Overview of Recent Amendments to the Illinois Workplace Transparency Act

On August 15, 2025, Illinois Governor JB Pritzker signed HB 3638 into law, amending the Illinois Workplace Transparency Act (IWTA) and imposing additional obligations on employers to ensure that their employment contracts – including settlement agreements, termination agreements, and arbitration agreements – omit language that may restrict employees from reporting or disclosing allegations of unlawful conduct in the workplace.

The revised provisions apply to any employment contract entered into, modified, or extended on or after January 1, 2026, except for collective bargaining agreements covered by the National Labor Relations Act or the Illinois Public Labor Relations Act.  

HB 3638 includes the following changes: 

Expands definition of “unlawful employment practice”

Prior to the amendments, the IWTA voided any contract that interfered with an employee’s ability to disclose or report claims of unlawful employment practices, i.e., any form of discrimination, harassment, or retaliation. Now, the amendments expand the scope of “unlawful employment practices” to include any unlawful practice actionable under state or federal employment law including those enforced by the Illinois Department of Labor, the Illinois Labor Relations Board, the U.S. Department of Labor, the Occupational Safety and Health Administration, or National Labor Relations Board. Notably, this includes wage claims and purported safety issues that go beyond claims of discrimination or retaliation. 

Additional Protection for Concerted Activity 

In addition to prohibiting employment contracts that restrict or otherwise prevent an employee from reporting allegations of unlawful conduct in the workplace, it now also prohibits any language that restricts an employee from engaging in “concerted activity” to address work-related issues. “Concerted activity” includes the right to collectively bargain, participate in labor organizations, or even collectively discuss work-related issues such as benefits and wages.

Specifies Prohibited Contract Language 

Pursuant to the amendments, employment contracts may not unilaterally (1) shorten the applicable statute of limitations; (2) apply non-Illinois law to Illinois-based claims; or (3) require adjudication of Illinois claims outside the state if it denies the employee a substantive or procedural right or remedy related to unlawful employment practices. 

Such provisions, however, may be included if they are “mutual” based on the previous conditions of being made in writing, provide actual, knowing and bargained-for consideration, and acknowledge rights to report unlawful and criminal conduct to any appropriate federal, state or local government agency. In addition, the agreement must also expressly affirm the employee’s right to participate in proceedings related to unlawful employment practices, including private litigation and actions brought by any government agency, not just those enforcing discrimination laws, and acknowledge the employee’s right to engage in concerted activity to address workplace issues.

Confidentiality Clauses in Settlement and Termination Agreements  

Any confidentiality provision in a settlement or termination agreement must be supported by distinct, bargained-for consideration separate from any consideration provided for a release of claims or other terms. Additionally, employers may not unilaterally include any clause that states that the promises of confidentiality is the preference of the employee. Additionally, the Act prohibits employers from including confidentiality provisions that restrict employees from engaging in future or anticipated concerted activity concerning workplace conditions.

Expanded Rights for Employees to Testify 

Under the amended Act, employees, prospective employees, and former employees will be permitted not only to testify in administrative, legislative or judicial proceedings concerning alleged criminal conduct and unlawful employment practices, but also in arbitral proceedings. The Act clarifies that employees can participate in depositions in any such proceedings pursuant to a court order, subpoena or other written request from an administrative agency or the legislature.

Additional Damages Available

The amended Act expands available remedies for employees, prospective employees, and former employees by allowing the recovery of “consequential damages” in addition to the preexisting right to reasonable attorney’s fees and costs. These remedies now apply not only to successful challenges to the validity or enforceability of employment agreements, but also to defenses against claims for breach of confidentiality under the IWTA. 

Moving forward, it is important for employers with operations in Illinois to review and, where necessary, update their employment-related agreements before the amended IWTA takes effect on January 1, 2026.