On June 2, 2019, the Illinois General Assembly approved the Workplace Transparency Act providing certain protections concerning sexual harassment in the workplace and imposing significant new obligations on Illinois Employers. This Bill was signed into law by Governor Pritzker in June 2019 and the provision of the new bill become effective January 1, 2020.

The Workplace Transparency Act prohibits Employers from entering into any Employment Agreement that includes non-disclosure or non-disparagement clauses dealing with claims for harassment or discrimination. The Workplace Transparency Act would permit such clauses dealing with claims of harassment or discrimination in Settlement and Separation Agreements so long as:

1. The harassment or discrimination claims arose before the Agreement was signed; and
2. The Clauses are mutually agreed upon and benefit to both parties; and
3. The Employee/Applicant is given twenty-one (21) calendar days to review the Agreement before its execution; and
4. The Employee/Applicant has seven (7) calendar days after signing the Agreement to revoke it.

The Workplace Transparency Act also prohibits the ability to enforce an Arbitration Agreement unless that Arbitration Agreement excludes discrimination and harassment claims, and Arbitration Agreements drafted by Employers may not shorten applicable statute of limitation periods for those claims or limit an Employee’s right to assert those claims under Federal and State Law-i.e., by prohibiting class actions. This prohibition of class actions seems to be inconsistent with recent United Supreme Court precedence (Lamps Plus incorporated v. Varela, Epic Systems Corporation v. Lewis and Kindred Nursing Senators LP v. Clark,) but obviously whether they are truly in conflict will have to wait for their court action.

One of the most troubling concepts of the Workplace Transparency Act is the requirement for Mandatory Annual Disclosures and required Sexual Harassment Training.

Starting July 1, 2020, the Workplace Transparency Act 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 for the preceding calendar year. This information must be reported:

1. The total number of adverse judgments or adverse rulings during the preceding year; and
2. Whether any equitable relief was ordered against the Employer; and
3. How many adverse judgments or administrative ruling in each of the following specific categories occurred in the previous year:

• Sexual Harassment;
• Discrimination or harassment on the basis of sex;
• Discrimination or harassment on the basis of race, color or national origin;
• Discrimination or harassment on the basis of religion;
• Discrimination or harassment on the basis of age;
• Discrimination or harassment on the basis of disability;
• Discrimination or harassment on the basis of military status or unfavorable discharge;
• Discrimination or harassment on the basis of sexual orientation or gender identity;
• Discrimination or harassment on the basis of any other characteristic protected by the Illinois Human Rights Act.

As well, under the Act, every Employer with Employees working in the State of Illinois will be required annually to provide its Employees with a Sexual Harassment Prevention Training Program that it creates or, in the alternative, the Employer may use the sexual harassment prevention training model developed by the Illinois Department of Human Rights.

If an Employer fails to make the required disclosures dealing with adverse judgment or administrative ruling or fails to provide the sexual harassment training, an Employer may be subject to penalties for the failure to report or failure to train that. An Employer with fewer than four (4) Employees will be subject to an initial penalty of Five Hundred ($500.00) dollars for the first offense, a penalty not to exceed One Thousand ($1,000.00) dollars for the second offense and a penalty not to exceed Three Thousand ($3,000.00) dollars for the third or subsequent offense. If the Employer has four (4) or more employees, the first offense cost is One Thousand ($1,000.00) dollars the second offense cost is Three Thousand ($3,000.00) dollars and the third or subsequent offense cost is Five Thousand ($5,000.00) dollars.

For purposes of this Act, Employer is defined as “any person employing one or more employees in the State of Illinois”;

Settlement means “written commitment or agreement that an Employer owes to an Employee who has been a victim of sexual harassment as discrimination compensation or other consideration”; and

Adverse Judgment or Administrative Ruling means “final non-appealable ruling or decision in favor of Employee”.

Obviously, the obligations of an Employer under the Workplace Transparency Act have the potential of greatly increasing the “cost to do business” in the State of Illinois.

Questions? Contact attorney Walter Liszka in our Chicago office at (312) 629-9300 or by email at waliszka@wesselssherman.com.