The FTC’S Ban on Non-Competes is Dead—But Illinois rules still bite

Employers and Employment Counsel Should Take Note

Short take: After a Texas federal court set aside the FTC’s non-compete rule, and the FTC decided not to appeal, the nationwide ban on covenants not to compete in employment situations is arguably dead. 

But in Illinois, the Illinois Freedom to Work Act (IFWA), 820 ILCS 90, still governs—and it has teeth. The IFWA can be found here: (Illinois General Assembly)

What’s the federal status?

In Ryan, LLC v. FTC, 764 F. Supp. 3d 369, 374 (N.D. Tex. 2024), the court set aside the FTC’s Non-Compete Rule, holding the agency lacked statutory authority and that the rule was arbitrary and capricious. Thus, the rule “shall not be enforced or otherwise take effect.” 

Illinois thresholds (whom you can bind)

• Non-competes: prohibited unless the worker earns >$75,000 annually; rises to $80k (2027), $85k (2032), $90k (2037). 820 ILCS 90/10(a).
• Non-solicits (customers/employees): prohibited unless the worker earns >$45,000; rises to $47.5k (2027), $50k (2032), $52.5k (2037). 820 ILCS 90/10(b).

Illinois also bars restrictive covenants for most construction employees (820 ILCS 90/10(e)) and restricts enforcement following certain pandemic-related layoffs unless paid during the restriction. 820 ILCS 90/10(c).

Mandatory notice & “adequate consideration”

Two gating requirements make or break enforceability:

1. 14-day review + counsel warning. Employers must give the covenant at least 14 days before agreement is required, or give the employee at least 14 days to review the covenant, and advise in writing to consult an attorney—otherwise the covenant is illegal and void. 820 ILCS 90/20
2. Adequate consideration. Defined by statute as (i) at least two years of continued employment after signing; or (ii) other adequate professional or financial benefits (which can include employment plus extras or stand-alone benefits). 820 ILCS 90/15; 820 ILCS 90/5.

Fee-shifting & enforcement risk

If the employer sues to enforce and the employee prevails, the employee shall recover all costs and reasonable attorneys’ fees. 820 ILCS 90/25. The Attorney General may also bring actions for patterns or practices. 820 ILCS 90/30(a). Draft with the expectation that a weak covenant can be costly.

Special carve-outs you’ll miss at your peril

1. • Mental-health providers for veterans/first responders. Any non-compete or non-solicit entered after Jan. 1, 2025 is not enforceable if enforcing it would likely raise the cost or difficulty of veterans or first responders obtaining mental-health services. 820 ILCS 90/10 (f). “Licensed mental health professional” is defined (psychologists, LCSWs, MFTs, certain nurses, professional counselors).
   • Lawyers. Rule 5.6 of the Illinois Rules of Professional Conduct prohibits agreements that restrict an attorney’s right to practice after leaving a firm (except retirement-benefit arrangements) and bars settlement terms that restrict future practice. Don’t use post-employment non-competes for lawyers. Ill. Sup. Ct. R. 5.6. (Supreme Court Rules).
   • Physicians (ethics guidance). While Illinois law doesn’t impose a blanket statutory ban on physician non-competes, the AMA Code of Medical Ethics (Op. 11.2.3.1) cautions against covenants that unreasonably restrict practice or fail to accommodate patient choice—use narrow protections that prioritize continuity of care. (AMA Code).

Practical drafting tips (what still works in Illinois)

1. • Start with the statute’s checklist. Confirm the earnings threshold, 14-day review + counsel notice, adequate consideration, and that the covenant is ancillary to a valid employment relationship and no greater than necessary to protect a legitimate business interest (customer relationships, confidential info, etc.). 
   • Prefer targeted non-solicit + confidentiality over broad non-compete. Courts—and the IFWA’s structure—favor narrower tools tied to actual competitive risk. Check the non-solicit threshold before using.
   • Tailor scope precisely. Define customers by objective criteria (e.g., accounts the employee serviced in the last 12–24 months); limit geography to actual territories; cap duration to what your sales cycle or information half-life requires. The statute’s “rule of reason” framework and “legitimate business interest” totality test demand specificity. 
   • Document consideration. If you’re not relying on two years of post-signing employment, spell out the non-illusory benefits (e.g., sign-on bonus, promotion, equity grant, training of quantifiable value) in the agreement and onboarding file. 
   • Build in blue-pencil/severability—but draft to survive without it. Courts may narrow overbroad terms, but you should not assume the court will that in every case, as the IFWA does not allow “extensive judicial reformation” of restrictive covenants.
   • Health-care diligence. For mental-health roles, screen whether the employee will serve veterans/first responders; if yes, rely on confidentiality, non-solicit, and non-disclosure/trade-secret tools rather than a non-compete.
   • Litigation posture. Because of fee-shifting, reserve lawsuits for clear breaches of well-tailored covenants tied to genuine competitive harm.

Bottom line

Federal preemption never arrived: Ryan v. FTC ended the nationwide rule, so Illinois law controls. If you meet the thresholds, satisfy notice and consideration, and keep restraints narrow and interest-driven, your agreements can still be enforceable—while overreach risks automatic invalidation and fee exposure. Start every restrictive-covenant update by reviewing the IFWA and drafting backwards from the statute. 

Storm & Piscopo, P.C.