Amendments to the Illinois Workplace Transparency Act Require Changes to Form Employment Agreements and Separation Agreements

Recent amendments to the Illinois Workplace Transparency Act (WTA) (HB 3638) require changes to Illinois employment agreements and separation agreements, beginning as of January 1, 2026.

The WTA, first enacted in response to the #MeToo movement, imposes certain procedural requirements on employment-related contracts for Illinois employees. These amendments impose additional restrictions, the most significant of which involves confidentiality clauses in separation agreements.

Overview of Key Changes:

• Confidentiality clauses must be supported by a separate allocation of consideration. The WTA already requires that termination and settlement agreements provide valid, bargained-for consideration in exchange for a promise of confidentiality. Under the amended law, there must be a specific allocation of consideration expressly in exchange for such a promise of confidentiality, separate from any allocation for a release of claims.
• Restrictions on choice of law and other language limiting dispute resolution. Under the amendments, employment agreement clauses that unilaterally shorten the statute of limitations for a potential claim, seek to apply the law of a jurisdiction other than Illinois to an Illinois state law claim, or require a judicial venue outside of Illinois, are void.
• Protection of concerted activity. The amendments provide that no employment agreement clause can unilaterally limit an employee from engaging in concerted activity (i.e., collective bargaining or other means by which workers promote mutual aid or protection) to address work-related issues. While these workers’ rights are already protected under federal law by the National Labor Relations Act (NLRA), the new language adds an additional state protection for such activities.
• Expanded right to testify. The amendments clarify that the right to participate in a proceeding includes any proceeding involving any practice unlawful under any federal, state, or local law, and further clarify that the right to testify includes testimony at a deposition or arbitration proceedings.
• Expanded remedies. Individuals who succeed in challenging a contract or defending against an alleged breach of a confidentiality agreement under the WTA will be entitled to consequential damages, in addition to the costs and reasonable attorneys’ fees that were already available to plaintiffs.

Is Illinois Usurping Jurisdiction Over Labor Law?

To some, the WTA amendments that reference the NLRA could read as potentially overstepping state authority. The NLRB’s Acting General Counsel, William Cowen, recently addressed a trend of state legislatures proposing laws in response to the NLRB’s current lack of quorum, urging that such legislation is unconstitutional and preempted by the NLRA.

To that end, on September 12, 2025, the NLRB filed suit against the State of New York, challenging a newly enacted law there that would grant New York State authority over labor disputes if the NLRB cannot act. The WTA amendments do not contain such ambitions – that is, they do not purport to vest Illinois agencies with authority over labor issues under the NLRB’s jurisdiction. Nevertheless, it is plausible that the amended WTA’s numerous references to “concerted protected activity” – protection of which falls squarely within the NLRB’s domain – could draw scrutiny and, perhaps, a legal challenge. This is something we will keep an eye on and report further as necessary.

What Illinois Should Employers Do Now

Employers will need to review language used for employment related contracts, including those used for settlements and separation pay. Agreements will need to comply with the WTA’s changes effective January 1, 2026, including:

• Separately allocating consideration for confidentiality and waiver clauses;
• Reviewing language regarding an employee’s right to testify and to engage in concerted activity; and
• Reviewing choice-of-law and venue clauses;
• Reviewing provisions purporting to shorten applicable statutes of limitation or apply non-Illinois law to an Illinois employee’s claim.

Be on the lookout for additional comprehensive updates on newly enacted Illinois legislation in forthcoming EBG Insights.

Epstein Becker Green Staff Attorney Elizabeth A. Ledkovsky contributed to the preparation of this article.