Labor & Employment Law Daily Wrap Up, EXPERT INSIGHTS—Illinois expands workplace protections: employer considerations, (Oct 14, 2025)

By Jon Zimring, Mikaela Shaw Masoudpour and Jade Yee of Greenberg Traurig, LLP

Starting Jan. 1, 2026, Illinois' amended Workplace Transparency Act (WTA) takes effect, giving more protections to employees, contractors, and consultants, and challenging Illinois employers to undertake new, strategic approaches if they wish to continue including some common, employer-friendly provisions in their agreements with current and former employees.

The changes include prohibitions on various "unilateral" contract provisions required as a condition of employment and heightened requirements for valid mutual conditions and confidentiality clauses. The amendments also introduce new protections for employees participating in "concerted activity" and a new remedy of consequential damages that employees may pursue in addition to attorneys' fees and costs.

What Is Changing?

Gov. J.B. Pritzker signed House Bill 3638 into law on Aug. 15, 2025, and the amended WTA will apply to any agreement entered into, modified, or extended after Jan. 1, 2026. The original WTA has been in effect since 2020, covering all contracts between Illinois employers and their employees or service providers (like contractors and consultants), and set rules for agreements that include arbitration, nondisclosure, and confidentiality of alleged unlawful employment practices. The 2026 amendments give more protection to workers. Here are the key changes:

1. Broader Definition of "Unlawful Employment Practices"

Before, the law mainly covered agreements involving discrimination, harassment, and retaliation claims. Now, it will cover agreements involving any claim under any "state or federal law governing employment, including those that are enforced by the Illinois Department of Human Rights, Illinois Department of Labor, Illinois Labor Relations Board, or the Equal Employment Opportunity Commission, U.S. Department of Labor, Occupational Safety and Health Administration, or National Labor Relations Board." This means more types of workplace complaints are protected.

2. Stronger Protections for Group Actions (Concerted Activity)

The new law protects employees' ability to engage in "protected concerted activity," defined as "activities engaged in for the purpose of collective bargaining or other mutual aid or protection as provided in 29 U.S.C. 157 et seq., as it existed on January 19, 2025, and the Illinois Education Labor Relations Act, Illinois Public Labor Relations Act, and Labor Dispute Act." Unlike certain provisions, such as arbitration and confidentiality, which may be enforceable if specific requirements are met, employers cannot use agreements that stop employees from joining together for these purposes at all. Any contract that tries to limit this kind of activity is automatically void and unenforceable. Agreements must also clearly explain workers' rights to engage in protected concerted activity.

3. Limits on "Unilateral" Employment Terms

Employers often include certain terms in contracts unilaterally, as a take-it-or-leave-it condition of getting or maintaining employment. Previously, the WTA prohibited employers from including unilateral provisions that require an employee to "waive, arbitrate, or otherwise diminish any existing or future claim, right, or benefit related to an unlawful employment practice." Now, it is also unlawful for employers to require employees to unilaterally impose the following conditions:

• Non-Illinois governing law: Contracts cannot force Illinois employees to use another state's law for their claims.

• Out-of-state venues: Contracts cannot require employees to go to court outside of Illinois for workplace claims.

• Shortened statute of limitations: Employers cannot shorten the legal time an employee has to make a claim.

4. Stricter Rules for Confidentiality Clauses

If an employer wants an employee to sign a separation or settlement agreement that requires them to keep details of their claims of unlawful employment practices confidential, they must now offer separate consideration beyond what is already being provided in exchange for their release of claims. Also, employers cannot unilaterally declare that confidentiality is the employee's preference unless the employee actually agrees and their agreement is properly documented.

5. Employees May Get More Damages

In addition to reasonable attorneys' fees, an employee who wins a case based on a violation of the WTA may now be entitled to "consequential damages." The amendments also extend these remedies beyond a win to also include fees, costs, and damages associated with "defending an action for breach of a confidentiality agreement pursuant to [the WTA]."

6. Expanded Rights to Take Part in Legal Proceedings

Employees will now have the right to participate in more types of legal actions — not just proceedings brought by government agencies, but also private litigation, arbitration, or other proceedings, if they are required to by a court, government agency, or the legislature. This includes giving testimony in depositions taken in connection with any such proceeding. Agreements must also expressly acknowledge the employee's right to do so.

Takeaways for Employers

Employers with workers, consultants, or contractors in Illinois may wish to consult legal counsel regarding their compliance approach to the WTA and these amendments by reviewing all of their confidentiality, arbitration, severance, and settlement agreements before Jan. 1, 2026. Confidentiality and arbitration agreements should be reviewed to confirm that necessary carve-outs for protected disclosures are included. Severance and settlement agreements that require confidentiality of underlying claims of unlawful employment practices should be reviewed to ensure that separate consideration for confidentiality covenants is clear, and there is explicit, documented evidence of mutual assent.

Beyond review and updating any forms, Illinois employers should also think strategically about how to approach communications and negotiations with employees about the terms they want to include in such agreements. Particularly where such traditionally important terms to employers may now require the employee's mutual or bilateral agreement to be enforceable, and there will now be potential legal liability for attempting to obtain nonmutual or unilateral agreement to such terms, having and documenting the communications and/or negotiations that will establish the enforceability and legality of those terms will become important after Jan. 1, 2026.

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.

Jon Zimring, Mikaela Shaw Masoudpour and Jade Yee

Greenberg Traurig, LLP

4 Embarcadero Ctr, Ste. 3000

San Francisco

CA 94111-5983

United States

Tel.: +1 415 655 1300

E-mail: contentteam@gtlaw.com

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