signs a covenant for an employee on target for $72,000, as a hypothetical, has written a void clause no matter how carefully the rest is worded.

Reviewed and corrected on 6 October 2026. This is general information, not legal advice; check the cited statute or opinion before relying on it.

The position this post defends: Illinois is one of the more legible non-compete regimes in the country, but its legibility punishes lazy drafting. The statute names the dollar thresholds, the 14-day review period, the written advice-of-counsel requirement and the reformation factors. A drafter who treats Illinois like a reasonableness-only state and ignores 820 ILCS 90/ loses.

Official text, as of 6 October 2026

Citation: 820 ILCS 90/10(a), Illinois Freedom to Work Act (official text on ilga.gov).

"No employer shall enter into a covenant not to compete with any employee unless the employee's actual or expected annualized rate of earnings exceeds $75,000 per year."

What changed in 2026: nothing in the dollar figures. The $75,000 and $45,000 floors still apply through 2026 and first step up on January 1, 2027. The current text of section 10 also carries subsections (c), (e) and (f), described below, and the FTC's national rule was removed from the CFR on February 12, 2026.

TL;DR

• The Illinois Freedom to Work Act, 820 ILCS 90/1 et seq., took effect January 1, 2017 (Public Act 99-860) and was substantially amended by Public Act 102-358, effective January 1, 2022. The Act's definitions of "covenant not to compete" and "covenant not to solicit" apply to agreements entered into after that 2022 amendatory Act took effect.
• Section 10 voids non-competes against any employee whose actual or expected annualized earnings do not exceed $75,000, and non-solicits at or below $45,000. Both steps rise every five years through 2037 ($90,000 and $52,500).
• Section 20 makes a covenant void unless the employer (1) advises the employee in writing to consult an attorney and (2) gives the employee a copy at least 14 calendar days before employment starts or at least 14 calendar days to review it.
• An employee who prevails on a claim to enforce a covenant recovers costs and reasonable attorney's fees (820 ILCS 90/25). The Attorney General can seek civil penalties of up to $5,000 per violation or $10,000 per repeat violation within five years (820 ILCS 90/30).
• Above the thresholds, section 7 directs courts to judge the employer's legitimate business interest on the totality of the facts and circumstances, as the Illinois Supreme Court held in Reliable Fire Equipment Co. v. Arredondo, 2011 IL 111871. Fifield v. Premier Dealer Services, Inc., 2013 IL App (1st) 120327, required at least two years of continued employment as adequate consideration, and section 5 now defines "adequate consideration" as two years of employment after signing or other consideration adequate to support the covenant.
• Reformation is discretionary under section 35, and the Act says extensive judicial reformation "may be against the public policy of this State."
• The FTC's national rule never took effect. A federal court set it aside in Ryan, LLC v. FTC, 746 F. Supp. 3d 369 (N.D. Tex. 2024), the FTC dropped its appeals on September 5, 2025, and it removed the rule from the CFR effective February 12, 2026 (91 FR 6507). Illinois employers rely on 820 ILCS 90/ and Illinois case law.

Part of our state law reference series.

Are non-competes enforceable in Illinois?

Yes, but only above an earnings floor and only if the employer follows the process. Under 820 ILCS 90/10, a non-compete is void unless the employee's actual or expected annualized earnings exceed $75,000, and a non-solicit is void unless they exceed $45,000. Above those floors the covenant still has to be supported by adequate consideration, be ancillary to a valid employment relationship, be no greater than needed to protect a legitimate business interest, impose no undue hardship and not injure the public (section 15), and the employer must give the written advice and the 14 days required by section 20. Miss the earnings floor, the written advice or the 14 days, and the covenant is void. Clear those and it still has to meet section 15.

Source: 820 ILCS 90/10(a) and (b).

The statute: 820 ILCS 90/

The Act is short. It has sections 1, 5, 7, 10, 15, 20, 25, 30, 35 and 97.

820 ILCS 90/5 is the definitions section. It defines "adequate consideration," "covenant not to compete," "covenant not to solicit," "earnings," "employee," "employer" and "construction." The definitions of the two covenants apply to agreements "entered into after the effective date of this amendatory Act of the 102nd General Assembly," which is the 2022 amendment. A "covenant not to compete" does not include a covenant not to solicit, a confidentiality agreement, a covenant on use or disclosure of trade secrets or inventions, an invention assignment agreement, a covenant tied to buying or selling a business or an ownership interest, a paid advance-notice clause, or an agreement not to reapply for employment with the same employer. A "covenant not to solicit" covers soliciting the employer's employees and also soliciting or interfering with the employer's clients, prospective clients, vendors, prospective vendors, suppliers, prospective suppliers or other business relationships.

820 ILCS 90/7 is the legitimate-business-interest section. It directs that "the totality of the facts and circumstances of the individual case shall be considered," with non-exclusive factors including the employee's exposure to customer relationships or other employees, the near-permanence of customer relationships, the employee's use or knowledge of confidential information, and the time, place and activity restrictions. It adds that no factor carries more weight than another. This is the statute's codification of the Reliable Fire approach.

820 ILCS 90/10 sets the earnings floors and the special cases:

• (a) non-competes: earnings must exceed $75,000, rising to $80,000 on January 1, 2027, $85,000 on January 1, 2032 and $90,000 on January 1, 2037.
• (b) non-solicits: earnings must exceed $45,000, rising to $47,500, $50,000 and $52,500 on the same dates.
• (c) no non-compete or non-solicit for an employee the employer terminates, furloughs or lays off as a result of business circumstances or governmental orders related to the COVID-19 pandemic or under similar circumstances, unless enforcement of the non-compete includes pay equal to the employee's base salary for the enforcement period, less earnings from later employment.
• (d) a non-compete is void and illegal for individuals covered by a collective bargaining agreement under the Illinois Public Labor Relations Act or the Illinois Educational Labor Relations Act.
• (e) a non-compete or non-solicit is void and illegal for individuals employed in construction, whether or not covered by a collective bargaining agreement, except construction employees who primarily perform management, engineering or architectural, design or sales functions or who are shareholders, partners or owners of the employer.
• (f) a covenant entered into after January 1, 2025 (the effective date of Public Act 103-915) is not enforceable for mental health services to veterans and first responders by licensed mental health professionals if enforcement is likely to increase the cost or difficulty of care for a veteran or first responder.

"Earnings" is compensation "reflected or that is expected to be reflected as wages, tips, and other compensation on the employee's IRS Form W-2," including earned salary, bonuses and commissions, plus elective deferrals not reflected on the W-2, such as contributions to a 401(k) plan, a 403(b) plan, a flexible spending account or a health savings account, or commuter benefit deductions. Practitioners who look only at base salary can miscount the threshold.

820 ILCS 90/15 sets the validity test. A covenant is illegal and void unless (1) the employee receives adequate consideration, (2) it is ancillary to a valid employment relationship, (3) it is no greater than required to protect a legitimate business interest of the employer, (4) it does not impose undue hardship on the employee, and (5) it is not injurious to the public.

820 ILCS 90/20 is the procedural section. A covenant is illegal and void unless (1) the employer advises the employee in writing to consult with an attorney before entering into it and (2) the employer provides a copy at least 14 calendar days before employment begins, or provides at least 14 calendar days to review. The employer is in compliance "even if the employee voluntarily elects to sign the covenant before the expiration of the 14-day period."

820 ILCS 90/25 is the remedies section. If an employee prevails on a claim by an employer to enforce a covenant, the employee "shall recover from the employer all costs and all reasonable attorney's fees" on that claim, and the court or arbitrator may award appropriate relief. The section gives the employer no reciprocal fee right.

820 ILCS 90/30 is Attorney General enforcement. When the Attorney General has reasonable cause to believe a person or entity is engaged in a pattern and practice prohibited by the Act, the Attorney General may sue. The court may impose a civil penalty not to exceed $5,000 for each violation or $10,000 for each repeat violation within five years, and each violation for each person subject to an agreement in violation of the Act is a separate violation.

820 ILCS 90/35 addresses reformation. Extensive judicial reformation "may be against the public policy of this State and a court may refrain from wholly rewriting contracts." A court may in its discretion reform or sever instead of holding a covenant unenforceable, and it may consider the fairness of the restraints as written, whether the original restriction reflects a good-faith effort to protect a legitimate business interest, the extent of the reformation, and whether the parties included a clause authorizing modification.

The Act has no choice-of-law section. Whether a choice-of-law clause or an out-of-state forum clause will hold against an Illinois employee is decided under general conflict-of-laws principles, and we did not research Illinois decisions applying them. Check current authority before relying on such a clause.

What Public Act 102-358 changed

The original 2017 Act (Public Act 99-860) barred non-competes only for "low-wage employees," defined as employees who earn the greater of the applicable minimum wage or $13.00 per hour. Public Act 102-358 replaced that narrow band with the $75,000 and $45,000 structure and the five-year steps, and the sections now numbered 5, 7, 15, 20, 25, 30 and 35 carry its 2022 source line.

The earnings floor is a hard line. Expected annualized earnings of $74,999 mean the non-compete is void, whatever the employee's role or sophistication.

The 14-day review and advice-of-counsel rule is a condition of enforceability, not a best practice. Both parts are required. The 14 days run from delivery of the covenant. If an employer sends the covenant with the offer and demands a signature within a week, and the employee did not choose to sign early, the employer has not given 14 days to review unless it delivered the covenant at least 14 days before employment began; without one of those, the covenant is void. The statute protects an employer whose employee voluntarily elects to sign early.

Construction. Public Act 102-358 put the construction ban in subsection 10(d) for non-competes. The current statute puts it in subsection 10(e), applies it to non-solicits as well, and excepts management, engineering, design and sales employees and owners. Collective bargaining coverage now sits in subsection 10(d). Subsection 10(c) (pandemic-type layoffs) was part of the 2022 Act. Subsection 10(f) (mental health services for veterans and first responders) was added by Public Act 103-915, effective January 1, 2025.

The Act's definition of "adequate consideration" uses the same two-year period. Fifield v. Premier Dealer Services, Inc., 2013 IL App (1st) 120327, was decided June 24, 2013. In paragraph 19 the court wrote: "Illinois courts have repeatedly held that there must be at least two years or more of continued employment to constitute adequate consideration in support of a restrictive covenant." The statute defines "adequate consideration" as (1) at least two years of employment after the employee signed, or (2) other consideration "adequate to support an agreement to not compete or to not solicit, which consideration can consist of a period of employment plus additional professional or financial benefits or merely professional or financial benefits adequate by themselves." The Act does not name a dollar figure for the second prong.

The Act did not replace the reasonableness test. Above the floor, with adequate consideration and the section 20 steps in order, a covenant still has to satisfy sections 7 and 15.

Reliable Fire and the totality-of-circumstances test

The Illinois Supreme Court's leading non-compete decision is Reliable Fire Equipment Co. v. Arredondo, 2011 IL 111871, filed December 1, 2011. The court said that two panels of the appellate court had questioned whether Illinois recognizes the legitimate business interest test, and it took the opportunity to correct that. It held that enforceability is judged by a three-prong test of reasonableness, of which the employer's legitimate business interest remains a part, and it held the two-factor test from Nationwide Advertising Service, Inc. v. Kolar (a near-permanent customer relationship plus the employee's acquisition of confidential information as determinative factors) no longer valid.

In the court's words, whether a legitimate business interest exists "is based on the totality of the facts and circumstances of the individual case." The factors include "the near-permanence of customer relationships, the employee's acquisition of confidential information through his employment, and time and place restrictions," and "no factor carries any more weight than any other." Section 7 of the Act now puts that language in the statute.

Two practical consequences follow. The test is fact-intensive, so the record supporting the protectable interest matters as much as the covenant's wording. And because the interest depends on the role, one covenant used for every role may fit some employees and not others. The statute says so directly: "The same identical contract and restraint may be reasonable and valid under one set of circumstances and unreasonable and invalid under another set of circumstances."

Adequate consideration: the Fifield trap

Fifield is the rule that catches templates. As a hypothetical: a new hire signs a non-compete on day one, the employer ends the relationship six months later, and the employer sues to enforce. If the only consideration was at-will employment, the covenant has the problem Fifield identified. In Fifield itself the employee resigned after slightly more than three months, and the court held that period "far short of the two years required." The court added that the rule applies even if the employee resigns on his own instead of being terminated.

For the other prong of the statutory definition, the Act says consideration can be "professional or financial benefits adequate by themselves." Drafting practice, not a rule from the cases we read, is to tie something identifiable and contemporaneous to the covenant: a signing bonus paid up front with a repayment term, an equity grant, a promotion with a raise, or a retention payment when the covenant is first introduced. Whether a particular benefit is adequate is a question of fact, and the statute gives no dollar test, so document why you think it is.

Industry-specific notes

Healthcare. An earlier version of this post said physician non-competes sit under the Medical Practice Act (225 ILCS 60). We could not support that and removed it. In the Act and the cases we read, physician covenants are governed by 820 ILCS 90/ and Illinois common law. In Mohanty v. St. John Heart Clinic, S.C., 225 Ill. 2d 52 (2006), decided December 21, 2006, the Illinois Supreme Court declined to hold that restrictive covenants in physician employment contracts are void as against public policy. It reasoned that nothing in the constitution, statutes or prior decisions gave it a clear expression of public policy to that effect, and it distinguished attorney covenants, which conflict with Rule 5.6 of the Illinois Rules of Professional Conduct. The Act itself has one health-related rule: subsection 10(f), for mental health services to veterans and first responders by licensed psychologists, clinical social workers, marriage and family therapists, nurses and counselors, for covenants entered into after January 1, 2025, where enforcement is likely to raise the cost or difficulty of care for a veteran or first responder.

Construction. Section 10(e) voids non-competes and non-solicits for individuals employed in construction, except construction employees who primarily perform management, engineering or architectural, design or sales functions and employees who own the employer. "Construction" is defined broadly in section 5. Read the definition and the exception before deciding a role is outside the ban.

Where the law is going

Two things matter as of 6 October 2026.

Pending bills. According to the Illinois General Assembly's bill-status pages, House Bill 3213 (104th General Assembly), as introduced, would provide that on and after January 1, 2026, no employer shall enter into a covenant not to compete or a covenant not to solicit with any employee, would void such covenants "regardless of where and when" entered into, and would repeal sections 7, 20 and 35. Its last recorded action was April 17, 2026, when it was re-referred to the House Rules Committee. House Bill 1642 would require earnings above $300,000 per year for both a non-compete and a non-solicit. Its last recorded action was March 27, 2026, a re-referral to the Rules Committee. Neither is law. Treat the current floors as the law that applies, and watch both bills.

The federal backdrop. The FTC's rule never took effect, and Illinois law governs these covenants, as the TL;DR notes.

On covenants entered into before 2022: the Act's definitions of the two covenants apply only to agreements entered into after the 2022 amendatory Act took effect. Earlier covenants fall under Illinois common law. That law was not easy on at-will-only consideration even then. Fifield (2013) already required two years of continued employment, and the 2022 Act's section 5 defines adequate consideration with the same two-year period or other adequate consideration. A 2026 covenant signed without the section 20 steps is void on the face of the statute, and a 2026 covenant supported only by at-will employment is exposed to the Fifield problem if the employee leaves within two years.

Drafting checklist for an Illinois non-compete

This checklist assumes the employee is above the earnings floor and the role merits a covenant in the first place. If either is false, do not draft. The items on notice, consideration and recitals follow the statute. The items on time, geography and scope are drafting practice, not statutory rules.

Notice and disclosure. Deliver the covenant at least 14 calendar days before employment begins or give the employee at least 14 calendar days to review it. Include a written statement advising the employee to consult an attorney before signing. Keep proof of the delivery date, such as a signed acknowledgment or an email with a timestamp.

Consideration. Pair the covenant with consideration that is identifiable and contemporaneous, such as a signing bonus, an equity grant or a raise tied to the covenant. Do not rely on at-will employment alone unless you can wait two years.

Time. The Act sets no maximum duration, and section 7 lists time restrictions as a factor. Choose the shortest period that protects the documented interest, and be ready to justify any longer one.

Geography. Tie the territory to where the employee actually worked. A formula such as "the counties in which Employee provided services during the final twelve months of employment" tracks the facts better than a blanket "State of Illinois" for a regional role.

Activity scope. Restrict what the employee actually did, not everything the employer does. Reference the specific product line, customer type and function.

Legitimate business interest. Name the interest the covenant protects, for example customer relationships in a defined book, access to a defined data set, or specialized training in a documented program, and tie the restraint to it. Section 7 lists the factors a court may weigh.

Reformation clause. Include one. Section 35 lists whether the parties included a clause authorizing modification among the factors a court may consider.

Choice of law and forum. The Act has no choice-of-law section. If you are tempted to pick another state's law or forum for an Illinois-based employee, take advice on how a court would treat it before relying on it.

A hypothetical to make this concrete. A Chicago fintech hires a senior compliance officer at $185,000 base plus $40,000 in restricted units. The first-instinct draft is twenty-four months, nationwide, covering "any competing financial services business." A tighter draft uses twelve months, limits the territory to the counties where the officer worked with regulators and customers, and limits the scope to "compliance functions in the consumer lending vertical for U.S. state-licensed lenders." The employer delivers the covenant 16 days before signing, includes the advice to consult counsel in the covenant email, and books the equity grant on day one. The second draft is easier to defend under sections 7 and 15 because it follows the statutory steps and ties the restraint to a stated interest. Neither is guaranteed to survive a challenge.

Multi-state employer strategy

A multi-state employer with a uniform national covenant hires an Illinois employee, or moves an employee into Illinois. Whether a covenant signed in another state continues to apply is a conflict-of-laws question that we did not research, and the answer depends on the facts and the other state's law. A cautious approach is to issue a new covenant when an employee moves into Illinois, with the section 20 advice and 14 days and fresh consideration. That is a drafting choice, not a requirement we found in the statute.

One structure that helps is a base national covenant with state-specific riders. The Illinois rider would apply the earnings floors, the section 20 steps, adequate consideration under section 5 and the section 7 and 15 reasonableness requirements.

For the other state regimes, see our guides to California, Texas, Florida and Massachusetts.

FAQ

Are non-competes enforceable in Illinois in 2026? Yes, against the right employee and only with the right process. A non-compete is void if the employee's expected earnings do not exceed $75,000 a year, if the employer skipped the written advice to consult an attorney or the 14-day review period, or if it lacks adequate consideration. A covenant that clears those steps must still be no greater than needed to protect a legitimate business interest and meet the rest of section 15.

What is the Illinois Freedom to Work Act? It is the state statute (820 ILCS 90/) on non-compete and non-solicit covenants. The 2017 version protected only low-wage workers. Public Act 102-358, effective January 1, 2022, added the $75,000 non-compete floor, the $45,000 non-solicit floor, the 14-day and advice-of-counsel requirements, fee-shifting for prevailing employees, Attorney General enforcement, and the reformation and legitimate-business-interest sections.

What is the income threshold for a non-compete in Illinois? The employee's actual or expected annualized earnings must exceed $75,000 for a non-compete and $45,000 for a non-solicit in 2026. "Earnings" is W-2 wages, tips and other compensation plus elective deferrals, not base salary alone. The floors rise to $80,000 and $47,500 on January 1, 2027, and continue stepping up through 2037.

How long can a non-compete last in Illinois? The Act sets no fixed maximum. Duration is one of the factors a court weighs under section 7, and the covenant must be no greater than needed to protect a legitimate business interest (section 15).

Can an employer use a Delaware choice-of-law clause to avoid the Illinois rules? The Act has no choice-of-law section, and we did not research how Illinois courts treat these clauses for Illinois-based employees. Take advice before relying on one.

What happens if an Illinois non-compete is unenforceable? A court can hold the covenant void or, in its discretion, reform or sever it under section 35, though the Act says extensive judicial reformation may be against public policy. If the employee prevails on the employer's claim to enforce, the employee recovers costs and reasonable attorney's fees under section 25, and the Attorney General can pursue civil penalties for a pattern and practice of violations under section 30.

Does the Fifield two-year rule still apply? It is reflected in the statute. Fifield v. Premier Dealer Services, 2013 IL App (1st) 120327, held that at least two years of continued employment is needed for adequate consideration in support of a restrictive covenant. Section 5 now defines adequate consideration as two years of employment after signing or other consideration adequate to support the agreement.

Did the FTC ban end non-competes nationwide? No. The FTC rule was set aside in Ryan, LLC v. FTC, 746 F. Supp. 3d 369 (N.D. Tex. 2024), before its September 4, 2024 effective date and never took effect. The FTC dropped its appeals on September 5, 2025 and removed the rule from the CFR effective February 12, 2026. Illinois non-compete questions are decided under 820 ILCS 90/ and Illinois case law.

Related state guides

• Pillar: non-compete enforceability by state
• Cross-cutting: choice-of-law clauses, state by state

For the US statutes, regulations and court rules these laws sit in, see the US primary law API.

Arshita Anand

Co-Founder & CEO · Attorney

Arshita leads product and strategy at Vaquill AI, the US primary law data API. As an attorney, she decides which law we carry, how each section is sourced and cited, and what legal AI and compliance teams need from the data.