Illinois NDA Law: Protecting Innovation in the Prairie State

Illinois is a major hub for technology, manufacturing, and financial services, and its legal framework for NDAs is designed to balance the protection of business trade secrets with the rights of employees to mobile careers. If you are doing business in Chicago or anywhere in Illinois, you must navigate the Illinois Trade Secrets Act (ITSA) and the Illinois Freedom to Work Act.

The Illinois Freedom to Work Act: Strict New Limits on Non-Competes

Effective January 1, 2022, Illinois significantly restricted the use of non-compete and non-solicitation agreements. Under this law, non-compete agreements are prohibited for employees earning less than $75,000 per year, and non-solicitation agreements are prohibited for those earning less than $45,000 per year. These thresholds will increase every five years through 2037. Any NDA that includes "hidden" non-compete language for low-wage workers is void in Illinois.

The "Adequate Consideration" Requirement (The Fifield Rule)

One of the most unique aspects of Illinois law is the requirement for "adequate consideration." Illinois courts generally require that an employee remain employed for at least two years after signing a restrictive covenant for it to be enforceable, unless the employer provided other significant consideration (like a large signing bonus or specialized training). This is known as the "Fifield Rule," and it makes Illinois one of the more challenging states for enforcing newly-signed NDAs against existing employees.

Trade Secret Protection Under ITSA

The ITSA provides strong protection for information that: (1) is sufficiently secret to derive economic value from not being generally known, and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Illinois courts have been particularly clear that customer lists can be protected trade secrets if they were developed through significant time and expense and are not easily duplicable from public sources.

10-Year Statute of Limitations

Illinois has one of the longest statutes of limitations in the country for written contracts: 10 years. This provides long-term protection for businesses, though trade secret misappropriation claims under ITSA must still be brought within 5 years of discovery.