United States: Illinois Can See Clearly Now: State Legislates Workplace Transparency

Our June 2019 article "discussed four new bills targeting equity, transparency, and discrimination, including the Workplace Transparency Act (WTA), which was awaiting the signature of Governor J.B. Pritzker. As expected, Governor Pritzker signed Senate Bill 75—a sweeping piece of legislation that places new restrictions on Illinois employers and is designed to prevent harassment and discrimination in the workplace.

Below is a summary of the new restrictions, most of which go into effect on January 1, 2020 (unless otherwise noted).

Nondisclosure and/or Nondisparagement Clauses

Under the WTA, employers are generally prohibited from entering into employment agreements that contain nondisclosure and/or nondisparagement clauses pertaining to harassment or discrimination claims. However, employers may include a nondisclosure and/or nondisparagement clause in a separation or settlement agreement if, and only if:

  • the claim arose before the agreement was executed;
  • the nondisclosure and/or nondisparagement clause is the documented preference of the employee and is mutually beneficial to both parties;
  • the employee is notified, in writing, of the right to have an attorney or representative review the agreement before it is executed;
  • there is bargained for consideration in exchange for the confidentiality;
  • the employee has 21 days to consider the agreement; and
  • the employee has seven days following execution to revoke.

Employers may wish to review their employment agreements and assess compliance with the new law in the coming months.

Arbitration Agreements

The WTA also requires employers that utilize arbitration agreements to exclude claims of harassment and discrimination from the arbitration requirements. "[A]n arbitration clause shall contain a written exception for claims of harassment or discrimination . . . and shall allow an employee or applicant to pursue such claims against the employer through either arbitral or judicial forums."

While this restriction on parties' ability to contract for arbitration appears to conflict with the Federal Arbitration Act, Illinois employers may want to consider drafting compliant language to add into standard arbitration agreements.

New Reporting Requirements

Under the new law, employers are now required to make the following disclosures to the Illinois Department of Human Rights (IDHR):

  • The total number of settlements entered into by the employer in the preceding year based on claims of unlawful discrimination and/or harassment
  • A breakdown of the type of claim and the protected characteristic of each claim settled
  • The number of adverse judgments or administrative rulings rendered in the preceding year based on claims of unlawful discrimination and/or harassment
  • A breakdown of the type of claim and the protected characteristic of each claim resulting in an adverse judgment
  • Whether any equitable relief was ordered against the employer in an adverse judgment

These reporting requirements will begin on July 1, 2020, not January 1, 2020.

Expanded Definition of Discrimination

The WTA also expands the definition of discrimination under the Illinois Human Rights Act (IHRA) to include both actual and perceived protected characteristics. Previously, the IHRA only allowed claims of discrimination based on perception for disability discrimination. Under the WTA, claims for discrimination will be allowed based on the perception of a claimant having a protected characteristic other than a disability, such as race or sexual orientation.

Additional Protections for Nonemployees

These amendments to the IHRA also provide protections against discrimination and harassment to nonemployees, such as contractors and consultants. Therefore, employers may be liable for discrimination and/or harassment perpetrated by their employees that substantially interferes with the work of a contractor or consultant or creates a hostile working environment for them.

Required Annual Sexual Harassment Prevention Training

Under the new law, Illinois joins California, New York, Delaware, Connecticut, and Maine in requiring employers to hold annual sexual harassment training for all employees. The WTA requires the IDHR to produce a model sexual harassment prevention training program that will be made available to employers at no cost. At a minimum, this model program will include:

  • An explanation of sexual harassment consistent with the IHRA;
  • Examples of conduct that constitutes unlawful sexual harassment;
  • A summary of relevant federal and state statutory provisions concerning sexual harassment, including remedies available to victims of sexual harassment; and
  • A summary of responsibilities of employers in the prevention, investigation, and corrective measures of sexual harassment.

Employers are not required to utilize the model program, but if they chose not to do so, the training they provide must meet the minimum standards of the model program.

Key Takeaways for Illinois Employers

Illinois employers may want to review their policies and procedures before these laws go into effect and determine their plans for compliance with the new laws. To prepare for implementation of these laws, employers doing business in Illinois may consider taking the following actions:

  • Ensuring their sexual harassment and discrimination policies comply with the requirements of the WTA
  • Adopting annual sexual harassment trainings that cover the standards set forth in the new law and preparing for such trainings
  • Limiting the use of arbitration or nondisclosure agreements with respect to harassment claims where necessary, and revising all employment agreements to ensure their nondisclosure and arbitration clauses meet the standards set forth in the WTA
  • Ensuring that severance agreements and settlement agreements meet the standards set forth in the WTA for nondisclosure and nondisparagement clauses

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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