June 20, 2019

Gearing Up for the Workplace Transparency Act: A Checklist for Illinois Employers

Illinois legislature recently approved the Workplace Transparency Act (WTA) – a sweeping piece of legislation that imposes a variety of restrictions and requirements on employers relating to workplace discrimination and harassment. With Governor Pritzker expected to sign the act into law, Illinois employers are facing a radically different labor and employment landscape starting in 2020.

Limitations on Employment Agreements

Under the WTA, employers are prohibited from entering into employee agreements (including separation or settlement agreements) that contain nondisclosure and/or non-disparagement clauses for claims of harassment or discrimination. However, employers can enter into separation or settlement agreements with nondisclosure and/or non-disparagement clauses if all the following conditions are present:

  • The claim at issue arose before the settlement/separation agreement was executed.
  • The parties both agree on the nondisclosure and/or non-disparagement clause.
  • The employee/applicant has 21 days to consider the agreement before executing.
  • The employee/applicant has seven calendar days following the execution of the agreement to revoke the agreement.

Limitations on Arbitration Agreements

Although employers are still permitted to use arbitration agreements, they may only do so if the arbitration agreement excludes discrimination and harassment claims. The prohibition on arbitration of discrimination and harassment claims appears to conflict with the Federal Arbitration Act. But, employers will be faced with uncertainty in how this provision will be enforced against employers until there is a judicial opinion addressing the conflict.

Expanded Definitions of Discrimination and Harassment

The WTA also amends the Illinois Human Rights Act (IHRA) to prohibit actual or perceived discrimination and/or harassment based on a protected characteristic under the IHRA, including: 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. Previously, causes of action for “perceived” discrimination or harassment were limited to disability claims. “Perceived” discrimination or harassment claims allow employees to allege that they were subject to unwelcome conduct based on a protected characteristic their employee “perceived” them to have, regardless of whether the individual actually has that characteristic.

Expanded Application of IHRA to Contractors

The WTA further amends the IHRA to specifically provide protections to “nonemployees,” such as contractors and consultants. Consequently, employers could be held liable for harassing conduct that substantially interferes with contractors’ work performance or creates an intimidating, hostile or offensive working environment for them as members of a protected class.

Employer Disclosure Requirements

Beginning July 1, 2020, employers and parties to a public contract in Illinois are required to disclose annually to the Illinois Department of Human Rights (IDHR):

  • Total number of settlements entered into during the preceding year by the employer or corporate executive of the employer that relate to any alleged act of sexual harassment or unlawful discrimination
  • Breakdown of the number of settlements based on protected characteristics
  • Total number of adverse judgments or administrative rulings during the preceding year
  • Whether any equitable relief was ordered against the employer in any adverse judgment or administrative ruling
  • Total number of adverse judgments or administrative rulings based on protected characteristics

The IDHR may use the information disclosed to open a preliminary investigation into pattern and practice violations. Noncompliance with reporting obligations could result in civil penalties up to $5,000 per offense.

Annual Sexual Harassment Prevention Training

Employers are now required to provide annual sexual harassment prevention training to all employees, which at minimum, must:

  • Define sexual harassment.
  • Provide examples of prohibited conduct.
  • Identify employer responsibility to prevent, investigate and address sexual harassment.
  • Summarize federal and state laws addressing sexual harassment, including available remedies.

The IDHR will make available a model sexual harassment prevention training program that meets these criteria. Employers must either use the model program or establish training that exceeds the minimum standards provided by the model training.

Noncompliance with this section may subject employers to civil penalties up to $5,000 per offense.

Recommended Next Steps

Once signed by Governor Pritzker, the WTA will largely go into effect on January 1, 2020 (with the exception of the employer disclosure requirement noted above).

Employers should be ready to immediately review their employment contracts, separation agreements, arbitration agreements, and policies on discrimination and harassment. Employers should also evaluate whether their internal sexual harassment training program meets the WTA’s minimum requirements. Additionally, employers should prepare to comply with the mandatory reporting requirements.

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