Illinois Workplace Transparency Act: Employer Guide

Overview of the Workplace Transparency Act

The Illinois Workplace Transparency Act (WTA), effective January 1, 2020, significantly changed how Illinois employers handle harassment and discrimination claims. The law was enacted as part of a broader legislative package in response to the #MeToo movement and imposes requirements that affect employment agreements, settlements, and employer reporting obligations.

The WTA applies to all Illinois employers regardless of size and covers all forms of unlawful discrimination and harassment, not just sexual harassment. Employers must understand the law's impact on employment contracts, arbitration agreements, and settlement negotiations.

Restrictions on Arbitration Agreements

The WTA prohibits employers from requiring employees or prospective employees to waive, arbitrate, or otherwise diminish any existing or future claim of unlawful discrimination, harassment, or retaliation as a condition of employment. However, the law permits arbitration agreements that are voluntary, meaning the employee is given the option to opt out.

To qualify as voluntary, the agreement must include specific language allowing the employee to decline the arbitration provision without consequence. Employers must also wait at least 21 calendar days after providing the agreement before requiring a response, and the agreement must remain revocable for at least seven days after the employee signs it.

Confidentiality Provisions in Settlements

The WTA restricts the use of confidentiality provisions in settlement agreements resolving claims of harassment or discrimination. Confidentiality clauses are permitted only if the employee or applicant specifically requests confidentiality. The employer may not unilaterally include a confidentiality provision.

Even when confidentiality is included at the employee's request, the agreement must include certain minimum terms. It must state that the employee retains the right to file charges with state and federal agencies, participate in agency proceedings, and report conduct to law enforcement.

Annual Disclosure Requirements

Under the WTA, employers with one or more employees in Illinois must provide annual disclosures to the Illinois Department of Human Rights (IDHR). These disclosures include the total number of adverse judgments and administrative rulings in the preceding year related to sexual harassment or unlawful discrimination, and whether the employer has had any such judgments in the past five years.

Additionally, employers must disclose the existence of any settlement agreements related to sexual harassment or discrimination claims and provide aggregate data about the settlements without identifying the parties. Failure to file the required disclosures can result in penalties.

Practical Compliance Steps

Illinois employers should review all existing employment agreements, arbitration clauses, and settlement templates for compliance with the WTA. Arbitration agreements must be restructured to include opt-out provisions and waiting periods. Settlement agreements should be revised to ensure confidentiality provisions are employee-initiated rather than employer-imposed.

Employers should also establish internal tracking systems to capture the data needed for annual IDHR disclosures. Training HR personnel and legal counsel on the WTA's requirements helps ensure compliance across all stages of the employment relationship, from hiring through separation.