Amendments to Workplace Transparency Act trigger new compliance requirements for Illinois employers

By SCOTT CRUZ

The Illinois Workplace Transparency Act (IWTA) took effect on Jan. 1, 2020, with the impetus to protect employees who truthfully report alleged unlawful discrimination and harassment or criminal conduct in the workplace, by prohibiting nonnegotiable confidentiality obligations, waivers, and mandatory arbitration of allegations of discrimination, harassment, or retaliation (i.e. “unlawful employment practice”), in employment and separation agreements, and employment policies in employee handbooks.

On Aug. 15, 2025, Illinois Governor J.B. Pritzker signed amendments to the IWTA into law, which take effect on Jan. 1, 2026.

Presently, the IWTA prohibits any contract, agreement, clause, covenant, waiver or other document from prohibiting, preventing, or otherwise restricting a current or former employee (or applicant) from reporting allegations of unlawful conduct to federal, state or local officials for investigation, including but not limited to alleged criminal conduct or unlawful employment practices.

The amendments expand the scope of what now constitutes an “unlawful employment practice.”

Presently, the IWTA defines “unlawful employment practice” as any form of unlawful discrimination, harassment, or retaliation that is actionable under Article 2 of the Illinois Human Rights Act (“IHRA”), Title VII of the Civil Rights Act of 1964 (“Title VII”), or any other related State or federal rule or law that is enforced by the Illinois Department of Human Rights (“IDHR”) or the Equal Employment Opportunity Commission (“EEOC”).

The amended IWTA defines an “unlawful employment practice” as any practice made unlawful that is actionable under the IHRA, Title VII or any other state or federal rule or law governing employment, including those that are enforced by” the IDHR, the Illinois Labor Relations Board, the EEOC, the U.S. Department of Labor, OSHA, and the National Labor Relations Board.  Thus, an “unlawful employment practice” also covers, for example, wage and hour violations, workplace safety concerns, and unfair labor practices.

The amended IWTA is now expanded to prohibit any contract, agreement, clause, covenant, waiver or other document from prohibiting, preventing, or otherwise restricting individuals not only from reporting an allegation of unlawful employment practices, but also “engaging in concerted activity to address work-related issues.”  “Concerted activity” is defined as activities engaged in for the purpose of collective bargaining (e.g. forming or joining a union) or other mutual aid or protection” (e.g. engage in concerted activities—those by two or more employees—to improve their terms and conditions of employment).

The amended IWTA restricts employer use of new categories of contractual provisions if imposed unilaterally (i.e. non-negotiable) by the employer as a condition of employment or continued employment.  Presently, the IWTA prohibits any agreement, clause, covenant, or waiver that is a unilateral condition of employment or continued employment that has the purpose or effect of preventing an employee from making truthful statements or disclosures about alleged unlawful employment practices.

Under the amended IWTA, it is also unlawful for an agreement, clause, covenant, or waiver that is a unilateral condition of employment or continued employment that has the purpose or effect of preventing an employee from “engaging in protected concerted activity to address work related issues.”

Further, the amended IWTA prohibits employers from unilaterally adding provisions into agreements (e.g. employment or separation) that have effect of (1) shortening applicable statute of limitations; (2) applying non-Illinois law to Illinois-based claims; or (3) requiring adjudication of Illinois claims outside Illinois if it denies the employee a substantive or procedural right or remedy related to unlawful employment practices.

So, for example, an employer cannot force an employee to agree in an employment contract to shorten the two-year time period that the IHRA affords employees to file a charge of discrimination with the IDHR to one year.

However, the amended IWTA retains, but expands on an existing IWTA language, which provides that such provisions may lawfully be included in employment-related agreements so long as the agreement is in writing, demonstrates, actual, knowing and bargained-for consideration from both parties, and acknowledge the right of the employee to:

1. report any good faith allegation of unlawful employment practices to any appropriate federal, State, or local government agency enforcing discrimination laws;
2. report any good faith allegation of criminal conduct to any appropriate federal, State, or local official;
3. participate in a proceeding related to unlawful employment practices, including any litigation brought by any federal, State, or local government agency, or any person who alleged that the employer has violated any State, federal, or local law, regulation, or rule;
4. make any truthful statements or disclosures required by law, regulation, or legal process;
5. request and receive confidential legal advice; and (6) engage in concerted activity to address work-related issues.

Further, the amendments require that to be valid and enforceable, any promise by an employee in a separation or settlement agreement to keep alleged unlawful employment practices confidential, must be supported by distinct, bargained-for consideration separate from any consideration provided for a release of claims.

So, for example, if an employer is willing to offer $5,000 as severance in exchange for the employee’s release of claims, a portion of that severance amount must be specifically allocated and identified as separate consideration to support the employee’s promise to keep confidential any alleged unlawful employment practices.

Additionally, employers may not include in a termination or settlement agreement a clause stating that the promise of confidentiality is the preference of the employee; rather, it must truly be the employee’s preference.

Finally, under the amended IWTA, individuals are now able to recover in litigation consequential damages, in addition to reasonable attorneys’ fees and costs incurred, for example, if they challenge a contract as being in violation of the IWTA. Consequential damages are indirect, foreseeable financial losses or injuries that result from a breach of contract or a wrongful act, rather than directly from the act itself.

Employers should review their current template employment, separation, and settlement agreement, in addition to related employment handbook policies, with employment counsel to ensure compliance with these amendments.

 

Scott Cruz is a partner in the Labor & Employment Practice Group of UB Greensfelder LLP’s Chicago, O’Fallon, Ill., and St. Louis, Mo. offices. He can be reached at (312) 658-6608, [email protected].