Governor J.B. Pritzker approved sweeping changes to Illinois anti-discrimination laws on August 9, 2019, building on the momentum of the #MeToo and Time’s Up movements and following similar trends in other states. The recently enacted Workplace Transparency Act (WTA), which takes effect on January 1, 2020, will impact virtually all Illinois employers in one way or another. With just a couple of months left in the year, employers should act now to ensure compliance by 2020. Below are some of the key takeaways from the WTA.

Impact on Employment-Related Agreements

Under the WTA, Illinois employers will be prohibited from requiring an employee or prospective employee to enter into a unilateral, “take-it-or-leave-it” agreement as a condition of employment where the agreement infringes on the individual’s ability to make truthful statements or disclosures about an alleged “unlawful employment practice,” i.e., unlawful discrimination, harassment or retaliation (as prohibited by Title VII, the Illinois Human Rights Act or similar laws). This requirement will likely affect many form confidentiality and non-disclosure agreements, and employers should review and revise those documents to ensure that appropriate “carve-out” language is in place to expressly allow employees to report and disclose allegations of illegal conduct and unlawful employment practices.

Similarly, the WTA will prohibit unilateral agreements between an employer and employee that require the employee to waive, arbitrate or otherwise “diminish” any claim concerning unlawful employment practices. (Employers with unilateral arbitration agreements should consult with counsel regarding whether this provision of the WTA will be trumped by the Federal Arbitration Act, and draft accordingly.)

However, an employee can consent to otherwise-prohibited contract terms in a mutual written agreement as long as certain requirements are met, including that the agreement (i) demonstrates actual, knowing, bargained-for consideration (e.g., a bonus, lump-sum payment or some other benefit of value to the employee that is negotiated in good faith) and (ii) expressly preserves the employee’s right to report unlawful employment practices and criminal conduct, to participate in investigative or enforcement proceedings, to make truthful statements and disclosures required by law, and to seek and obtain confidential legal advice.

Notably, the WTA’s scope is not limited just to agreements that are a condition or term of employment; the new law also applies to those agreements that the employer offers as part of a severance or termination package, or to settle an employment-related claim. Language in termination or settlement agreements that requires the employee to keep information concerning an alleged unlawful employment practice confidential will be unlawful unless a variety of preconditions are met, including but not limited to that (i) confidentiality is documented in the agreement as the employee’s preference and mutually benefits the employee and the employer; (ii) the employee is notified in writing of his or her right to have an attorney review the agreement; (iii) there is bargained-for consideration; (iv) the agreement does not waive claims concerning unlawful employment practices that accrue after the agreement is executed; and (v) the employee is given 21 calendar days to consider the agreement, and seven days following the execution of the agreement to revoke it.

In light of the WTA’s significant impact on employment-related agreements, employers are encouraged to review such documents – including but not limited to standard employment agreements, confidentiality and restrictive covenant agreements, arbitration agreements, termination and severance agreements, and settlement agreements – to ensure compliance with the WTA by year-end. 

Expanding the Reach of the Illinois Human Rights Act and Related Protections

The WTA also amends the Illinois Human Rights Act, which prohibits unlawful discrimination, harassment and retaliation in the workplace, as follows:

• “unlawful discrimination” will be defined to include discrimination based on an individual’s perceived (and not only actual) race, national origin, age, sex or other protected characteristic; 

• employers can be held liable for unlawful harassment perpetrated against nonemployees (such as consultants, contractors, etc.) in the workplace; and

• unlawful harassment will be prohibited not only in the physical location the employee is assigned for work-related purposes, but also outside of that location.

In addition, and consistent with other jurisdictions that have addressed the #MeToo movement head-on, employers in Illinois will be required to train all employees annually regarding prohibitions against unlawful sexual harassment. Such training will need to include a review of a variety of topics, including (i) the definition of unlawful sexual harassment and examples of the same, (ii) a summary of the laws that prohibit sexual harassment and (iii) the responsibilities of employers in preventing, investigating and taking corrective action in response to sexual harassment. The Illinois Department of Human Rights (the Department) is expected to release model training for this purpose.

Further, effective July 1, 2020, employers will be required to disclose to the Department, and on an annual basis, the total number of adverse judgments or administrative rulings (and related relief) made against the employer during the preceding calendar year that concern discrimination or harassment on the basis of a variety of protected characteristics. Upon request of the Department, during the course of its investigation into a charge of discrimination, an employer must provide information to the Department regarding settlements it has entered into during the preceding five years concerning purported sexual harassment or unlawful discrimination.

In light of the above, employers should promptly review, revise and distribute their equal employment opportunity and anti-harassment policies, closely evaluate their current training programs and consider implementing a mechanism by which they can track claims and settlements concerning unlawful employment practices to comply with the WTA.

Other WTA Provisions Worth Noting

The above touches only on certain key aspects of the WTA. Employers in the entertainment industry (restaurants, bars, hotels and casinos, for example) should be mindful of further industry-specific requirements outlined in the WTA. And all employers should review the WTA to ensure compliance with its expanded protections for victims of gender violence.