New amendments to the Illinois Workplace Transparency Act expand employee and consultant/contractor protections, including prohibitions on various “unilateral” contract provisions imposed as a condition of employment and enhanced requirements for valid “mutual” conditions and for confidentiality clauses in termination and settlement agreements.
Illinois Governor J.B. Pritzker signed House Bill 3638 into law on August 15, 2025. The amended Act applies to contracts entered into, modified, or extended on or after its effective date. The law, set to go into effect on June 1, 2026, amends the Illinois Workplace Transparency Act (IWTA or the Act) in several key ways. The following is a summary of various amendments. It is not a comprehensive analysis of the Act or all of its amended provisions.
The amended Act broadens the definition of “unlawful employment practice” to encompass any practice made unlawful by any federal or Illinois state employment law. It also now provides protections for employees participating in “concerted activity.” Additionally, and perhaps most significantly for employers, the amendments add restrictions on the use of certain “unilateral” conditions in employment agreements and expand the requirements for certain legally enforceable “mutual” conditions and agreements, as well as for certain confidentiality provisions in termination and settlement agreements. Lastly, the amended Act introduces a new remedy of consequential damages that employees may pursue in addition to attorney’s fees and costs.
Like the pre-amendment Act, the amended IWTA borrows “Employee” and “Employer” definitions from the Illinois Human Rights Act (IHRA). The Act applies to “Employees,” generally defined in relevant part as “[a]ny individual performing services for remuneration within this State [of Illinois] for an employer,” and to “Employers,” generally defined in relevant part as “[a]ny person employing one or more employees within Illinois.”
The amended IWTA also continues to provide that protected “Employees” include “‘nonemployees’ as defined in Section 2-102 of the Illinois Human Rights Act.” “Nonemployee” under the foregoing IHRA provision, and thus the IWTA, “means a person who is not otherwise an employee of the employer and is directly performing services for the employer pursuant to a contract with that employer,” and “includes contractors and consultants.”
IWTA TO ENCOMPASS EXPANDED VIOLATIONS OF STATE OR FEDERAL EMPLOYMENT LAWS
The new law widens the IWTA’s purpose to include protections against all violations of Illinois state or federal employment laws. This expanded purpose is echoed in the new definition of “unlawful employment practice,” which broadly includes not only the Article 2 Employment provisions of the IHRA and Title VII of the Civil Rights Act of 1964, but also “any other State or federal rule or law governing employment,” including those enforced by an expanded range of Illinois and federal agencies: the Illinois Department of Human Rights, the Illinois Department of Labor, the Illinois Labor Relations Board, the Equal Employment Opportunity Commission, the US Department of Labor, the Occupational Safety and Health Administration, and the National Labor Relations Board.
The Act’s prior definition had limited an “unlawful employment practice” to laws prohibiting “unlawful discrimination, harassment, or retaliation,” including those enforced by the Illinois Department of Human Rights or the Equal Employment Opportunity Commission. The definition affects, among other things, protections for the reporting of allegations of unlawful employment practices, the use of unilateral conditions and mutual conditions requirements in employment agreements, and confidentiality clauses in termination and settlement agreements.
NEW ‘CONCERTED ACTIVITY’ PROVISION
The amended Act specifies new protections for “concerted activity,” defined as “activities engaged in for the purpose of collective bargaining or other mutual aid or protection as provided in [the National Labor Relations Act,] 29 U.S.C. 157 et seq., as it existed on January 19, 2025, and the Illinois Education Labor Relations Act, Illinois Public Labor Relations Act, and Labor Dispute Act.” The Act forbids employers from prohibiting, preventing, or otherwise restricting an employee, prospective employee, or former employee from “engaging in concerted activity to address work-related issues.”
UNILATERAL CONDITIONS OF EMPLOYMENT OR CONTINUED EMPLOYMENT
The amended Act expands the scope of certain prohibited “unilateral” contract terms that require an employee or prospective employee to “waive, arbitrate, or otherwise diminish any existing or future claim, right, or benefit related to an unlawful employment practice.” The Act’s definition for “unilateral condition of employment or continued employment” remains the same, defining it as “any contract, agreement, clause, covenant, or waiver an employer requires an employee or prospective employee to accept as a non-negotiable material term in order to obtain or retain employment.” The amended Act adds the following new restrictions:
- Concerted activity: The Act adds “concerted activity” to the scope of protected activities and provides that a unilateral contract condition is invalid where it has the “purpose or effect of preventing an employee or prospective employee” from “engaging in protected concerted activity to address work-related issues”
- Other contract provisions: The Act adds the following categories of contract provisions to those that, if “unilaterally” imposed as a condition of employment or continued employment, are deemed unlawful and void:
- Statute of limitations: A provision that “purports to shorten the applicable statute of limitation”
- Application of non-Illinois law: A provision that “purports to . . . apply non-Illinois law to an Illinois employee’s claim”
- Venue: A provision that “purports to . . . require a venue outside of Illinois to adjudicate an Illinois employee’s claim”
MUTUAL CONDITIONS OF EMPLOYMENT OR CONTINUED EMPLOYMENT
The Act continues to provide that “[a]ny agreement, clause, covenant, or waiver that is a mutual condition of employment or continued employment may include provisions that would otherwise be against public policy as a unilateral condition of employment or continued employment” (including the above statute of limitation, non-Illinois choice of law, and venue provisions) if it meets certain conditions.
Most of those conditions remain unchanged, including that the agreement or other condition be “in writing, demonstrate[] actual, knowing, and bargained-for consideration from both parties” and “acknowledge[] the right of the employee or prospective employee to” engage in certain protected conduct. The amended IWTA makes two changes to the required “acknowledgements,” however:
- It requires acknowledgement of the individual’s right to “participate in a proceeding related to unlawful employment practices, including any litigation brought by any federal, State, or local government agency or any other person who alleges that the employer has violated any State, federal, or local law, regulation or rule”
- This language revises the pre-amendment Act’s language referencing an employee’s right to “participate in a proceeding with any appropriate federal, State, or local government agency enforcing discrimination laws”
- The revised language appears to expand the prior provision to encompass private litigation, as well as government agencies beyond those that strictly “enforc[e] discrimination laws”
- The amended Act adds a new required acknowledgment of an individual’s right to “engage in concerted activity to address work-related issues”
CONFIDENTIALITY CLAUSES IN SETTLEMENT AND TERMINATION AGREEMENTS
The amended Act continues to permit a current, prospective, or former employee and their employer to enter into a valid and enforceable settlement or termination agreement that includes promises of confidentiality related to alleged employment practices. However, it adds certain new conditions for doing so (beyond pre-existing requirements including as to documentation, mutual benefit, notice, and periods for consideration and revocation; see IWTA Section 1-30 for details):
- Separate consideration for confidentiality clauses: The “valid, bargained for consideration in exchange for the confidentiality,” which was required by the pre-amendment Act, now must be “separate from any consideration that is provided in exchange for a release of claims”
- No unilateral statement of employee preference for confidentiality: Prior to the amendments, the Act required that confidentiality be the “documented preference of the employee”; the amendments elaborate on this requirement by specifying that an employer may not “unilaterally” include any clause in these agreements “that states that the promises of confidentiality are the preference of the employee”
- No waiver of concerted activity: The amended Act adds that employers may not contract for confidentiality as it pertains to future or prospective concerted activity related to workplace conditions
Notably, the final enacted amendments do not include a provision from a prior bill that would have required any such promises of confidentiality to expire within five years from the date the employee, prospective employee, or former employee disclosed the alleged unlawful employment practice that is the subject of confidentiality.
DAMAGES
The Act’s damages provision has also been amended to provide for the award of “consequential damages,” in addition to reasonable attorney’s fees and costs, upon a final non-appealable decision in favor of the employee, prospective employee, or former employee. The Act also extends these remedies beyond just a win on the question of enforceability of the contract and now encompasses success in “defending an action for breach of a confidentiality agreement pursuant to this Act” as well.
EMPLOYEE RIGHT TO PARTICIPATE IN PROCEEDINGS
The amended Act broadens the employee’s right to participate not just in administrative, legislative, and judicial proceedings, but also in arbitral proceedings when that employee has been required or requested to attend a proceeding pursuant to a court order, subpoena, or written request from an administrative agency or the legislature. The Act further clarifies that the employee’s right to provide testimony includes a deposition taken in connection with any of such proceedings.
TAKEAWAYS
Employers with one or more employees (or non-employee consultants or contractors) in Illinois should consider reviewing the agreements they use with any such persons and consult legal counsel regarding the applicability of and compliance with the IWTA, including its most recent amendments.
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