When an executive receives a severance agreement, the first question is usually: How much am I getting?
But there may be another provision in the agreement worth considerably more than an extra month or two of severance: what happens to your non-compete and non-solicitation restrictions after you leave.
A severance agreement may contain a new restrictive covenant, extend or modify an existing restriction, or simply state that you “reaffirm” obligations contained in an employment agreement you signed years ago. For executives, sales professionals, managers, and other highly compensated employees, those few paragraphs can directly affect where you can work next, which clients you can contact, and whether you can bring former colleagues to a new company.
Before signing a severance agreement in Illinois, you should understand exactly what restrictions will follow you out the door.
What Is the Difference Between a Non-Compete and a Non-Solicit?
A non-compete generally restricts your ability to work for a competitor or engage in specified competitive activity for a period after your employment ends.
A non-solicitation agreement is usually narrower. It may restrict you from soliciting your former employer’s customers, clients, or employees.
For an executive, however, “narrower” does not necessarily mean insignificant.
Imagine that you have spent 15 years in one industry and the companies most likely to hire you are your former employer’s competitors. A one-year non-compete could interfere with your most realistic employment opportunities. Similarly, if your value comes partly from longstanding customer relationships or your ability to build a team, a broadly written non-solicitation provision could substantially affect your next position.
That is why these provisions should be evaluated alongside the amount of severance—not as boilerplate at the back of the agreement.
Illinois Law Places Limits on Non-Competes and Non-Solicits
Illinois regulates these agreements through the Illinois Freedom to Work Act.
In 2026, an employer generally cannot enter into a non-compete with an employee unless the employee’s actual or expected annualized earnings exceed $75,000 per year. For a non-solicitation agreement, the threshold is $45,000.
Those amounts increase on January 1, 2027, to $80,000 for non-competes and $47,500 for non-solicitation agreements. Agreements entered into in violation of the applicable earnings thresholds are void and unenforceable. Illinois General Assembly
For many executives, the salary thresholds will not resolve the issue because their compensation exceeds those amounts.
But that does not mean an employer can impose any restriction it wants simply because an employee is highly compensated.
A High Salary Does Not Automatically Make a Non-Compete Enforceable
Under Illinois law, a non-compete or non-solicit is illegal and void unless several requirements are satisfied.
Among other things, the employee must receive adequate consideration; the restriction must be connected to a valid employment relationship; it cannot be greater than necessary to protect the employer’s legitimate business interest; it cannot impose an undue hardship on the employee; and it cannot be injurious to the public. Illinois General Assembly
Whether a restriction protects a legitimate business interest depends on the particular circumstances. Illinois law permits consideration of factors such as the employee’s customer relationships, exposure to other employees, access to confidential information, and the duration, geographic reach, and scope of the restriction. Illinois General Assembly
In other words, “you’re an executive” is not the end of the analysis.
Look for Restrictions Hidden in Other Agreements
One of the easiest provisions to overlook in a severance agreement is language stating that prior obligations remain in effect.
The agreement may say that you “reaffirm,” “acknowledge,” or “remain bound by” restrictive covenants contained in another agreement.
That other document could be an employment agreement you signed eight years ago. It could be an equity award, confidentiality agreement, stock-option agreement, incentive-compensation plan, or stand-alone restrictive covenant agreement.
Before agreeing to reaffirm anything, find the underlying document and determine exactly what it says.
You do not want to sign a severance agreement believing you are simply accepting six months of salary and later discover that you also reaffirmed a 12-month restriction affecting your ability to accept your next job.
A New Restriction in Your Severance Agreement Deserves Particular Attention
Sometimes the employer goes further and uses the severance agreement to introduce a new non-compete or non-solicitation restriction.
Illinois law provides important protections when an employer asks an employee to enter into a covered restrictive covenant. The employer must advise the employee in writing to consult with an attorney and provide at least 14 calendar days to review the covenant, although the employee can voluntarily sign sooner. Illinois General Assembly
The requirement of adequate consideration matters too. Under the statute, adequate consideration can consist of working for the employer for at least two years after signing the restriction, or the employer may provide other professional or financial benefits sufficient to support the agreement. Illinois General Assembly
When the restriction first appears at the end of employment, that raises an obvious question:
What are you receiving in exchange for agreeing not to compete?
That should be part of the severance analysis.
Don’t Negotiate Only the Severance Number
This is particularly important for executives.
Suppose your employer offers you six months of salary but insists that you cannot work for any competitor for 12 months.
Getting another month of severance may be far less valuable than getting the non-compete eliminated or reduced.
Depending on the circumstances, severance negotiations can address both money and restrictions. An employee may seek to eliminate the non-compete, shorten its duration, narrow the definition of “competitor,” exclude particular prospective employers, reduce the geographic scope, or limit a customer non-solicit to customers with whom the employee actually had meaningful contact.
The language defining “solicitation” also matters. There can be a significant practical difference between prohibiting you from actively contacting former customers and attempting to prevent you from doing business with a customer who independently contacts you.
Employee non-solicitation provisions deserve similar scrutiny. An executive joining another organization may expect to build a new team. A provision restricting recruitment of former coworkers could interfere with that plan.
Think About Your Next Job Before You Sign
If you expect to join a competitor next month, launch your own company, continue working with industry clients, or recruit former colleagues, the restrictive covenant may be one of the most important provisions in the entire severance package.
The right time to address that issue is before you sign, not after you have accepted a new job and receive a cease-and-desist letter from your former employer.
Have Your Severance Agreement Reviewed Before You Sign
If you have received an Illinois severance agreement containing a non-compete, non-solicitation provision, or language reaffirming an earlier restrictive covenant, 1818 Legal can review the agreement before you sign it.
We represent executives and employees in severance negotiations and employment disputes. We can review the severance agreement together with your prior employment, equity, confidentiality, and restrictive covenant agreements; evaluate the restrictions under Illinois law; and identify provisions that may be worth negotiating.
Before accepting severance in exchange for restrictions that could affect your next job, contact 1818 Legal to discuss your agreement.
