On August 9, 2019, Illinois Governor Pritzker signed the Workplace Transparency Act (the “Act”) into law.  The Act will apply to all contracts, agreements, clauses, or waivers entered into, modified, or extended on or after January 1, 2020.  Here are the key features with respect to arbitration agreements, employment agreements and separation agreements that Illinois employers should be aware of:

• The Act applies to contracts entered into with employees and non-employees (defined to include individuals who are directly performing services for the employer pursuant to a contract, including contractors and consultants).

• Employers may no longer unilaterally require arbitration of any claim arising under any law enforced by the Equal Employment Opportunity Commission (“EEOC”) or the Illinois Department of Human Rights (“IDHR”).  This includes claims under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, Americans with Disabilities Act, the Equal Pay Act and the Illinois Human Rights Act (collectively, “EEO Laws”).  Any unilaterally required arbitration clause pertaining to EEO laws will be deemed void to the extent it denies substantive or procedural rights or remedies.  (Although this provision potentially conflicts with and thus may be preempted by the Federal Arbitration Act, no so such challenge has yet to be raised to the courts.)

• Employers cannot unilaterally condition employment or continued employment on an agreement that has the purpose or effect of preventing individuals from making truthful statements or disclosures about violations of EEO laws (e.g., a confidentiality clause that prohibits reporting of EEO violations).

• However, agreements that reflect mutual conditions of employment (e., that are negotiated between an employer and employee in good faith for consideration in order to obtain or retain employment) are permissible, but only where they are: (A)  in writing; (B) demonstrate actual, knowing, and bargained-for consideration from both parties; and (C) expressly acknowledge the right of the employee or prospective employee to (i) report good-faith allegations of violations of EEO laws; (ii) report good-faith allegations of criminal conduct; (iii) participate in proceedings before EEOC and/or state or federal agency enforcing EEO laws; and (iv) make truthful statements required by law.

• Employee termination and/or separation agreements that include confidentiality covenants relating to EEO violations are permissible only where:

  • Confidentiality is the preference of the employee and is mutually beneficial to both parties;

  • The employer notifies the employee in writing of his or her right to attorney review of the agreement before its execution;

  • There is valid and bargained-for consideration for the exchange of confidentiality;

  • The agreement does not waive claims of EEO violations that accrue after the date the agreement is executed;

  • The employee has 21 days to consider the agreement before execution; and

  • Unless knowingly and voluntarily waived by the employee, the employee has 7 calendar days following the execution of the agreement to revoke it.

• Employees may be entitled to attorneys’ fees incurred for successful challenges to contracts that violate the Act.

Illinois employers, along with organizations that utilize contractors or consultants in Illinois, should take immediate steps to review all relevant policies and contracts—including employee handbook provisions, service and/or employment contracts, arbitration agreements and separation agreements—to ensure they are in compliance with the Act.