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HB 3213

EMPLOYMENT-PROHIBIT COVENANTS

104th Regular Session Introduced by Laura Faver Dias and 5 co-sponsors

Starting Jan 1, 2026, employers generally may not enter into covenants not to compete or not to solicit with employees in Illinois.

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Bill Summary · HB 3213

Summary — HB 3213 (Illinois Freedom to Work Act amendments)

Status: Introduced Feb 24, 2025; House Floor Amendment No. 1 filed Apr 8, 2025; re‑referred to Rules Committee (Apr 11, 2025). Effective date (if enacted): January 1, 2026.

Main purpose

HB 3213 substantially restricts employers’ use of post‑employment restraints by amending the Illinois Freedom to Work Act. It generally bans new covenants not to compete and covenants not to solicit effective January 1, 2026, while modifying definitions and removing certain employer‑friendly provisions in current law.

Key provisions

  • General ban (effective Jan 1, 2026): On and after January 1, 2026, employers generally may not enter into covenants not to compete or covenants not to solicit with employees. Covenants entered on or after that date are void and unenforceable.
  • Pre‑2026 thresholds preserved & phased increases: Before Jan 1, 2026, the bill continues existing earning thresholds that limit which employees may be asked to sign covenants:
    • Noncompetes: allowed only if the employee’s actual or expected annualized earnings exceed $75,000 (with scheduled increases to $80,000 on 1/1/2027, $85,000 on 1/1/2032, and $90,000 on 1/1/2037).
    • Non‑solicit agreements: allowed only if earnings exceed $45,000 (with scheduled increases to $47,500 on 1/1/2027, $50,000 on 1/1/2032, and $52,500 on 1/1/2037).
  • Amendment carve‑out for certain health care workers: House Amendment No. 1 creates a limited exception allowing covenants for health care workers who do not work under a contract of employment with a health care facility, subject to the earnings thresholds noted above (the amendment text retains the phased thresholds for such exceptions).
  • Definitions revised and expanded: The bill refines terms such as “covenant not to compete,” “covenant not to solicit,” “earnings,” and “adequate consideration.” It adds or clarifies definitions for “health care worker,” “health care facility,” “option period,” “performing arts,” “athletic competition,” and “post‑employment.”
  • Carved‑out agreements: The bill clarifies that certain agreements are not treated as noncompetes, including confidentiality/trade secret protections, sale of business goodwill, invention‑assignment clauses, notice‑of‑termination agreements, and agreements limited to current employment (including option periods).
  • Repeals/changes: The introduced language removes provisions regarding employers’ “legitimate business interest,” employee notice requirements about covenants, and rules allowing reformation of overly broad covenants.

Who is affected

  • Employees statewide: Most employees will be protected from new noncompete and non‑solicit clauses after Jan 1, 2026. Before that date, protections continue to be tied to the earnings thresholds.
  • Employers: Employers will be restricted from imposing new covenants generally as of Jan 1, 2026, and may need to review employment agreements, particularly for higher‑paid workers and certain health care workers who may remain subject to limited exceptions.
  • Specific industries: Performing arts, athletic competition, health care, and business sale transactions are explicitly addressed by revised definitions and exclusions.

Procedural/timeline notes

  • Effective date specified as January 1, 2026.
  • Legislative activity: Introduced by Rep. Anna Moeller; several co‑sponsors added. Cleared Labor & Commerce Committee with a “Do Pass / Short Debate” recommendation (Mar 19, 2025). House Floor Amendment No. 1 filed Apr 8, 2025, and referred back to Rules Committee Apr 11, 2025.

Potential impacts and considerations

  • Increases worker mobility and ability to change jobs without risk of enforcement for post‑Jan‑1‑2026 covenants.
  • Employers may lose a commonly used tool to protect client relationships or limit competition; they may rely more on confidentiality/trade secret and nonsolicitation protections that remain valid (subject to the bill’s carve‑outs).
  • Legal disputes may arise over enforcement of covenants signed before Jan 1, 2026, or over whether particular agreements qualify for the health care worker exception.
  • Industries that commonly use option periods or short‑term exclusivity (performing arts, athletics, health care) will need to reassess contract language in light of clarified definitions and exclusions.

Compiled from official sources — confirm details with the bill’s official record.

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