Illinois Tightens Rules on Non-Disclosure in Employment

What happened

On August 15, 2025, Illinois Governor JB Pritzker signed House Bill 3638, amending the Illinois Workplace Transparency Act (IWTA) to strengthen employee protections in employment-related contracts. The changes apply to agreements entered into, modified, or extended on or after January 1, 2026.

Overview

Why this matters: Illinois is closing loopholes that allowed employers to use confidentiality clauses and restrictive provisions in settlement, separation, and employment agreements. Employers must review templates and practices to avoid invalid provisions and potential liability.

Action Steps for Compliance

• Review all employment, separation, and settlement agreement templates for compliance.
• Remove or revise confidentiality clauses that do not meet new requirements.
• Eliminate provisions that shorten limitation periods or require out-of-state law or forums.
• Train HR and legal teams on updated IWTA requirements before January 1, 2026.
• Update all agreement templates and internal policies to reflect IWTA changes.

Additional Information

Overview of Key Changes

Expanded Definition of Unlawful Employment Practices

• Now includes violations of any state or federal employment law enforced by agencies such as the U.S. Department of Labor, OSHA, NLRB, and Illinois Labor Relations Board.

• Covers wage and hour claims, workplace safety, FMLA, and concerted activity rights.

Source: (Sec. 1-15)

Protection of Concerted Activity

• Employers cannot restrict employees from engaging in collective bargaining or other concerted activities to address work-related issues.

• Applies to employment, separation, and settlement agreements.

Source: (Sec. 1-20)

Restrictions on Confidentiality Clauses

• Confidentiality in settlement or termination agreements is valid only if:
  • It reflects the employee’s documented preference.
  • Supported by separate consideration, distinct from severance or release of claims.

• Employers cannot unilaterally state confidentiality is the employee’s preference.

Source: (Sec. 1-30)

Void Provisions: Clauses that shorten statutes of limitation, apply non-Illinois law, or require adjudication outside Illinois are void.

Source: (Sec. 1-25)

Expanded Right to Testify: Employees retain the right to testify in administrative, legislative, arbitral, or judicial proceedings, including depositions.

Source: (Sec. 1-40)

Expanded Remedies: Employees may recover consequential damages, attorneys’ fees, and costs for IWTA violations.

Source: (Sec. 1-35)

Source References

• Illinois HB 3638 – WORK TRANSPARENCY-CONFIDENTIAL (Public Act 104-0320)

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