Tag Archives: Illinois employment law

Illinois Legislature Considering Freedom To Work Act Amendments That Target Non-Compete And Non-Solicitation Clauses

employment law books and a gavel on desk in the library. concept of legal education.

Contributed By: Jeffrey Glass, April 19, 2021

In recent years, many states have enacted legislation directed at employment contracts containing non-compete and non-solicitation clauses. Illinois first did so in 2016 with the Freedom to Work Act (the Act), which bans certain Illinois employers from entering into non-compete agreements with low-wage employees.

Now, the Illinois General Assembly has taken the matter up again with additional proposed amendments to the Act.

Although the new legislation has not been finalized, some provisions that appear likely to be included in the final version are: income thresholds for employees who are not “low wage,” a requirement that the employer provide the employee with a copy of the contract in advance of signing it, employee-friendly attorney’s fee-shifting provisions, and exemptions for union workers.  While the legislation primarily is geared toward protecting employees, it also helps employers by clarifying the state of the law on several issues, including clearer standards for the enforceability of non-compete clauses.

The amendments are projected to take effect on June 1, 2021, and will not apply to contracts entered into before that date.  Employers should contact their employment counsel to make sure any agreements entered into on or after the effective date comport with the new law. SmithAmundsen attorneys are working closely with employer-side groups on the legislation and will update readers of this blog as further developments arise.

New Years Resolution: Be Compliant In ALL Of Your States!

Contributed by Heather Bailey

For those employers with locations throughout the United States, now is a good time for a New Years’ resolution to brush up on the ever-so-changing state laws that govern your employment practices.  Here are some updates on the various new state laws that are changing with the coming New Year:

Federal:

Due to litigation challenging the rule, the National Labor Relations Board has delayed its requirement to post its Employee Rights Notice until April 30, 2012.

Illinois:

New-Hire Procedures: The new-hire reports you submit must have the date the employee first started to perform any paid services to the company.  (Already in place, effective 11/18/11).

California:

Just when California employers thought they were going to be getting an answer from the CA Supreme Court on how to properly administer rest and meal periods, think again.  The court in Brinker v. Superior Court originally had a deadline date of around February 6, 2012 to make its final decision after hearing oral arguments in November.  However, the court, in a not-so-usual practice, allowed for additional briefing.  Consequently, the court now has until April 12, 2012 to render its decision.   

Effective January 1, 2012, California has added that employers cannot discriminate based upon genetic information (similar to GINA), and, employees must be allowed to appear or dress in line with their gender expression – revising the definition of gender under sex discrimination prohibitions.  Moreover, the misclassification of an employee as an independent contractor to avoid employment status will bring hefty fines to employers starting in January 2012.  For those employers paying commissions, you will have a new requirement to give such payment plans and commission calculations to employees in writing beginning January 2013.

New York:

Effective January 11, 2012, for those employers who offer their employees insured group health plans that provide prescription drug coverage, your plan must now allow participants to fill their prescriptions at network non-mail order retail pharmacies if the pharmacies agree to charge comparable prices as the mail-order pharmacies (this includes fertility drug coverage if such coverage is offered under the plan).

Pennsylvania:

Effective March 8, 2012, your drivers can no longer use a wireless communication device to write, send or even read text messages while driving.  Now is a good time to put that policy in place if you haven’t already done so.

Civil Unions in Illinois – What Does It Mean For Your Employee Benefit Plans?

Contributed by Rebecca Dobbs

The Illinois Religious Freedom and Civil Union Act (IRFCUA) took effect on June 1, 2011.  Although the law adds a few wrinkles to existing equal employment opportunity laws, already recognized sexual orientation as a protected class.  Therefore, the most significant impact on employers will be in the employee benefits arena. 

Generally, the Employee Retirement Income Security Act (ERISA) is a federal law that serves to preempt state laws affecting employee benefits.  In other words, in the realm of employee benefits, federal law trumps state law.  However, ERISA does not preempt states from issuing laws that affect and govern insurance.  Accordingly, states can issue laws that regulate insurance which indirectly affects those employers who sponsor insured plans.

IRFCUA mandates that “[a] party to a civil union is entitled to the same legal obligations, responsibilities, protections, and benefits as are afforded or recognized by the law of Illinois to spouses, whether they derive from statute, administrative rule, policy, common law, or any other source of civil or criminal law.” 

Thus, where an employer maintains an insured health plan (versus a self-insured plan) and that plan allows for coverage of spousal dependents, the plan is required to extend the same coverage to an employee’s civil union partner. 

Keep In Mind

  • Federal law and state law do not currently mandate coverage of spousal dependents but the majority of plans allow employees to enroll their spousal dependents. 
  • For insured plans, employers will need to amend their health plans to include civil union partners and modify enrollment and other plan-related materials accordingly.
  • Continuation coverage provided under federal law, the Consolidated Omnibus Reconciliation Act (COBRA), will not be affected by the state law.  Accordingly, civil union partners will not be entitled to continuation under COBRA. 

That said, Illinois Continuation Law and Illinois Spousal Continuation Law, which affect insured plans regardless of size, will apply to civil union partners.  Illinois Continuation Law can operate to provide continuation up to a period of 12 months where an employee is terminated or experiences a reduction in hours. 

  • Under Illinois Spousal Continuation Law, a civil union partner will be eligible to continue coverage up to two years when benefits are lost due to divorce from the employee, death of the employee or retirement of the employee. 
  • When a civil union partner is over the age of 55, Illinois Spousal Continual Law can potentially provide him or her with the ability to continue coverage until eligible for Medicare when the qualifying event relates to divorce, death or retirement.  Plan documents and qualifying event notices will need to be changed accordingly.

Benefits provided to civil union partners will not be taxable for Illinois state income tax purposes.  However, civil unions are not recognized under federal law for purposes of federal income tax considerations.  As a result, employers will have to calculate the fair market value of the coverage provided to an employee’s civil union partner and count it towards the employee’s total taxable wages when determining the appropriate federal income tax to withhold. 

Non-government retirement plans such as 401(k) plans are regulated solely by federal law – private employers will not be required to extend spousal benefits to employees in regard to federally-regulated pension benefits and retirement plans.

Action Steps

  1. Thoroughly review and assess all benefits currently being provided to determine which, if any, require amending. 
  2. Any necessary changes to communication materials and plan documents will need to be addressed. 
  3. Tax ramifications must be taken into consideration.