Restrictive Covenants Update – Illinois Moves Forward as District of Columbia Slows | Benesch

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Benesch previously briefed clients on significant changes to Illinois restrictive covenant law made by the Illinois legislature in the dying moments of its last legislative session. These changes include, among other things, the creation of a law that a) establishes pay thresholds for the application of non-competition and non-solicitation agreements and b) requires employers to i) provide the employee “adequate compensation” in return for their acceptance of the restrictive covenant (s), ii) notify the potential hiring, in writing, to consult a lawyer before signing a restrictive covenant agreement, and iii) grant the new employee 14 days to consider signing the restrictive covenant agreement. (Please click here for our full analysis of Illinois’ new restrictive covenant law and the steps your business can take to ensure compliance with the law). Unsurprisingly, Illinois Governor JB Pritzker enacted the restrictive covenant law on August 13, and we now know the law will come into effect on January 1, 2022.

As Illinois moves forward with its restrictive covenant law, the District of Columbia, on the other hand, has apparently pushed back / delayed enforcement of the non-compete law that Mayor Muriel Bowser signed on the 11th. January 2021. District non-competition The law, which was originally slated to become law this fall, essentially prohibits an employer from requiring or requesting that an employee who works in the district, or a potential employee whose employer is ‘reasonably expected to work in the district, signs an agreement with a non-competition. In order to ensure that employers notify their employees of the unenforceability of non-competition in the district, the law requires the employer to provide the following notice to its employees in the district or to those who are likely to provide services in the district. district:

“No employer operating in the District of Columbia may request or require an employee working in the District of Columbia to accept a non-compete policy or agreement, in accordance with the prohibition in the 2020 Act. ‘amendment of non-competition agreements’

Notably, the district law does not apply to non-solicitation agreements / provisions and exempts charitable, religious and non-profit workers, doctors earning over $ 250,000 per year, and (interestingly) baby- occasional sitters. The law also prohibits employers from prohibiting employees from engaging in competitive activities while in employment. In other words, the district statute allows an employee to work for a competitor, or to start and operate a competing business, while also working for the employer. Apparently, some district council members have now taken a closer look at the statute and are raising questions about it. Some board members also suggested revisions. Among the most important potential suggestions / revisions is the language that allows employees to engage in competitive activities with their employer during their employment. Another proposed amendment / revision would further clarify that the law does not apply to non-solicitation agreements or confidentiality agreements that protect trade secret information. Due to questions now raised by several board members, the implementation of the statute is now postponed to at least April 1, 2022. We will continue to monitor all proposed changes to the statute as well as the effective date of the statute. .


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