Illinois Non-Compete Ban Takes Effect January 2026
Beginning January 1, 2026, an Illinois non-compete ban will take effect. This marks another significant step forward for employee rights and workplace fairness. The change expands existing restrictions on non-compete and non-solicitation agreements, reinforcing the state’s commitment to protecting workers’ freedom to pursue new opportunities.
Originally enacted to curb unfair employment practices, the Illinois Freedom to Work Act is being strengthened through this amendment, which dramatically raises the earnings threshold for employees who can be bound by restrictive covenants. For most Illinois workers, that means non-compete and non-solicitation agreements will soon be unenforceable unless they apply to high-level employees earning more than $300,000 per year.
This development underscores Illinois’ continued focus on ensuring fair competition, open employment mobility, and accountability in workplace practices.
Understanding the Illinois Freedom to Work Act
The Illinois Freedom to Work Act (820 ILCS 90/) first took effect in 2017 and was substantially amended in 2022 to regulate the use of non-compete and non-solicitation agreements. Often presented at the start of employment or during job transitions, these agreements restrict an employee’s ability to work for competitors, solicit former clients, or recruit co-workers after leaving a company.
Under the Act, a “covenant not to compete” generally means any agreement that prevents an employee from performing similar work for another employer or within a specified area for a period of time. A “covenant not to solicit” prohibits an employee from approaching clients, customers, or other employees of their former employer for competitive purposes.
To be enforceable, a non-compete or non-solicit agreement must meet several conditions under Illinois law:
The employee must receive adequate consideration (such as at least two years of continued employment or other financial or professional benefits).
The restriction must be ancillary to a valid employment relationship and protect a legitimate business interest.
The agreement must be reasonable in scope, duration, and geographical scope, and must not impose undue hardship on the employee, nor be injurious to the public.
The employee must be given advance notice and an opportunity to consult an attorney before signing.
Additionally, as of 2022, employers could only impose non-compete agreements on employees earning more than $75,000 per year and non-solicitation agreements on employees earning more than $45,000 per year, with scheduled increases every five years. However, the Illinois General Assembly has now gone a step further—raising the bar substantially starting in 2026.
2026 Amendment Enacts Illinois Non-Compete Ban
Beginning January 1, 2026, the Illinois Freedom to Work Act will be amended again to tighten restrictions on restrictive covenants significantly. Under House Bill 1642, both the non-compete and non-solicitation earnings thresholds will jump to $300,000 per year.
This means that starting in 2026:
Employers cannot enter into or enforce non-compete agreements with employees who earn less than $300,000 annually.
Employers cannot enter into or enforce non-solicitation agreements with employees who earn less than $300,000 annually.
Any agreements made in violation of these limits will be void and unenforceable.
The amendment preserves the Act’s prior protections for workers in specific industries, such as construction and public employment. It retains the special restrictions for those laid off or furloughed under pandemic-like conditions. However, the 2026 changes represent a dramatic tightening of Illinois’ approach, effectively extending what many are calling an Illinois non-compete ban for nearly all employees below executive or ownership levels.
By increasing the income threshold fourfold from $75,000 to $300,000, the legislature signaled a clear intent to limit restrictive covenants to only the most highly compensated individuals whose positions involve access to truly sensitive trade secrets, proprietary information, or strategic client relationships.
Why This Matters for Illinois Employers and Employees
The 2026 amendment carries sweeping implications for both employers and employees. For most Illinois workers, the update will functionally eliminate non-compete and non-solicitation clauses from standard employment contracts. Employees will gain significantly greater mobility and bargaining power, particularly in competitive industries such as technology, healthcare, and finance, where non-compete agreements have historically restricted lateral movement.
For employers, however, this change requires immediate attention. Businesses must review existing employment contracts, evaluate compensation structures, and reconsider how they protect confidential information. While true trade secrets remain protected under the Illinois Trade Secrets Act and confidentiality agreements remain lawful, employers will need to rely more heavily on narrowly tailored confidentiality, invention assignment, and client non-solicitation provisions that meet statutory requirements.
From a policy standpoint, this move reflects a broader national trend. States like California, Minnesota, and Oklahoma have already banned non-compete agreements entirely. Furthermore, the Federal Trade Commission (FTC) has previously issued a nationwide rule that would prohibit most non-compete agreements across the country (though this was recently reversed). Illinois’ 2026 amendment aligns the state more closely with this evolving landscape and continues its focus on fostering fair competition, wage growth, and open employment markets.
Preparing for the Illinois Non-Compete Ban
The upcoming Illinois non-compete ban taking effect on January 1, 2026, marks a pivotal moment in the state’s employment law. By drastically raising the income threshold to $300,000, the amendment will make most non-compete and non-solicitation agreements unenforceable, empowering workers and demanding proactive compliance from employers.
Employees should take this time to review any existing employment contracts and consult an attorney if they believe a non-compete or non-solicitation clause currently binds them. Understanding whether those restrictions remain valid or will soon become void can make a significant difference in future career opportunities.
If you have questions about your employment agreement or your rights under the Illinois Freedom to Work Act, contact the Chicago-based employment law firm of O’Malley & Madden, P.C.
