Business owners often ask me for the two-minute answer to a question that has gotten genuinely confusing over the last two years: can I still use a non-compete in Illinois? The headlines certainly have not helped. First a federal agency announced it was banning them nationwide. Then a court threw that out. Then an Illinois bill proposed wiping them off the books entirely as of this past January. With all of that noise, a reasonable person could be forgiven for assuming non-competes are dead. They are not. As of 2026, a properly drafted non-compete is still enforceable in Illinois — and the rules for getting it right have not actually changed much. Here is what survived, what did not, and what I tell clients to do about it.
Start with the federal piece, because it generated the most alarm. In 2024 the Federal Trade Commission issued a rule that would have voided most non-compete agreements across the country. It never took effect. A federal court in Texas set the rule aside nationwide in Ryan, LLC v. FTC, holding that the agency lacked authority to issue it, and the FTC ultimately stood down rather than fight that battle to the end. So there is no federal ban on non-competes in 2026. The Commission can still scrutinize individual agreements it considers abusive under its general authority, but the sweeping prohibition employers feared is gone.
Now the Illinois piece. There was a real effort in Springfield to ban restrictive covenants outright. House Bill 3213, introduced in 2025, would have made every non-compete and non-solicitation agreement entered into on or after January 1, 2026, illegal and void — no income exceptions, no legitimate-business-interest defense, and a bar on enforcing such agreements even if signed in another state. That bill did not become law. The date came and went, and Illinois employers woke up on January 1 with the same framework they had on December 31.
That framework is the Illinois Freedom to Work Act, 820 ILCS 90. It does not ban non-competes. It puts guardrails on them. The two that trip people up most often are the income thresholds and the process requirements. Under the Act, a non-compete is only enforceable against an employee whose actual or expected annualized earnings exceed $75,000, and a non-solicitation covenant only against an employee earning more than $45,000. Those numbers are not frozen — they step up over time, with the non-compete threshold scheduled to reach $80,000 and the non-solicit threshold $47,500 in 2027, and further increases after that. If you hand a standard non-compete to a worker below the line, it is void no matter how reasonable the terms look.
The process requirements are just as unforgiving. This is where I see good companies make avoidable mistakes. The Act requires that you give the employee at least fourteen calendar days to review the agreement before signing, and that you advise them in writing of their right to consult counsel. You also need adequate consideration — Illinois courts have generally looked for at least two years of continued employment after signing, or some other real benefit, so a covenant supported by nothing but “you get to keep your job” is on thin ice. Miss the fourteen-day window or skip the written advisory, and you can lose an otherwise enforceable agreement on a technicality.
Clear those statutory gates and you still have to satisfy Illinois common law, which has not moved. The governing standard remains the one the Illinois Supreme Court laid out in Reliable Fire Equipment Co. v. Arredondo, 2011 IL 111871: a restrictive covenant is enforceable only if it is reasonable, judged on the totality of the circumstances. Reasonable means the restraint is no greater than necessary to protect a legitimate business interest, does not impose undue hardship on the employee, and is not injurious to the public. Legitimate business interests in Illinois typically mean trade secrets and confidential information, near-permanent customer relationships, and specialized training you paid to provide. A covenant that exists just to keep a competitor from hiring a good employee, with no protectable interest behind it, is the kind courts strike down.
So What Does A Business Owner Do?
- Pull your existing agreements and read them with fresh eyes. Many were drafted years ago, predate the current statutory thresholds and the fourteen-day rule, and are far broader than any judge would enforce today. An unenforceable non-compete is worse than none, because it gives you false confidence and hands the other side an easy win.
- Match the tool to the risk. A non-compete is the heaviest instrument in the drawer, and it is not always the right one. For most roles, a tightly drafted confidentiality agreement, a customer non-solicitation provision, an invention-assignment clause, and solid internal controls protect what actually needs protecting with far less litigation risk. Save the non-compete for the people whose departure genuinely threatens a protectable interest.
- Tailor the scope. Tie the duration, the geography, and the definition of “competition” to the real business interest you are protecting. Courts reward restraint and punish overreach. A two-year, narrowly defined covenant aimed at the customers an employee actually served will fare far better than a five-year, industry-wide ban.
- Follow the process every time. Build the fourteen-day notice and the right-to-counsel advisory into your onboarding, document them, and confirm the consideration. The substance and the procedure both have to be right.
Non-competes remain a real and useful tool here for the employers who use them deliberately, draft them carefully, and reserve them for the situations that warrant them. The ones who treat them as boilerplate are the ones who end up explaining to a judge why they screwed up their inadequate trade secret protection.
David Seidman is the principal and founder of Seidman Law Group, LLC. He serves as outside general counsel for companies, which requires him to consider a diverse range of corporate, dispute resolution and avoidance, contract drafting and negotiation, real estate, and other issues. He can be reached at david@seidmanlawgroup.com or 312-399-7390.
This blog post is not legal advice. Please consult an experienced attorney to assist with your legal issues.
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