On June 2, 2019, the Illinois General Assembly approved the Workplace Transparency Act (WTA), providing further prohibitions concerning sexual harassment in the workplace and imposing significant new obligations on Illinois employers. Illinois Governor Pritzker is expected to sign the legislation into law imminently.

The WTA addresses many aspects of workplace discrimination and harassment, including limiting non-disclosure and non-disparagement clauses, banning certain arbitration clauses, and mandating sexual harassment training and reporting. Employers who do not comply with the reporting and training requirements will be subject to certain monetary penalties.

The major changes provided under the WTA include:

Limitations on Non-disclosure, Non-disparagement, and Arbitration Clauses

The WTA prohibits employers from entering into employment agreements that include non-disclosure or non-disparagement clauses for claims of harassment or discrimination.

However, the WTA permits such clauses in settlement or separation agreements so long as: (1) the harassment or discrimination claims arise before the agreement is signed; (2) the clauses are mutually agreed upon and benefit both parties; (3) the employee/applicant is given 21 days to review the agreement before its execution; and (4) the employee/applicant has seven days after signing the agreement to revoke it and the agreement is not enforceable until that revocation period ends.

Additionally, unless an arbitration agreement excludes discrimination and harassment claims, the arbitration agreement is unenforceable. Further, arbitration agreements drafted by employers may not: (1) shorten applicable limitation periods for claims; or (2) limit an employee’s right to assert claims or remedies available under state or federal law – e.g., by prohibiting class actions.

The WTA’s prohibition of class action waivers appears squarely inconsistent with recent U.S. Supreme Court precedents (Lamps Plus, Inc. v. Varela, Epic Systems Corp. v. Lewis, and Kindred Nursing Ctrs LP v. Clark). Nonetheless, until a court addresses this provision of the WTA, Illinois employers’ ability to enforce arbitration agreements prohibiting class actions has become unclear.

Mandatory Annual Disclosures

Starting July 1, 2020, the WTA requires all private or public employers, labor organizations, and parties to a public contract to report annually any settlement, adverse judgment, or administrative ruling against them, involving harassment or discrimination, to the Illinois Department of Human Rights (IDHR). The required disclosures include the total number of settlements or judgments and those settlements and judgments based on each characteristic protected under the Illinois Human Rights Act (IHRA).

This information reported to IDHR is not subject to disclosure requests under the Illinois Freedom of Information Act nor will IDHR identify any employer in its public reports of this data. However, IDHR may use the reported information to begin an investigation and possibly bring a discrimination charge against an employer. Employers who do not comply with the reporting requirements are subject to penalties ranging from $500 to $5,000 per violation, with the penalty amount based on the number of an employer’s employees and whether the employer has prior violations.

Sexual Harassment Training

The WTA also requires every employer to provide annual sexual harassment prevention training. The training must equal or exceed the standards provided under a model training program that will be published by IDHR. The program will include an explanation of sexual harassment, examples of prohibited conduct, a summary of applicable laws about sexual harassment, and a summary of employee rights regarding sexual harassment. Failure to provide the required training will result in the same monetary penalties for violating annual reporting requirements.

The WTA does not indicate when IDHR will publish its model training program or when employers must complete their initial annual harassment training under the WTA. IDHR presumably will address the training deadline in its forthcoming regulations implementing the WTA.

Protections for Independent Contractors

The WTA extends the protections of the IHRA to independent contractors and consultants. This means employers could be held liable for harassing conduct that substantially interferes with the work of an independent contractor or creates a hostile work environment adversely affecting a contractor.

Unpaid Leave for Treatment following Sexual Harassment

The Illinois Victims’ Economic Security and Safety Act (VESSA) requires employers to provide 8-12 weeks of unpaid leave for employees to obtain medical, psychological, or other services after experiencing domestic or sexual violence. The WTA amends VESSA to include sexual harassment among the qualifying reasons for taking leave under VESSA. However, for VESSA purposes, “sexual harassment” need not have any connection to the workplace or employment.

“Regarded As” Discrimination Claims

The WTA also amends the IHRA to prohibit discrimination based on any actual or perceived protected characteristics. Previously, the IHRA barred perceived discrimination only when based on disability. The WTA amendment dramatically expands “perceived” claims to those based on race, gender, age, and every other protected characteristic. This means that even if an employee does not have a particular characteristic but contends the employer perceives the employee to have that characteristic and discriminated against the employee for that reason, the employee can bring a discrimination claim under the IHRA.

Take away: Illinois employers should consider reviewing their employment contracts, arbitration agreements, separation agreements, and policies on discrimination and VESSA, for compliance with the new obligations imposed under the WTA. Employers also should watch for forthcoming information about the reporting and training that the WTA requires.