HB4040 - Illinois Covenants Not to Compete Act

• Creates the Illinois Covenants Not to Compete Act establishing criteria for enforceability of non-compete agreements, applicable only to key employees or key independent contractors.

• Requires promisees to provide written notice at least 2 weeks before employment begins that a covenant is required, or enter the agreement upon material promotion, advancement, or bonus/compensation increase.

• Establishes rebuttable presumptions that covenants exceeding one year duration, geographic areas beyond where services were performed in the prior year, or scope beyond work performed are not reasonable.

• Allows courts to modify overly broad covenants and prevents damages awards for breaches occurring before modification; grants prevailing promisors attorney's fees and costs if they file for declaratory judgment.

• Excludes from this Act agreements regarding employee/vendor/customer solicitation, confidentiality agreements, agreements between entities and their owners, and forfeiture of incentive compensation provisions.

• Takes effect January 1, 2010.