Effective January 1, 2020 the Illinois Workplace Transparency Act (the “Act”) became effective. This Act provides major protections for Employees – and happily provides pitfalls for unwary Employers who try to squeeze Employees (as they have been doing for many years) – in the areas of:

• Employment agreements, severance agreements, and settlement agreements containing non-disclosure and non-disparagement clauses;
• Sexual harassment training;
• Reporting settlements and adverse judgments to the Illinois Department of Human Rights (“IDHR”).

As discussed in greater detail below, in many respects the Act is a game-changer that now gives Employees certain meaningful protections and leverage that they did not previously have.

In the preamble to the Act (Section 1-5) it provides as follows:

“This State has a compelling and substantial interest in securing individuals’ freedom from unlawful discrimination and harassment in the workplace. This State also recognizes the right of parties to freely contract over the terms, privileges and conditions of employment as they so choose. The purpose of this Act is to ensure that all parties to a contract for the performance of services understand and agree to the mutual promises and consideration therein, and to protect the interest of this State in ensuring all workplaces are free of unlawful discrimination and harassment.”

Notably, and importantly, the Act concerns itself not with general harassment, but rather with “unlawful discrimination and harassment”, with there relatedly being a definition in the Act for unlawful employment practices to include any form of unlawful discrimination, harassment, or retaliation under the Illinois Human Rights Act or “any related State or federal rule or law” enforced by the IDHR or the EEOC.

Severance agreements and settlement agreements (collectively “Sev/Settle Agreements”) containing non-disclosure and non-disparagement clauses

1. 21 days to consider/ 7 days to revoke

This is perhaps the most important provision of the Act. Employers are now required to provide all employees (with certain narrow exceptions under Section 1-45) 21 days to consider Sev/Settle Agreements and 7 days to revoke, else the non-disclosure and non-disparagement clauses (also referred to as NDA’s) are automatically void for any subject involving the above-defined “unlawful employment practices”. This does not mean that such clauses are entirely void, but rather that such clauses are void with regard to prohibiting an employee from disclosing information pertaining to “unlawful employment practices” – which practically speaking is a wide net.

The practical effect of this requirement is that going forward most Employers will start providing all Employees/ former employees with 21 days to consider/ 7 days to revoke Sev/Settle Agreements, where previously only Employees who were 40+ years old had such protections, and more and more employers had been squeezing employees under 40 years of age by providing them with say 7-10 days (or less) to consider such proposed agreements.

Short time-frames of 7-10 days (or less) made it very difficult for Employees to contact attorneys to negotiate better Sev/Settle Agreement terms (read: more money and benefits, and better contract language, etc.), and going forward it is expected that most employees will be afforded this 21/7 (and therefore have more of an opportunity to meaningfully negotiate better Sev/Settle Agreement terms).

2. Employers may not “unilaterally” include a clause in a severance or settlement agreement that prohibits an individual from “making truthful statements or disclosures regarding unlawful employment practices

While it is possible that Employers may begin to include boilerplate language in Sev/Settle Agreements, those that do not include such language will very possibly be out of luck to enforce such clauses even if they did the 21/7. And even merely including boilerplate language may not suffice, since the requirement is that such “confidentiality” is the “documented preference of the employee” and is to be “mutually beneficial to both parties” – and mere boilerplate language in other employment contract contexts has routinely been dismissed by the Courts as not sufficient.

Moreover, there is a requirement that the Employer have notified the Employee in writing that the Employee has the right to have the Sev/Settle Agreement reviewed by an attorney or representative of the Employee’s choosing before it is executed. A boilerplate clause in this regard may suffice, but it is another protection for the Employee – in other words, if it is not in the Sev/Settle Agreement then such clauses are void with regard to prohibiting an employee from disclosing information pertaining to “unlawful employment practices”.

3. Employees shall be entitled to reasonable attorney’s fees and costs for violations of the Act

I have noticed a disturbing trend in Sev/Settle Agreements, as well as in the initial (and sometimes only) drafts of Employment Agreements, of such documents providing for attorney’s fees for the Employer – and only the Employer – pursuing violations of the agreements. This can put employees at risk of big financial liabilities even for small violations of the agreements.

But the Act specifically now provides that Employees “shall be entitled to reasonable attorney’s fees and costs incurred in challenging a contract for violation of this Act”. As a result, even if there are 1-way attorney’s fees clauses just for the benefit of the Employers in the agreements, Employees will have certain statutory protections under the Act with regard to the agreements. This will give many Employers pause before suing, or even threatening to sue, an Employee due to the potential risks and exposure to which the Employer may expose itself under the Act.

Employment agreements containing unilateral Confidentiality Clauses (NDA’s)

Frequently when Employees commence their employment the Employers have them enter into Employment Agreements that have been prepared by the Employer. Sometimes the Employee can negotiate a change in some of the proposed language, and sometimes not – it depends on a lot of factors.

The Act provides for some protections for Employees where a “unilateral” condition of employment or continued employment has “the purpose or effect” of preventing an employee from making truthful statements or disclosures about alleged “unlawful employment practices” (which definition has been provided above), with the Act providing that such clauses are void as being against public policy and severable from otherwise valid and enforceable clauses in the Employment Agreement.

The Act goes on to provide, though, that if such NDA terms are “mutual” conditions of employment, then such clauses can be valid and enforceable. But in this regard this is only if the clause is in writing, demonstrates actual knowing, and bargained-for consideration from both parties, and acknowledges, inter alia, the right of the employee to report good faith allegations of unlawful employment practices and criminal conduct to the appropriate federal, state, or local government agency/ official. Failure of the Employment Agreement to have such language creates a rebuttable presumption that the clause is unilateral rather than mutual.

It remains to be seen how this will actually work/ be interpreted by the Courts in the real world.