Independent Contractor Agreement With Non Compete Clause In Chicago
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The final rule bans most non-compete clauses between employers and their workers. The effective date of the final rule is September 4, 2024.
The employer's breach of the parties' employment relationship or unclean hands can serve as a defense to defeat a covenant not to compete or non-solicitation clause signed by the employee, even if that agreement is otherwise properly narrowly drafted and enforceable.
Illinois courts generally disfavor non-competes as a restraint of trade. However, Illinois courts enforce non-compete agreements if they are: ∎ Reasonable. ∎ Supported by adequate consideration.
Illinois, like most states, enforces covenants not to compete in employment agreements as long as they meet certain requirements.
(820 ILCS 90/10.) A non-compete agreement entered into on or after January 1, 2022, is void unless: The employee receives adequate consideration. The agreement is ancillary to a valid employment relationship.
Even workers labeled as “independent contractors”—who should have the freedom to work for multiple clients—are often required to sign non-competes that limit where they can work. Employers often present non-competes as a “take it or leave it” contract, forcing workers either to sign or forego employment.
If an independent contractor violates a non-compete agreement, the company that issued the non-compete contract may take legal action against them. They can file a lawsuit seeking damages, a court injunction prohibiting the worker from engaging in competitive activities, or both.
Typically, a noncompete agreement prohibits you from working for a competitor until a set period has passed, but it may additionally ban you from completing the following actions: Starting your own company in the same industry. Contacting former customers. Utilizing skills you learned on the job.
Several factors can void or limit the enforceability of a non-compete agreement, including overly broad restrictions, unreasonable time frames or geographical limits, lack of consideration (such as compensation or job opportunities provided in exchange for the agreement), and violation of public policy.
As previously reported (Dentons Alert), the US Federal Trade Commission (“FTC”) issued a regulation earlier this year that effectively bans most non-competes for employees and independent contractors (the “FTC Rule”). The effective date of the FTC Rule is September 4, 2024.