The Illinois Freedom to Work Act – Anticipated Amendments

Author: Jason Hirsh

Non-competes and non-solicits, so-called restrictive covenants, have been at the center of a nationwide discussion for many years. On the one hand, employee-leaning constituencies have advocated for substantial restrictions and/or outlawing restrictive covenants.  Employer groups, on the other hand, have argued that restrictive covenants are necessary to protect important business interests, such as mitigating the risk of unfair competition.  The debate has raged on for years now, and many states have enacted legislation regulating restrictive covenants.    

Illinois is now jumping back into the fray, with the General Assembly passing an amendment to The Illinois Freedom to Work Act (the “Amended Act”).  Should Governor Pritzker sign the Amended Act into law, which is expected, the Amended Act will usher in a new era of restrictive covenant regulation effective January 1, 2022. 

Employers should consider this anticipated change to Illinois law.  Below is a discussion of key points.

Prospective Application

The Amended Act addresses the use of non-competes and non-solicits, both of which are defined in the proposed legislation. Critically, both categories are limited to those “entered into after the effective date of this Amendatory Act of the 102nd General Assembly.” This means the Amended Act will apply prospectively and its application will be limited to employment agreements signed after January 1, 2022.

Salary Thresholds

Throughout the nation, there is a growing view that lower-paid employees should not be saddled with the burden of post-employment restrictive covenants.  The Amended Act joins this movement by prohibiting non-competes, initially, with respect to any employee not earning more than $75,000 and prohibiting non-solicits, initially, with respect to any employee not earning more than $45,000.  These thresholds will increase every five years until 2037:

(a) No employer shall enter into a covenant not to compete with any employee unless the employee’s actual or expected annualized rate of earnings exceeds $75,000 per year. This amount shall increase to $80,000 per year beginning on January 1, 2027, $85,000 per year beginning on January 1, 2032, and $90,000 per year beginning on January 1, 2037. A covenant not to compete entered into in violation of this subsection is void and unenforceable. No employer shall enter into a covenant not to compete with any low-wage employee of the employer.

(b) No employer shall enter into a covenant not to solicit with any employee unless the employee’s actual or expected annualized rate of earnings exceeds $45,000 per year. This amount shall increase to $47,500 per year beginning on January 1, 2027, $50,000 per year beginning on January 1, 2032, and $52,500 per year beginning on January 1, 2037. A covenant not to solicit entered into in violation of this subsection is void and unenforceable. A covenant not to compete entered into between an employer and a low-wage employee is illegal and void

Presumably, the Amended Act would be amended before or around 2037 to implement further adjustments to the compensation thresholds.

Defining Adequate Consideration

Illinois law has traditionally required “adequate consideration” to support enforcement of a non-compete or non-solicit covenant. Since Fifield v. Premier Dealer Services, Inc. was decided in 2013, there has been an active controversy over what actually constitutes “adequate consideration.”  In Fifield, the First District determined that in the absence of other consideration, continued employment was adequate consideration only if the employee was employed for two full years following execution of the agreement containing the restrictive covenant at issue. That ruling was adopted by other courts in Illinois.  But the federal courts largely rejected Fifield, believing that the Illinois Supreme Court would not, if provided an opportunity, adopt the Fifield rule.     

The Amended Act resolves this disagreement by codifying the Fifield rule: “‘[a]dequate consideration’ means (1) the employee worked for the employer for at least 2 years after the employee signed an agreement containing a covenant not to compete or a covenant not to solicit …”

The Amended Act does not, however, limit “adequate consideration” to continued employment, but encompasses other undefined professional or financial benefits – “‘[a]dequate consideration’ means … (2) the employer otherwise provided consideration adequate to support an agreement to not compete or to not solicit, which consideration can consist of a period of employment plus additional professional or financial benefits or merely professional or financial benefits adequate by themselves.” 

The contours of this other consideration are nebulous at best. Nevertheless, if past legal disputes are predictive, other benefits are likely to include cash payments, special training, etc.  What will no doubt be important is that the operative employment agreement is drafted to specifically describe other benefits as part of the employee’s consideration package so the employment agreement clearly reflects that the other benefits are given in return for the restrictive covenant.     

Advising Employees

Employees often sign an employment agreement in the days leading up to employment or on the employee’s first day of employment.  Employers beware: if the Amended Act is signed into law, employers must advise employees in writing to consult with an attorney before agreeing to a non-compete or non-solicit restrictive covenant and provide employees 14 days to review the covenant.  Absent compliance, the covenant is “illegal and void”: 

Ensuring employees are informed about their obligations. A covenant not to compete or a covenant not to solicit is illegal and void unless (1) the employer advises the employee in writing to consult with an attorney before entering into the covenant and (2) the employer provides the employee with a copy of the covenant at least 14 calendar days before the commencement of the employee’s employment or the employer provides the employee with at least 14 calendar days to review the covenant. An employer is in compliance with this Section even if the employee voluntarily elects to sign the covenant before the expiration of the 14-day period.

Employee Remedy

In the past, employers who pursued and lost lawsuits seeking to enforce restrictive covenants typically had no risk of paying the employee’s legal fees. Employers wisely did not draft employment agreements to provide an employee with such a right. The Amended Act changes the landscape, giving employees the statutory right to recover attorney’s fees if the employee “prevails” in a lawsuit seeking to enforce a non-compete or non-solicit: 

Sec. 25. Remedies. In addition to any remedies available under any agreement between an employer and an employee or under any other statute, in a civil action or arbitration filed by an employer (including, but not limited to, a complaint or counterclaim), if an employee prevails on a claim to enforce a covenant not to compete or a covenant not to solicit, the employee shall recover from the employer all costs and all reasonable attorney’s fees regarding such claim to enforce a covenant not to compete or a covenant not to solicit, and the court or arbitrator may award appropriate relief.

In the Amended Act, the Illinois General Assembly empowers the Attorney General to investigate and take action against employers that violate Amended Act:

Sec. 30. Attorney General enforcement. (a) Whenever the Attorney General has reasonable cause to believe that any person or entity is engaged in a pattern and practice prohibited by this Act, the Attorney General may initiate or intervene in a civil action in the name of the People of the State in any appropriate court to obtain appropriate relief.

This is a fairly significant change, requiring reconsideration of aggressive drafting and enforcement of non-competes and non-solicits. 

The Labor & Employment and Litigation Groups at Levenfeld Pearlstein will continue to monitor any developments on the amendments to the Illinois Freedom to Work Act. If you have any specific questions about the Act or its amendments, please do not hesitate to reach out.

This document is not intended to, nor shall it be considered legal advice. If you have any questions regarding your legal rights, you should address the specific matter with your attorney.

Masking Requirements in the Workplace: What Employers Should Consider

Author: Becky Canary-King

The CDC has lifted mask requirements for vaccinated individuals, what does that mean for employers?

Earlier this month, the CDC issued new guidance that Fully Vaccinated individuals can resume activities without wearing a mask or social distancing, except where required by state or local guidelines. Illinois and Chicago subsequently issued new orders affirming that individuals who are Fully Vaccinated are not required to wear a mask. “Fully Vaccinated” means:

  • 2 weeks after their second dose in a 2-dose series, such as the Pfizer or Moderna vaccines, or
  • 2 weeks after a single-dose vaccine, such as Johnson & Johnson’s Janssen vaccine

Options for Employees

Given these recent changes, Illinois employers now have a choice: to change their workplace rules to allow Fully Vaccinated individuals to go “maskless,” or they can keep current masking requirements in place (either temporarily or for a longer period). Of course, employers with employees outside Illinois need to check state and local requirements for the locations where they have employees.

Employers who wish to allow Fully Vaccinated employees to not wear a mask in the workplace are required to confirm that an employee is, in fact, Fully Vaccinated, prior to allowing them to go maskless.  This can be accomplished by requiring employees to present proof of vaccination or by requiring that employees certify that they are Fully Vaccinated. As a reminder, the information provided to confirm vaccination status needs to be treated as confidential medical information.

Because of issues around confidentiality, we recommend that employers who are not mandating that employees be vaccinated make clear that while Fully Vaccinated individuals may request to go maskless by submitting the requested documentation, it is their choice. In other words, regardless of vaccination status, employees will be required to wear a mask unless they request to go maskless and provide the required documentation. 

Employers should also be aware that the Chicago ordinance that allows Fully Vaccinated employees to go maskless also requires that employers have all employees who are reporting to the workplace to self-certify each day or shift that they are free of COVID-19 symptoms.

Options for Members of the Public

Under these new Illinois standards, employers also have the obligation to “seek to ensure” that customers who are not Fully Vaccinated wear a mask. It’s not clear from the Governor’s order whether this means that employers are required to independently confirm vaccination status prior to allowing a customer or visitor to be maskless in the workplace. Currently, large restaurants and retailers have taken different approaches to public masking requirements, but the fact remains that employers’ general duty to maintain a safe workplace continues to apply and should be considered before changing customer mask requirements. 

Looking Forward

Illinois Governor J.B. Pritzker announced that Illinois plans to fully reopen and enter Phase 5 of its COVID plan on June 11, “barring any significant reversals in our key COVID-19 statewide indicators.” Governor Pritzker has indicated that Illinois will continue following the CDC’s masking guidelines in Phase 5.

Navigating the Vaccine: Considerations Employers Should Keep in Mind

Author: Labor & Employment Group

Whether your business chooses to require the vaccine or allow employees to get vaccinated at their option, all employers are facing new challenges managing through this phase of the pandemic. Below are some considerations employers should be keeping in mind:

  • Continue to Require Safety Measures. The CDC continues to recommend employers require social distancing, face masks, and other safety measures in the workplace. While the CDC has indicated that fully vaccinated individuals can gather in small groups, it has not revised its recommendations regarding workplace safety.
     
  • Provide Resources for Employees. Many individuals are still having difficulty finding and traveling to vaccine appointments. Employers requiring or encouraging vaccination should consider what resources they can provide to assist employees with the process. Options include sharing local resources for appointment scheduling, providing time off, and providing other monetary incentives such as gift cards for employees who get vaccinated.
     
  • Consider Remote Work Options Moving Forward. With many employees working remotely for the first time during the pandemic, we anticipate greater demand for remote work moving forward. Employers should take time now to consider whether they will allow ongoing remote work once all employees can safely return to the workplace, and the potential implications for hiring and retention.

For more questions on COVID-19 vaccination policies in the workplace, please contact any member of our Labor and Employment team.

Chicago’s New Proposed Vaccine Anti-Retaliation Ordinance

On Tuesday, April 13, Chicago’s aldermen unanimously approved Mayor Lori Lightfoot’s proposed new anti-retaliation ordinance. Under the proposed ordinance, Chicago employers would be prohibited from taking any adverse action against employees who take time off to get vaccinated.

Additionally, employers that choose to mandate vaccinations would not be able to require employees to get vaccinated during non-work hours. Instead, employees must be allowed to get the vaccine during working hours and must be compensated for the time to get the vaccine, up to four hours per dose. Employers may not require employees to use paid sick time to meet this requirement.

Employers without mandatory vaccination policies would be required to allow employees to take time off work to get vaccinated. Employees may use accrued sick leave for this purpose.

FFCRA Extended to Cover Leave Related to COVID Vaccines through September 31 – At Employer’s Option

While FFCRA leave remains voluntary, the American Rescue Plan Act of 2021 gives employers the option to continue providing Emergency Paid Sick Leave (EPSL) and Extended FMLA Leave (EFMLA) to employees through September 30, 2021.

Beginning April 1, 2021, if an employer elects to provide FFCRA leave, employees may now use such leave for (1) obtaining the COVID-19 vaccine; (2) recovering from any illness or condition related to getting the vaccine; or (3) seeking or awaiting the result of a COVID-19 test if the employee has been exposed to COVID-19 or the employer has requested the COVID-19 test. Employees’ available leave is also reset on April 1, so employees are eligible for up to 10 days of EPSL and 10-weeks of EFMLA between April 1 and September 30, 2021.

Employers are not required to provide FFCRA leave, but will be eligible for payroll tax credits if they do so and otherwise follow the requirements of the FFCRA. Providing this paid leave is a great option for employers seeking to require or encourage employees to get the COVID-19 vaccine.

OSHA Issues Updated COVID-19 Guidance

Author: Becky Canary-King

TheOccupational Safety and Health Administration (OSHA) recently issued new guidance on mitigating and preventing the spread of coronavirus in the workplace. The guidance outlines best practices and recommendations for employers to identify risks of being exposed to and of contracting COVID in workplace settings. OSHA’s recommended steps to implement a COVID prevention program include:

  • Assign a workplace coordinator for COVID
  • Conduct a hazard assessment to identify where and how workers might be exposed to COVID and eliminate or implement control measures to reduce workplace hazards
  • Educate workers on COVID policies and procedures, establish a system of communicating to workers in a language they understand, and encourage two-way communication
  • Instruct infected or potentially infected workers to stay home
  • Perform enhanced CDC-compliant cleaning and disinfecting
  • Appropriately record and report COVID-19 infections
  • Make the COVID-19 vaccine available at no cost to all eligible employees. Require vaccinated employees to continue to follow protocols, as there is no evidence that COVID-19 vaccines prevent transmission of the virus from person-to-person.

Like previous OSHA guidance, this is not a standard or regulation, and it creates no new legal obligations for employers. Rather, employers are required under the General Duty Clause to provide their workers with a workplace free from recognized hazards that are causing or likely to cause death or serious physical harm.

What the Updated CDC Quarantine Recommendations Mean for Employers

Author: Becky Canary-King

The CDC recently updated its guidance to provide recommendations for reducing the quarantine period after an individual has had close contact with someone with COVID-19. Close contact includes:

  • Being within 6 feet of someone who has COVID-19 for a total of 15 minutes or more
  • Providing care at home to someone who is sick with COVID-19
  • Direct physical contact with the person (hugged or kissed them)
  • Sharing eating or drinking utensils
  • Exposure to respiratory droplets, such as through coughing or sneezing

Individuals who have had COVID-19 within the past three months do not need to quarantine again.

While the CDC still endorses 14 days as optimal length for quarantine, the new guidance provides two options to discontinue quarantine earlier:

  • After day 10 without testing
  • After day 7 after receiving a negative test result (test must occur on day 5 or later)

If the quarantine period is reduced, employees should be directed to continue monitoring symptoms for 14 days post-exposure.

Employers may choose to continue to require employees to quarantine for 14 days after an exposure and should continue to follow any state or local requirements. However, these new CDC-approved options may reduce the burden placed on employees and employers by lengthy periods of quarantine.

For more information regarding potential exposures in the workplace and other COVID-related issues, please see information provided in our webinar on practical tips for COVID-related workplace issues.

The Labor & Employment Attorneys at Levenfeld Pearlstein are here to help with your COVID-19 employment-related questions, and other labor and employment needs as well.

Can Employers Require Employees to Get the COVID-19 Vaccine?

Authors: Becky Canary-King and Laura Friedel

Likely, yes, but employers must consider accommodation requests.

While we have not received clear guidance from government authorities on administering or requiring the COVID-19 vaccine, we hope to receive such guidance once the vaccine becomes available to the general population. Of course, government guidance necessarily will guide how employers proceed.

As the law stands now, employers will likely be able to require that employees get vaccinated for COVID. However, employers will have to consider accommodation requests from employees for medical reasons, religious reasons, or pregnancy. What is reasonable, as always, will depend on the circumstances. Employers will have a strong argument that having an unvaccinated employee would cause an undue burden and/or direct threat to other employees, and therefore no accommodation is required by law. Unfortunately, that argument has not yet been tested as related to COVID-19.

Employers will also need to check state and local law for prohibitions. For employers who choose to require the vaccine, we recommend that the employer pay for the vaccine itself and for the time spent getting it.

LP will continue to monitor guidance related to administering the vaccine and update the answer to this question accordingly.

The Latest From Chicago: Anti-Retaliation, Fair Workweek, and Food Delivery Disclosures

While warm weather has finally hit Chicago, Mayor Lightfoot, the City Council and Chicago Department of Business Affairs and Consumer Protection (BACP) have not taken a spring break. The below summarizes the latest ordinances, and regulations from the Windy City:

Anti-Retaliation Ordinance

The Chicago City Council passed the COVID-19 Anti-Retaliation Ordinance last week, which prohibits employers from retaliating against employees for obeying a public health order requiring an employee to stay home due to coronavirus.

The Ordinance prohibits employers from demoting or terminating a Covered Employee for obeying an order issued by the Mayor, the Governor of Illinois, the Chicago Department of Public Health, or, in the case of (2), (3), and (4) below, a treating healthcare provider, requiring the Covered Employee to:

  • Stay at home to minimize the transmission of COVID-19;
  • Remain at home while experiencing COVID-19 symptoms or sick with COVID-19;
  • Obey a quarantine order issued to the Covered Employee;
  • Obey an isolation order issued to the Covered Employee; and
  • Obey an order issued by the Commissioner of Health regarding the duties
  • of hospitals and other congregate facilities

Employees subject to demotion or termination may recover reinstatement, damages equal to three times the full amount of wages that would have been owed had the retaliatory action not taken place, actual damages, and attorneys’ fees. Violations may also lead to fines of up to $1,000 per offense per day.

The ordinance is effective immediately.

Fair Workweek Ordinance

Chicago’s Fair Workweek Ordinance is set to take effect on July 1, 2020. Ahead of the effective date, the BACP has issued rules for implementing the ordinance, and a supplemental rule for implementation during the pandemic.

The Ordinance requires covered employers to post work schedules at least 10 days in advance, and provide additional pay if work schedules are changed without advanced notice. However, the Ordinance creates an exception where the work schedule change is “because of” a pandemic. BACP’s supplemental rule clarifies that the COVID-19 outbreak qualifies as a “pandemic” for the purposes of this exception, and will remain a “pandemic” until the Mayor’s Executive Order declaring a state of emergency is repealed.    

However, a work schedule change will be considered “because” of the pandemic only when the pandemic causes the employer to materially change its operating hours, operating plan, or the goods or services provided by the employer, resulting in the work schedule change. Further, the exception applies only to the work schedule during which the change occurs, and the work schedule immediately following.

Additionally, while the substantive requirements of the Ordinance will still go into effect on July 1, 2020 and may still be enforced by the City, individual employees will not be allowed to file lawsuits for violations of the ordinance occurring before January 1, 2021.

New Rules for Third Party Food Delivery Companies

Mayor Lightfoot and the BACP announced new rules earlier this month for third-party food delivery companies to increase transparency and fair competition. Effective Friday, May 22nd, all third-party delivery companies must disclose the following to customers, in a “clear and conspicuous manner”:

  • the menu price of the food;
  • any sales or other tax applied to the transaction;
  • any delivery charge or service fee, imposed on or collected from the customer by the third-party food delivery service or by the covered establishment, in addition to the menu price of the food;
  • any tip that will be paid to the person delivering the food, and not to the third-party food delivery service, to be added into the transaction when it occurs, and
  • any commission associated with the transaction.

The disclosure requirements apply to all websites, mobile applications or other internet services that offer or arrange the sale of food or beverages by a restaurant, bar or other food-serving establishments. The measure is intended to promote transparency and fair competition, as many restaurants are increasing relying on third-party delivery services to stay afloat during the pandemic.

While the rules were promulgated in response to the pandemic, these new rules will be in place permanently.

Guidance for Restaurants Applying COVID Surcharges

The City of Chicago issued a guidance for restaurants charging COVID-related surcharges to customers, reminding restaurants that the City’s restaurant tax is .50%, and any surcharge customers are required to pay is considered taxable and should be included in the basis upon which the restaurant tax is calculated. Additionally, a COVID surcharge is not a tax and should not be designated as such on any price list or invoice.

Can Employers Require High Risk Employees to Stay Home? Latest EEOC Guidance on Interpreting the ADA During the Pandemic

The CDC has identified a number of medical conditions that might place individuals at “higher risk for severe illness” if they get COVID-19. The EEOC has recently provided updated guidance on how employers should treat employees in this category. To summarize the EEOC guidance, while employees may request to stay home, and employers are required to consider whether that would be a reasonable accommodation, employers cannot require high risk employees to stay home unless they have requested to do so or their reporting to work would rise to the level of a “direct threat.”

What if an employer already knows an employee is at higher risk? Can the employer require the employee to stay home?

Generally, no. Even if the employer is concerned about the employee’s health, the employer cannot take any adverse action against the employee (such as requiring the employee to stay home) on the basis of being higher risk, unless the employee’s disability rises to the level of a “direct threat” to his or her health that cannot be eliminated or reduced by reasonable accommodation.

“Direct threat” is a high standard to meet.  It requires an individualized assessment based on a reasonable medical judgment about the employee’s disability – and cannot be based solely on the employee’s disability being listed on the CDC list. If the employee’s disability does pose a direct threat, the employer must attempt to provide a reasonable accommodation such as telework or reassignment before excluding the employee from the workplace.

Can employers ask employees if they have a disability that might put them at higher risk?

The EEOC has not provided clear guidance on this issue, so we currently are recommending against asking employees if they have a disability that might put them at higher risk.  However, it is would be permissible to inform employees generally that if they have a disability that would put them at higher risk, and they wish to request a reasonable accommodation (which could include staying home), that the employer would be happy to consider such requests.

In a previous guidance issued by the EEOC in response to flu pandemics, the agency cautioned against asking about medical conditions that might put employees at higher risk.  However, the EEOC did not close the door entirely on such inquiries.  The guidance stated that if a pandemic “becomes more severe or serious according to the assessment of local, state or federal public health officials, ADA-covered employers may have sufficient objective information from public health advisories to reasonably conclude that employees will face a direct threat if they contract pandemic influenza.” It’s possible that the current COVID-19 pandemic may fit the situation that the EEOC described, but the EEOC has not yet provided clarification.

In the absence of definitive guidance from the EEOC, there are significant risks involved in making disability-related inquiries, including the risk of claims after the pandemic based on the employer’s knowledge of an employee’s disability. Accordingly, we recommend employers avoid making these inquiries until the EEOC provides further guidance.

Employers may ask employees if they have symptoms of coronavirus or have tested positive.  Additionally, employers may invite employees to voluntarily disclose any underlying condition that make them vulnerable to the coronavirus, so that the employer may provide any necessary reasonable accommodations.

Do employers have to provide reasonable accommodations to employees who have a higher risk from COVID-19?

Potentially, yes, if the employee’s higher risk is due to a preexisting condition rising to the level of a disability and the accommodation does not cause an undue hardship. See our previous guidance on reasonable accommodations here.