Employers Should Review Upcoming Changes to the Illinois Workplace Transparency Act
With the new year approaching, Illinois employers should be mindful of recent amendments to the Illinois Workplace Transparency Act (IWTA). These amendments, which take effect on January 1, 2026, provide additional protections for employees in connection with a variety of employment agreements.
What is the IWTA?
The IWTA prohibits employers from including in certain employment agreements language that prevents a former, current, or prospective employee from “making truthful statements or disclosures about alleged unlawful employment practices.”1 The IWTA also prohibits non-negotiable confidentiality obligations, waivers, and mandatory arbitration of allegations of discrimination, harassment, or retaliation.2 Such provisions are void unless the agreement demonstrates that the employer and employee mutually agreed to them.3
Who is Covered Under the IWTA?
Employers
The IWTA applies to all employers in Illinois, as defined by the Illinois Human Rights Act (IHRA).4 As such, the IWTA applies to any employer with one or more employees within Illinois during 20 or more calendar weeks in the calendar year of or before the alleged violation.
Employees
The IWTA’s protections apply to current, prospective or former full-time employees, part-time employees, apprentices, and unpaid interns. Protections extend to non-employees such as consultants and independent contractors who perform work for the employer pursuant to a contract.
The IWTA does not apply to collective bargaining agreements.
What are the IWTA Amendments?
The recent amendments to the IWTA apply to employment contracts entered into, modified, or extended on or after January 1, 2026. The amendments include:
- Expanded Definition of “Unlawful Employment Practice”
The extant definition of the phrase “unlawful employment practices” includes “unlawful discrimination, harassment or retaliation” actionable under the IHRA, Title VII of the Civil Rights Act of 1964, or any other related state or federal rule or law enforced by the Illinois Department of Human Rights or the US Equal Employment Opportunity Commission. The amendments expand the IWTA’s definition of “unlawful employment practices” to include any unlawful practice arising under any state or federal rule or law governing employment, including those enforced by several additional agencies: the US Department of Labor, the National Labor Relations Board, the Occupational Safety and Health Administration, the Illinois Department of Labor and the Illinois Labor Relations Board.5 Thus, as of January 1, 2026, the IWTA will cover a broader scope of employment-related issues, such as those involving workplace safety, wages, and other labor activities.
Relatedly, the amendments prohibit employers from including in employment agreements, as a condition of employment or continued employment, “unilateral” contract terms that have the effect of preventing current or prospective employees from “making truthful statements or disclosures” about alleged “unlawful employment practices,” under the new broader definition of that phrase.6
- Protection for “Concerted Activity”
The IWTA bars agreements that prohibit or otherwise restrict a former, current or prospective employee from reporting allegations of unlawful conduct in the workplace to federal, state or local officials for investigation. As amended, the IWTA also prohibits agreements that restrict such employees from “engaging in concerted activities to address work-related issues.”7
The amendments define “concerted activity” as “activities engaged in for the purpose of collective bargaining or other mutual aid or protection” as provided in the National Labor Relations Act, the Illinois Education Labor Relations Act, Illinois Public Labor Relations Act, and the Illinois Labor Dispute Act.8
- Additional Limitations on Terms of Employment Agreements
Under the amendments to the IWTA, employers may not impose on current or prospective employees unilateral conditions of employment or continued employment that: (1) shorten the applicable statute of limitations; (2) apply non-Illinois law to an Illinois employee’s claim; or (3) require a venue outside of Illinois to adjudicate an Illinois employee’s claim. These provisions are explicitly against public policy and void to the extent they deny the current or prospective employee a substantive or procedural right or remedy related to unlawful employment practices.9
Such conditions are permitted, however, if the terms of the agreement establish that the employer and employee mutually agree to them.10 The amendments also require that any such mutual provisions acknowledge the employee or prospective employee’s right to “engage in concerted activities to address work-related issues,” and “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.”11
- Restrictions on Confidentiality Clauses in Settlement and Termination Agreements
The IWTA permits employers to include confidentiality and nondisclosure provisions in settlement agreements and termination agreements with current, prospective, and former employees. As amended, however, the IWTA requires that the “valid, bargained for consideration in exchange for the confidentiality” provision be “separate from any consideration that is provided in exchange for a release of claims.”12 Further, an employer may not unilaterally include a clause in a settlement or termination agreement that states that confidentiality is the employee’s preference.13 Additionally, employers are prohibited from including confidentiality provisions related to “future or prospective concerted activity related to workplace conditions.”14
- Expanded Rights for Employees to Testify in Legal Proceedings
The IWTA currently prohibits employers from restricting a former, current or prospective employee’s right to testify, pursuant to a court order, subpoena or other written request from an administrative agency or the legislature, in administrative, legislative or judicial proceedings concerning alleged criminal conduct and unlawful employment practices. As amended, the IWTA also protects an employee’s right to testify in arbitral proceedings. Employees may also participate in depositions in any such proceedings.15
- New Remedies Available to Employees
The amendments to the IWTA expand the scope of remedies potentially available to employees in connection with a challenge to an employment agreement. Specifically, former, current and prospective employees are now entitled to “consequential damages,” in addition to reasonable attorneys’ fees and costs, for a successful challenge to the validity or enforceability of an employment agreement. Moreover, consequential damages, attorneys’ fees and costs are also available to former, current and prospective employees who successfully defend an action for breach of a confidentiality agreement pursuant to the IWTA.16
Takeaways
Employers who have employees located in Illinois should carefully review and update, as may be necessary, their employment agreements to ensure compliance with the amendments to the IWTA. Specifically, employers should implement each of the following steps:
- Review employment-related agreements set to be executed, modified, or extended on or after January 1, 2026, including offer letters, employment contracts, confidentiality or non-disclosure agreements, restrictive covenant agreements, arbitration agreements, separation agreements and other employment agreements to ensure that they comply with the amendments to the IWTA.
- Expand carve-outs on non-disclosure provisions in separation, settlement and other employment agreements to explicitly permit employees to (a) make truthful statements or disclosures about any alleged “unlawful employment practices,” and (b) participate in proceedings related to unlawful employment practices and engage in concerted activities.
- Review and revise agreements that impose a shortened statute of limitations, that require non-Illinois law as the governing choice of law for Illinois employees, and/or that require out-of-state venues for the adjudication of claims.
- Consider some division of a settlement or separation payment into separate parts to establish valid, independent consideration for any required confidentiality covenants.
- Train human resources, legal, and business personnel on the amendments to the IWTA, including the expanded definition of unlawful employment practices, concerted activity protections, prohibited unilateral terms, and new remedies.
- Consult with employment counsel as needed to ensure that any modifications to employment agreements comport with the IWTA amendments.
2 820 ILCS 96/1-25(b). There are strong reasons to think that the Federal Arbitration Act preempts the IWTA’s ban on mandatory arbitration of allegations of discrimination, harassment, or retaliation, except as to claims involving sexual assault disputes or sexual harassment disputes (which are separately exempted from arbitration under a federal statute, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021).
