This is the first of a two-part column. The second part will run in Thursday’s edition.

Earlier this year, Gov. J.B. Pritzker signed the Illinois Workplace Transparency Act, which amends multiple state laws that affect Illinois employers or employers whose employees work in Illinois. This article provides an overview of the more significant provisions of this omnibus legislation.

Nondisclosure provisions in employment agreements

The new act bars agreements that prevent former, prospective or current employees from reporting to federal, state or local authorities unlawful conduct, including criminal conduct and unlawful employment practices, such as sexual harassment, discrimination and retaliation.

Additionally, the act bars the use of unilateral agreements to prevent disclosure of “truthful statements” or that demand confidentiality relating to allegations of discrimination, harassment and retaliation.

The act permits, however, parties to enter into mutual agreements that “include provisions that would otherwise be unilateral and against public policy,” only if the agreement:

  • Is in writing.
  • Demonstrates equal, actual, knowing and bargained for consideration from both parties.
  • Acknowledges the employee’s right to report good-faith allegations of unlawful employment practices and criminal conduct to authorities, to participate in proceedings with enforcement agencies, to make truthful disclosures required by law and to request and receive legal advice.

Arbitration agreements related to employment

The act bars any unilateral agreement that attempts to waive, arbitrate or diminish the right to pursue existing or future claims of harassment, discrimination or retaliation under federal or state law. The Illinois Uniform Arbitration Act was similarly amended to require arbitration agreements to comply with the provisions of the act to be enforceable with exceptions for hospitals and health-care providers.

As a caveat, the act provides that the prohibition on waivers and arbitration agreements applies “to the extent” the agreement “denies … a “substantive” or “procedural” right or remedy related to an unlawful employment practice.”

The lack of clarity in arbitration law over the meaning of the terms substantive and procedural rights as well as difficulties reconciling the arbitration provisions of the act with the Federal Arbitration Act will result in litigation to determine the extent to which the act’s arbitration provisions are enforceable.

Nondisclosure provisions in settlement or termination agreements

Settlement or termination agreements with unilateral provisions barring disclosure of harassment, discrimination and retaliation are prohibited. However, the parties may agree mutually in writing to a confidentiality provision in a settlement or termination agreement regarding unlawful employment practices so long as the following conditions are met:

  • The agreement is mutually agreed to by both parties and is the documented preference of the current, former or prospective employee.
  • The agreement applies only to claims arising before the execution of the settlement or termination agreement.
  • The agreement is supported by valid bargained for consideration.
  • No waiver of unlawful employment practices exists for events that occur after the execution of the agreement.
  • The agreement provides the current, former or prospective employee 21 days to consider the agreement and to consult an attorney prior to execution.
  • The agreement is not effective until the expiration of a seven-day revocation period.

Current, former and prospective employees who successfully challenge the validity and enforceability of an agreement under the act are entitled to costs and attorney fees.

Part 2 Tuesday will discuss how the act changes the Illinois Human Rights Act.