Toolkit Legislation for Employees Dealing with Non-Compete/Non-Solicitation Issues – Part 3

TOOLKIT LEGISLATION FOR EMPLOYEES DEALING WITH NON-COMPETE/NON-SOLICITATION ISSUES

Part 3

 

Provided below are several items of passed Illinois legislation that attorneys and non-attorneys should be aware of toward being aware of the rights of employees and protecting the rights of those employees  –  and toward having certain strategies/ additional strategies to protect those rights.

 

The Illinois Freedom to Work Act, 820 ILCS 90/1 to 90/10.

In 2016 Illinois passed a new law that protects “low wage employees” from the very bad trend of Employers over-using non-compete agreements to prevent such employees from going out and getting new employment in their same occupational field  –  which restrictive covenants frequently had the actual purpose/ effect of keeping wages down because such employees were less able to leave their employment and go out in the marketplace to obtain new employment utilizing their most marketable asset (the heard-earned skills that they had acquired and honed through their employment and otherwise).

The Illinois Freedom to Work Act applies to any non-compete agreement entered into on or after January 1, 2017, and this Act prohibits private Employers of any size from entering into non-competition agreements with “low wage employees” (which under the Act are defined as employees earning less than $13.00 per hour, or earning applicable federal, state or local hourly minimum wage, whichever is greater), and declares such agreements to be “illegal and void”.

The enactment of this law was influenced by then-recent news  –  and outrage  –  of the Illinois-based franchise, Jimmy John’s, having required their sandwich making staff to sign non-compete agreements that provided that such employees were barred from working for any other sandwich shop within two miles  –  which news also spurred state attorney generals to take action against Jimmy John’s.

Notably, while the Act restricts non-compete clauses from being used against “low wage employees” it is less clear whether the Act also applies to non-solicitation clauses (as discussed above non-solicitation clauses pertain to restricting employees from the solicitation of other employees and/or customers of the Employer as opposed to non-compete clauses that pertain to an employee being restricted from working for a competing Employer).

 

The Illinois Workplace Transparency ActPublic Act 101-0221 (2019).

On January 1, 2020 the Illinois Workplace Transparency Act (the “Act”) became effective.  This Act (which is an amendment to the Illinois Human Rights Act) provides some major protections for Employees  –  and happily provides pitfalls for unwary Employers who try to squeeze Employees (as they have been doing for many years)  –  in the areas of:

  • Employment agreements, severance agreements, and settlement agreements containing non-disclosure and non-disparagement clauses;
  • Sexual harassment training;
  • Reporting settlements and adverse judgments to the Illinois Department of Human Rights (“IDHR”).

As discussed in greater detail in an accompanying blog that I have previously prepared (also found on this website), in many respects the Act is a game-changer that now gives Employees certain meaningful protections and leverage that they did not previously have.

In the preamble to the Act (Section 1-5) it provides as follows:

  • “This State has a compelling and substantial interest in securing individuals’ freedom from unlawful discrimination and harassment in the workplace.  This State also recognizes the right of parties to freely contract over the terms, privileges and conditions of employment as they so choose.  The purpose of this Act is to ensure that all parties to a contract for the performance of services understand and agree to the mutual promises and consideration therein, and to protect the interest of this State in ensuring all workplaces are free of unlawful discrimination and harassment.”

Notably, and importantly, the Act concerns itself not with general harassment, but rather with “unlawful discrimination and harassment”, with there relatedly being a definition in the Act for unlawful employment practices to include any form of unlawful discrimination, harassment, or retaliation under the Illinois Human Rights Act or “any related State or federal rule or law” enforced by the IDHR or the EEOC.

In my accompanying blog I in greater detail address the following:

  • Severance agreements and settlement agreements containing non-disclosure and non-disparagement clauses have new requirements in order for those clauses to be enforceable:

1.  21 days to consider/ 7 days to revoke

2.  Employers may not “unilaterally” include a clause in a severance or settlement agreement that prohibits an individual from “making truthful statements or disclosures regarding unlawful employment practices

3.  Employees shall be entitled to reasonable attorney’s fees and costs for violations of the Act

  • There are new requirements for employment agreements containing unilateral Confidentiality Clauses (NDA’s)

 

There are also certain statutes/regulations in Illinois addressing the issue of restrictive covenants that are specific to particular industries/ professions, as follows:

1.  For lawyers there are the Illinois Rules of Professional Conduct, with Rule 5.6 addressing restrictive covenants involving lawyers

2.  For Broadcasters there is: 820 Ill. Comp. Stat. 17/10(a), with Section 10 of the Illinois Broadcast Industry Free Market Act addressing non-compete agreements for broadcasting industry employees

3.  For State Government Contractors there is 30 Ill. Comp. Stat. 500/50-25 (which is the Illinois Procurement Code), which addresses non-compete issues in which parties would be barred from bidding with state agencies

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