Governor Pritzker Signs The Workplace Transparency Act Into Law,
Governor Pritzker has been busily signing dozens of new laws over the last few months. On August 9, 2019, the landscape for Illinois employers was significantly changed when he signed the Workplace Transparency Act ("WTA") into law, imposing a slew of new requirements and restrictions on employers operating in Illinois. The WTA, which will become effective January 1, 2020, is aimed at preventing harassment and discrimination in the #MeToo era. The WTA has significant implications for Illinois employers, particularly with respect to:
With less than six months to comply, Illinois employers must quickly familiarize themselves with the WTA's new requirements and restrictions. Information about the key provisions of the WTA is set forth in more detail below.
Employment, Separation and Settlement Agreements
Under the WTA, employer-employee agreements entered into, modified or extended after January 1, 2020, must exclude certain previously-permissible provisions and must meet certain requirements in order to be valid. In particular, Illinois employers must be aware of the following:
Non-Disclosure/Non-Disparagement in Employment Agreements
Under the WTA, employment agreements cannot as a condition of employment, promotion, compensation, change in employment status or contractual relationship, require nondisclosure or non-disparagement clauses that cover harassment or discrimination. Subject to certain exceptions, the WTA further restricts Illinois employers from requiring employees, as a condition of employment, to agree to refrain from making "truthful statements or disclosures" about unlawful employment practices.
Employers may, however, by an agreement that is a mutual condition of employment, restrict the rights of employees to report unlawful employment practices, but only if the following conditions are met:
It remains to be seen how courts will determine the standard for "actual, knowing, and bargained-for consideration from both parties." It should not be assumed, however, that boilerplate acknowledgement language will meet the demands of the WTA's requirements.
Non-Disclosure/Non-Disparagement Provisions in Separation and Settlement Agreements
The WTA also restricts the ability of employers to demand confidentiality of alleged unlawful employment practices in the context of separation or settlement agreements. The WTA provides that such an agreement may include such confidentiality clauses only if:
Until standards are established, employers are likely to employ different approaches to address these requirements, which will undoubtedly complicate the negotiation of termination and settlement agreements, furthering the possibility for future litigation. Of course, an employee's ongoing confidentiality regarding alleged discrimination often is one of the major elements of consideration offered to induce an employer to make a settlement payment. Under the WTA, however, employers must either negotiate confidentiality terms separately from the consideration offered for a general release, or identify in the agreement the specific monetary payment that is being offered in exchange for an employee's confidentiality obligation.
The WTA further draws inspiration from the Older Workers Benefit Protection Act of 1990 (OWBPA), placing procedural requirements for consideration and revocation periods on employers wishing to negotiate a confidentiality provision. As with OWBPA, in order for a confidentiality provision to be enforceable, employers must give employees, regardless of age:
Employee Arbitration Agreements
The WTA significantly changes the structure of individual arbitration agreements entered into, modified or extended after January 1, 2020. The earlier version of the WTA restricted the right of employers to require employees to arbitrate harassment or discrimination claims, which as we noted in a previous version of this client alert likely would have been preempted by the Federal Arbitration Act. Under the WTA as enacted, employers still may not impose as a unilateral condition of employment or continued employment that an employee or prospective employee "waive, arbitrate or otherwise diminish any existing or future claim, right or benefit related to an unlawful employment practice" to which they are entitled under state or federal law. Examples of such restrictions that may not be imposed unilaterally by employers, in addition to mandatory arbitration, are likely to include contractual provisions that shorten the statute of limitations, restrict the right to seek punitive damages, force an employee to pay fees or costs above what is required to pursue claims in court, or force an employee to resolve claims in an inconvenient location that would not be required of an employee pursuing the same claims in state or federal court. The WTA makes such provisions, if unilaterally imposed, "against public policy, void to the extent it denies an employee or prospective employee a substantive or procedural right or remedy related to alleged unlawful employment practices," and "severable from an otherwise valid and enforceable contract."
The WTA, however, would appear to allow an employer and employee to agree to, as a "mutual condition of employment or continued employment," provisions "that would otherwise be against public policy as a unilateral condition of employment or continued employment." That includes an agreement to arbitrate unlawful employment practices. These otherwise void provisions become valid only if they are mutual and meet all of the requirements described above for employment agreements. That is:
The failure of an arbitration clause or agreement to meet each of these required elements establishes a "rebuttable presumption that the agreement … is a unilateral condition of employment or continued employment" and, thus, void and unenforceable. So, while the enacted WTA leaves open the possibility of an employer and employee mutually agreeing to arbitrate unlawful employment practice claims, employers should brace for subsequent challenges to those provisions as having been unilaterally imposed and thus void. Unless authentically negotiated and properly drafted, arbitration provisions are likely to lead to expensive litigation over the provisions' enforceability.
Expansions of the Illinois Human Rights Act
The WTA amends the IHRA to widen the scope of its application in the following three significant ways:
Actual or Perceived Protected Status
Consistent with EEOC guidance and several recent federal court opinions interpreting Title VII, the WTA amends the IHRA to expand the definition of unlawful discrimination and harassment to mean "discrimination against a person because of his or her actual or perceived: race, color, religion, national origin, ancestry, age, sex, marital status, order of protection status, disability, military status, sexual orientation, pregnancy, or unfavorable discharge from military service" and "any unwelcome conduct" on the basis of the same.
The implication of these definitional changes to include both actual or perceived protected classes cannot be understated. By expanding the definition of actionable discrimination and harassment to more than one's own actual, immutable or protected characteristics, the WTA is likely to significantly increase the claims Illinois employers will be forced to litigate under Illinois law.
The WTA further broadens the IHRA by expanding its statutory harassment protections to certain non-employees that are directly performing services for an employer pursuant to a contract (most commonly, contractors/consultants). Employers will now be subject to claims by non-employee contractors or consultants alleging harassment by employees in the workplace. By opening the door to such liability, in some regards, the WTA detracts from the benefits of utilizing non-employee contractors or consultants.
Mandatory Disclosures to the Illinois Department of Human Rights
In addition to the above requirements which take effect January 1, 2020, beginning July 1, 2020, Illinois employers must meet new reporting requirements. By July 1, and by each July 1 thereafter, employers must disclose to the IDHR the following statistics for the previous calendar year:
Moreover, if the IDHR is investigating a charge, it may request that the employer responding to the charge submit the total number of settlements it entered into during the prior five years (or less at the IDHR's discretion) that relate to any alleged act of sexual harassment or unlawful discrimination that either: (1) took place in the workplace or (2) involved the behavior of an employee or corporate executive, regardless of location. Employers must report the total number of settlements, in addition to a breakdown of the settlements based on protected characteristics. (An earlier version of the WTA mandated that employers disclose settlements without the IDHR first requesting that information. The WTA as enacted only requires this disclosure if requested by the IDHR during an investigation into a charge of discrimination.)
Failure to disclose this information could result in civil penalties up to $5,000 per offense. Notably, the information contained in an employer's disclosures are not subject to disclosure under the Freedom of Information Act.
Mandatory Annual Sexual Harassment Prevention Training
Beginning January 1, 2020, the WTA requires all Illinois employers to provide annual sexual harassment prevention training to all employees. Employers will be able to use an IDHR-created model sexual harassment prevention training program, or create their own training, provided it achieves the following:
As with the mandatory disclosures, employers may be subject to civil penalties of up to $5,000 for failing to provide the appropriate annual sexual harassment prevention training to employees.
Proactive Steps for Illinois Employers
In order to prepare for the implementation of the WTA, Illinois employers should consider proactively taking the following actions:
If you have questions regarding the WTA's implications for employers or would like assistance in reviewing or drafting policies or training employees, please contact David E. Morrison or any other member of the firm's Labor & Employment Group.
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The material in this client alert is based on information existing at that time. It should not be construed as legal advice or legal opinions based on any specific set of facts. The information in this publication is not intended to create, and the transmission and receipt of it does not constitute, an attorney-client relationship.
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