USA – ILLINOIS Trends and Developments Contributed by: Matthew Prewitt, Michael Molzberger, Trevor Jorgensen and James Cromley, ArentFox Schiff LLP
ee is allowed to accept competitive employment in a highly sensitive role that requires the employee to work directly with the same types of matters they oversaw for the former employer. The seminal decision on inevitable disclosure is PepsiCo, Inc. v Redmond , 54 F.3d 1262 (7th Cir. 1995), which established that misappropriation can be enjoined prospectively by the court – even in the absence of evidence of the employee’s actual use or copying of the trade secrets – where the circumstanc - es make future disclosure effectively unavoidable. In PepsiCo , a senior executive with knowledge of stra - tegic distribution plans left to join Quaker Oats in a directly competitive role. The Seventh Circuit affirmed an injunction issued by the district court barring him from continuing employment in the competitive role for Quaker, holding that a former employer may obtain relief by showing an employee’s new position will “inevitably lead” the employee to use the former employer’s trade secrets. The ITSA expressly permits relief for “threatened” mis - appropriation (765 ILCS 1065/3 (a)), and Illinois courts continue to apply the doctrine, although cautiously and only in unusual cases where very specific circumstanc - es show a high risk of trade secret misappropriation. PepsiCo , 54 F.3d at 1269–71; see Strata Mktg., Inc. v Murphy , 317 Ill. App. 3d 1054 (1st Dist. 2000). In Dan- iels Midland Co. v Sinele , 2019 IL App (4th) 180714, the court held the doctrine was inapplicable where the employee’s new position was with a customer rather than a competitor, distinguishing between “join[ing] the opposing team” and working for a customer. Statutory Limitations on Restrictive Covenants Under the Illinois Freedom to Work Act and Illinois Workplace Transparency Act As noted above, non-compete covenants, non-solic - itation covenants, and confidentiality covenants are accepted and important tools for trade secret protec - tion under Illinois law, but Illinois does impose safe - guards against oppressive employee covenants. The Illinois Freedom to Work Act (IFWA), effective 1 January 2022, sets bright-line compensation thresh - olds limiting who can be bound by non-competition and non-solicitation agreements and codifies core
enforceability requirements. The Illinois Workplace Transparency Act (IWTA) separately regulates confi - dentiality and non-disparagement covenants. Non-competition and non-solicitation agreements under the IFWA The IFWA prohibits non-competition covenants for employees earning less than USD75,000 per year and non-solicitation agreements for employees earning less than USD47,500 per year (with periodic adjust - ment for inflation). 820 ILCS 90/1, et seq. It also voids non-competition covenants for workers covered by a collective bargaining agreement under the Illinois Public Labor Relations Act or Illinois Educational Labor Relations Act and voids non-competition cov - enants and non-solicitation covenants for (i) workers “employed in construction” and (ii) mental health pro - fessionals providing “mental health services to vet - erans and first responders”, with certain limitations. 820 ILCS 90/10. The IFWA also requires adequate consideration in the form of two years of continued employment, addition - al financial or professional benefits, or a combination; specific procedural safeguards; and that the covenant is reasonable in scope as defined by judge-made Illinois common law. The IFWA provides one-way fee-shifting in favour of the employee if the employee prevails in litigation. 820 ILCS 90/25. A recent Northern District of Illinois decision awarded fees where the employer vol - untarily dismissed a non-solicitation claim after a motion to dismiss, holding the defendants had “prevailed” for IFWA purposes. Mazzetta Co., LLC v Simpson , No 1:24 cv-2488, 2025 WL 777534 (N.D. Ill. Mar. 11, 2025). Illinois differs from many other states by expressly rejecting the majority rule that at-will employment is adequate consideration under the IFWA. Adequate consideration may take the form of (i) two years of continued employment after signing or (ii) additional professional or financial benefits conferred on the employee in exchange for agreeing to the covenant. 820 ILCS 90/5; see also MSR Tech. Grp., LLC v VistalT- ech, Inc. , No 24-CV-03203, 2025 WL 1744730, at *4 (N.D. Ill. Mar. 17, 2025). When an employee receives only their regular wages and does not remain employed for two years, courts find mere continued employment inadequate consideration. See Titan Sec. Servs., LLC
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