Workplace Transparency Act Creates 2020 To-do List for Illinois Employers
Labor & Employment Alert 01/15/20 Gary R. Clark, William A. Walden
2019 was a busy legislative year in Illinois with many new compliance obligations for employers in the New Year. Topping the list for Illinois employers is the Workplace Transparency Act ("WTA"), which went into effect on January 1, 2020. Inspired by recent events, the WTA creates new requirements for employers wishing to include confidentiality provisions in employment contracts and separation agreements and amends the Illinois Human Rights Act in several significant ways.
Here's a quick summary of the WTA's to-do list for Illinois employers in 2020:
Review and Revise Confidentiality Provisions in Employment Agreements, Business Protection Agreements and Non-Disclosure Agreements. First and foremost, the WTA prohibits any employment agreement or contract provision that is (i) a unilateral term or condition of employment or continued employment, and (ii) has the purpose or effect of preventing employees or applicants from making truthful statements or disclosures regarding unlawful employment practices. Such provisions are void as a matter of public policy and, if included as part of a broader confidentiality requirement, risk voiding the entire confidentiality obligation. The key term here is "unilateral" as the WTA does permit employers to bargain with new hires or employees for confidentiality provisions that are prohibited as unilateral terms of employment. Specifically, a confidentiality provision prohibiting statements regarding unlawful employment practices is permissible if it is mutual, in writing, demonstrates actual knowing or bargained-for consideration (beyond the promise of employment), and includes the following written acknowledgements in the agreement regarding the individual's right to: (i) report good faith allegations of unlawful employment practices to federal, state or local government agencies; (ii) report good faith allegations of criminal conduct to federal, state or local government agencies; (iii) participate in any proceeding for a government agency; (iv) make truthful statements or disclosures required by law, regulation or legal process; and (v) request or receive confidential legal advice.
As this language makes clear, no confidentiality agreement can ever prohibit reporting unlawful employment practices to government agencies or participating in proceedings related to the same. This leaves Illinois employers with two options when navigating confidentiality provisions in employment, non-disclosure and business protection agreements: (i) for unilateral provisions that apply to all employees, the policy should be revised to make clear that nothing in the confidentiality obligation requires the individual to refrain from making truthful statements or disclosures regarding unlawful employment practices or criminal conduct; or (ii) draft an individual specific provision that reflects separate, bargained-for consideration and includes the required language.
- To Do #1: All contracts and agreements that include confidentiality provisions must be reviewed and evaluated for either the unilateral approach (carving out the ability to make truthful statements regarding unlawful employment practices and criminal conduct) or negotiating individual specific confidentiality provisions. Agreements should be revised to be consistent with this decision to avoid the risk of having the entire obligation voided as contrary to public policy.
Separation and Settlement Agreements. Separation and settlement agreements are treated differently under the WTA than employment agreements. For settlement and separation agreements, the WTA only permits confidentiality provisions governing truthful statements or disclosures of unlawful employment practices if the obligation reflects bargained-for consideration, is mutually beneficial to both the employee and the employer, and includes written acknowledgement of the following: (i) the employee's right to have an attorney or other representative review the agreement before signing it; (ii) the agreement does not waive or otherwise release any unlawful employment practice claims accruing after the date it is signed; (iii) the employee's right to a 21-day review period of the written agreement; and (iv) the employee's right to revoke the agreement within seven days of signing. Employers drafting separation or settlement agreements will want to bargain for separate consideration for confidentiality and revise the confidentiality language consistent with the above.
- To Do #2: All settlement agreement templates must be reviewed and evaluated for either the unilateral approach (carving out the ability to make truthful statements regarding unlawful employment practices) or to provide for separate consideration for confidentiality and the required language for any bargained provision.
Reconsider Arbitration Clauses. The WTA prohibits mandatory arbitration provisions for claims involving unlawful employment practices. In order for an employment agreement to provide for arbitration as the sole method of dispute resolution, the same requirements for employment agreements above must be met. This means the provision must be mutual, in writing, reflect bargained-for consideration and include the same written acknowledgement of rights. As mandatory arbitration provisions are traditionally unilateral and non-negotiable in the employment context, Illinois has essentially prohibited mandatory, take-it-or-leave-it arbitration provisions involving unlawful employment practices. Similar to what we are seeing in other states that have enacted similar laws, there will likely be a legal challenge to this law in 2020 arguing it is preempted by the Federal Arbitration Act (and likely obtaining injunctive relief against its enforcement).
- To Do #3: Illinois employers with mandatory arbitration provisions will want to monitor legal developments on this issue and potentially revisit their use of arbitration agreements on a position-by-position basis.
Review Discrimination Policies and Training. The WTA also made several changes to the language and substance of the Illinois Human Rights Act ("IHRA"). For example, effective January 1, 2020, the IHRA prohibits discrimination against individuals perceived as belonging to one of its protected categories in addition to individuals that are actually in those protected categories (e.g., perceived as belonging to a certain race, sex, gender identity, disability, or other status).
- To Do #4: Revise your discrimination and harassment policies accordingly.
Revise Sexual Harassment Policies. One significant change to the IHRA was revising the definition of harassment. Now, harassment is defined as "any unwelcome conduct" on the basis of a protected characteristic "that has the purpose or effect of substantially interfering with the individual's work performance or creating an intimidating, hostile, or offensive working environment." The IHRA was also amended to make clear that it prohibits harassment against contractors and other categories of non-employees performing services for the employer. Policies should be reviewed to make sure they are consistent with the new harassment standard and likewise prohibit harassment against independent contractors and other forms of non-employees performing services in the workplace. And, to keep up with recent trends, harassment policies should likewise prohibit the harassment of employees by customers or clients. Policy revisions should also take into account the amendments to the IHRA that make clear that harassment in the “working environment” is not limited to the actual physical location where the employee is assigned to perform duties.
- To Do #5: Revise sexual harassment policies and training to reflect changes in law.
Revise Your Harassment Prevention Training. Illinois followed the model of other jurisdictions in requiring employers with workers in Illinois to establish sexual harassment prevention training that meets or exceeds minimum standards, as well as requiring employers to administer the trainings annually to all employees. The Illinois Department of Human Rights ("IDHR") has yet to release a model training for Illinois employers and regulations regarding the same, but when it does, all employers will need to evaluate using the model training or creating their own training that complies with the minimum standards.
- To Do #6: Stay tuned for guidance from the IDHR on the model training and other requirements.
Prepare for Potential Disclosure and Reporting Obligations. Beginning July 1, 2020 (and every successive July 1), Illinois employers must disclose to the IDHR information about "adverse judgments" or "administrative rulings" sustained in the previous calendar year. The WTA defines "adverse judgment or administrative ruling" as any final, non-appealable judgment or administrative ruling finding sexual harassment or unlawful discrimination. As for the content of the report, employers will have to disclose the total number of judgments, whether the tribunal ordered any equitable relief, and a tally of the judgments falling into specific categories set by the IDHR.
The WTA also permits the IDHR to request information on all employment settlements related to alleged sexual harassment or discrimination. In addition to the total number of such settlements, employers may also be required to report the numbers falling into specific protected categories. Employers should begin tracking employment settlements and the categories for each now to make responding to such requests easier.
And, for businesses that believe the IHRA does not apply to them, beginning July 1, 2020, the IHRA will apply to all employers with one or more employees.
- To Do #7: Begin tracking judgments and settlements for purposes of complying with IDHR reporting obligations.
Update VESSA Policies. Another statute revised by the WTA was the Victims' Economic Security and Safety Act ("VESSA"). The main change for employers to note is that VESSA now covers gender violence (instead of only domestic and sexual violence). Although this likely means a few revisions to a VESSA policy, any HR, compliance, and third party benefits administrators managing the policy should know that incidents of violence taken because of a person's actual or perceived gender can also support a VESSA leave request.
- To Do #8: Revise VESSA policies to reflect changes in law.
Audit Recruiting Practices. Effective September 29, 2019, the Illinois Equal Pay Act was amended to prohibit asking candidates for employment for their prior wage, salary, benefit or other compensation history. If an applicant volunteers this information, the employer does not violate the law as long as it does not rely upon the volunteered information in making the hiring decision or setting the starting compensation. The law likewise makes unlawful employment policies that prohibit employees from discussing their wages with each other. This prohibition does not apply to employees who have general access to compensation and benefit information as a result of their job; such individuals can still be prohibited from disclosing compensation information.
- To Do #9: Make sure your 2020 applications and recruiting practices are up to date and consistent with these new requirements.
For more information about newly enacted WTA laws and amendments or compliance with other Illinois employment laws, please contact your Quarles & Brady attorney or: