To the Workplace Transparency Act.
Illinois employers should have their radar on several important employment law updates taking effect in 2026. One of the most significant is the amendment to the Illinois Workplace Transparency Act (WTA), enacted through House Bill 3638[LQ1] , and signed into law by Governor JB Pritzker.
This amendment expands the WTA’s scope and imposes new obligations on employment contracts, including employment agreements, settlement agreements, termination agreements, confidentiality or non-disclosure agreements, and separation agreements, etc. that do not contain provisions that unlawfully restrict employees’ rights.
The new law applies to any employer with at least one employee, and it extends to employees, contractors, and consultants who perform services directly for the employer. The amendments cover contracts entered into, modified, or extended on or after January 1, 2026, with limited exceptions for collective bargaining agreements governed by the National Labor Relations Act or the Illinois Public Labor Relations Act.
Below is an overview of the major changes:
- Expanded Definition of “Unlawful Employment Practice”
Prior to the amendments, the WTA primarily addressed unlawful employment practices related to discrimination, harassment, and retaliation. Under the amendments, the definition of “unlawful employment practice” has been significantly broadened to include any violation of state or federal employment law, not just those related to discrimination or harassment. This expansion aligns the WTA with laws enforced by agencies such as the Illinois Department of Labor (IDOL), the U.S. Department of Labor (USDOL), the Occupational Safety and Health Administration (OSHA), the Illinois Labor Relations Board (ILRB), and the National Labor Relations Board (NLRB).
The broadening definition under the WTA means that Illinois employers now face a wider range of potential claims under state law, beyond traditional discrimination, harassment, and retaliation. Starting from 2026, wage and hour disputes, workplace safety issues, leave and accommodation obligations can all form the basis of a WTA claim. This means that Illinois employers should review and update their employment policies, handbooks, and agreements, including arbitration, confidentiality, and non-disclosure provisions to ensure they do not inadvertently limit employee rights now protected under the WTA.
- New Protections for “Concerted Activity”
Under the amendments, employers can no longer restrict employees from engaging in “concerted activity” to address workplace issues. “Concerted activity” included the right of employees to (1) discuss or act collectively on matters such as wages, hours, benefits, or working conditions, (2) join or assist a labor organization, and (3) engage in collective bargaining or mutual aid related to workplace concerns.
Although protections for concerted activity have long existed under the federal National Labor Relations Act (NLRA), the Illinois amendment codifies these rights at the state level. This means that even employees who are not covered by the NLRA, such as certain supervisors, public sector employees, agricultural and domestic workers, or independent contractors are now protected under Illinois Law. In addition, the amendment explicitly prohibits Illinois employers from including restrictions in employment, confidentiality, and arbitration agreements that could inadvertently limit these rights.
- Prohibition of Certain Unilateral Contract Conditions
HB 3638 also targets unilateral employment conditions that may undermine employee rights. Specifically, employers may no longer require employees to accept a contract provision unilaterally that:
- Apply non-Illinois law to Illinois-based employees,
- Require venue outside Illinois for employment-related disputes,
- Shorten the statute of limitations for employee claims, or
- Waive or arbitrate claims in a way that diminishes employee protections.
While some of these provisions may still be enforceable if they are mutual, in writing, and provide actual, knowing, and bargained-for consideration, employers must also provide separate acknowledgments of employees’ rights. In other words, an employer can no longer impose these restrictions unilaterally. Any limitations on an employee’s rights must be the result of a negotiated agreement that the employee knowingly accepts. The key message of HB 3638 to employers is clear: employment contracts must be fair, transparent, and mutually acknowledged, and any restrictions on employee rights must be intentionally bargained for rather than imposed.
If your employment contract includes any of these types of restrictions, it is important to have it carefully reviewed by an employment attorney to ensure compliance with Illinois law in 2026.
- Stricter Rules for Confidentiality and Non-Disclosure Provisions
When it comes to Confidentiality Agreements and NDAs in separation and settlement agreements, stricter rules are also imposed by the amendment.
- Where an agreement includes a confidentiality provision regarding alleged unlawful employment practices, the promise of confidentiality must be supported by separate, bargained-for consideration apart from what is provided for a release of claims or other contract terms.
- Employers cannot unilaterally state that confidentiality is the employee’s preference. This must be explicitly stated and documented by the employee.
- Confidentiality provisions cannot restrict employees from engaging in protected concerted activity or from participating in legal, legislative, administrative, or arbitral proceedings related to unlawful employment practices.
- Expanded Employee Rights to Testify and Recover Remedies
The amended Act also expands employees’ right to testify and recovery remedies. Employees (current, former, or prospective), now have the right to testify not only in administrative, legislative, and judicial proceedings but also in arbitration regarding workplace violations. More importantly, if an employee successfully challenges the validity or enforceability of an employment agreement or successfully defends against a claim for breach of a confidentiality agreement brought by an employer, they can recover consequential damages in addition to reasonable attorney’s fees and costs.
For Illinois employers, this represents a material shift in risk and potential exposure. Even a seemingly small dispute over an employment contract or confidentiality agreement could result in substantial financial liability if the employee prevails. The inclusion of consequential damage means that employers may be responsible for losses beyond the immediate dispute, while the award of attorneys’ fees and costs shifts the expense of litigation onto the employer.
- What Should Employers Do Now.
What does this mean for employers preparing for 2026? We recommend that Illinois employers take the following actions before January 2026:
- Review and update all employment, arbitration, confidentiality, separation, and restrictive covenant agreements affecting Illinois employees and contractors.
- Ensure carve-outs for protected disclosures and concerted activity are broad enough to comply with the amended WTA.
- Review and update employee handbooks and policies to reflect the expanded definitions of unlawful employment practices and protected activity.
- Train HR and management team to comply with these amendments, particularly before entering into or enforcing confidentiality or arbitration provisions.
- Weigh litigation risks carefully before enforcing confidentiality provisions against employees or former employees.
Summary of Amendments:
| Feature | Pre HB 3638 | Amendment under HB 3638 |
| Scope of “unlawful employment practice” | Focused on discrimination, harassment, and retaliation. | Expanded to cover any violation of state or federal employment law, including wage/hour, safety/OSHA, leave rights, and collective bargaining issues. |
| Restriction on “Concerted Activity” | Implicit via NLRA but not explicit under WTA | Explicit prohibition on restricting concerted activity in contracts |
| Confidentiality and NDA | Carve-outs existed for discrimination claims | Separate consideration for confidentiality, prohibition on unilateral declarations of preference, expanded claim types |
| Right to Testify | Permitted to testify in administrative, legislative or judicial proceedings | Permitted to testify in arbitral proceedings as well. |
| Remedies for Employee | Employees can recover attorneys’ fees and costs when successful challenges to the validity or enforceability of employment agreements. | Allow employees to cover “consequential damage” and also attorney’s fees and legal costs defense against claim for breach of confidentiality provisions. |
If you have questions about the content of this blog or employment law needs, contact Navigant Law Group, LLC at (847) 253-8800 or email us at hello@navigantlaw.com.
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[LQ1]Link: https://www.ilga.gov/legislation/BillStatus/FullText?DocNum=3638&DocTypeID=HB&GAID=18&LegId=0&SessionID=114&utm_source=chatgpt.com