Non-Compete Agreements in Texas vs. Illinois: The Same Clause Can Bind in One State and Be Void in the Other

This post compares Texas and Illinois law; figures and deadlines are stated generally, so confirm the current rule in the relevant state before acting.

I advise both employers and employees in Texas and Illinois, and nothing illustrates the difference between the two states like the non-compete agreement. The identical paragraph, signed by identical employees, can be fully enforceable in Austin and void from day one in Chicago. This is employment law where the state line does real work, and it is a comparison I have drawn in my Justia answers as well.

Texas treats non-competes as enforceable when they are ancillary to an otherwise enforceable agreement and reasonable in time, geography, and scope of activity. Texas courts can even reform an overbroad covenant down to something reasonable rather than throwing it out, which gives employers a meaningful safety net for imperfect drafting.

Illinois went the other direction with its Freedom to Work Act. As of this writing, a non-compete is void for employees earning below a statutory salary threshold in the neighborhood of seventy-five thousand dollars a year (with a lower threshold, around forty-five thousand dollars, for customer and employee non-solicitation covenants), and both figures are scheduled to step up over time. Illinois also requires advance notice of at least fourteen days with a written advisory to consult counsel, and it demands adequate consideration, which courts have generally read to mean roughly two years of continued employment or some other real benefit. Miss any of those marks and the covenant fails regardless of how reasonable its terms look.

The practical lessons: a multi-state employer cannot use one template for both states; remote work muddies which state’s law applies in the first place; and a choice-of-law clause naming the friendlier state does not reliably save a covenant against an employee protected by the stricter one. Review the covenant under the law that will actually govern it, before anyone signs.

Whether you are asking employees to sign a covenant or being asked to sign one, have it reviewed under the law that will actually govern it. Call or text 512.761.8479.