Illinois Workplace Transparency Act: 2026 Updates Expand Employee Rights
The Illinois Workplace Transparency Act (WTA) has long served as a cornerstone of employee protection in Illinois, designed to ensure fair treatment and accountability in the workplace. Originally enacted in 2020 following the #MeToo movement, the WTA set limits on confidentiality agreements and employment contracts that could silence employees or conceal unlawful conduct.
Beginning January 1, 2026, new amendments under Public Act 104-0320 (House Bill 3638) will once again reshape the landscape of employment law in Illinois. The 2026 changes expand employee rights, impose stricter requirements on employers, and clarify the rules governing settlement, termination, and confidentiality agreements. For both employees and employers, understanding these updates is essential to ensure that agreements remain enforceable and compliant with state law.
What Is the Illinois Workplace Transparency Act?
The Illinois Workplace Transparency Act (820 ILCS 96) was enacted to prevent employers from using contracts or settlements to restrict workers’ rights or conceal unlawful behavior. The law aims to promote transparency in how companies address issues such as discrimination, harassment, retaliation, and other unlawful employment practices.
The WTA applies broadly to both employment agreements and separation or settlement agreements. It ensures that:
Employees can report alleged violations of state or federal law;
Employers cannot prohibit truthful statements about workplace misconduct;
Workers have time to review agreements and consult legal counsel; and
Confidentiality clauses are only valid when voluntarily agreed to by both parties.
The Act balances Illinois’ strong public policy interest in protecting employees from unlawful conduct with the contractual freedom of private parties to negotiate employment terms.
2026 Changes to the Illinois Workplace Transparency Act
Beginning January 1, 2026, the Illinois Workplace Transparency Act (WTA) will undergo several major updates under Public Act 104-0320 (House Bill 3638), which will reshape how employers draft, negotiate, and enforce employment and separation agreements. These amendments close long-standing loopholes and reinforce Illinois’ focus on transparency and fairness in the workplace.
First, confidentiality clauses must now include separate, bargained-for consideration (meaning a distinct payment or benefit specifically exchanged for confidentiality, apart from any compensation for releasing claims. Employers can no longer bundle confidentiality within standard severance terms. Second, clauses that shorten statutes of limitation, apply non-Illinois law, or require an out-of-state venue for Illinois employees are void. This ensures that Illinois law governs disputes arising within the state.
Third, the Act expands protection for concerted activity, prohibiting any contractual term that restricts employees from organizing or acting collectively to address workplace conditions. Notably, the National Labor Relations Act (NLRA) also recognizes these rights.
Fourth, employees, former employees, and applicants now have an expanded right to testify or participate in any legal, administrative, or arbitral proceeding concerning alleged unlawful conduct. Finally, employees who successfully challenge an unlawful contract clause or defend against a breach claim under the WTA may now recover consequential damages, in addition to attorney’s fees and costs. Collectively, these changes strengthen worker protections and emphasize Illinois’ stance that employment contracts must be transparent, negotiated in good faith, and fully compliant with state and federal law.
What Do the Changes Mean for Employees?
The 2026 updates to the Illinois Workplace Transparency Act have direct implications for both employees and employers, shifting how contracts and settlements are negotiated and enforced.
For employees, the changes provide:
Clearer rights to report misconduct, cooperate with investigations, and engage in collective action;
Protection from overreaching contract terms, such as shortened filing deadlines or forced arbitration outside Illinois;
Assurance that confidentiality clauses must be supported by additional, specific compensation; and
Greater remedies if an employer enforces a void or unlawful clause.
For employers, these updates mean that existing form agreements must be reviewed and revised before 2026. This particularly pertains to confidentiality, severance, and settlement templates. Noncompliance can expose organizations to litigation risk, reputational harm, and additional damages. Employers should also train HR staff and managers to understand the Act’s revised requirements, as well as document consent, consideration, and review periods when executing agreements.
Ultimately, the amended law underscores Illinois’ commitment to transparency, accountability, and fairness in employment relationships. It ensures that innovation in workplace practices (like AI-driven hiring and evolving labor models) does not come at the expense of fundamental employee protections.
Contact O’Malley & Madden, P.C. for Guidance on the 2025 WTA Changes
As Illinois updates its workplace laws, both employers and employees will face new compliance questions. Whether you are reviewing a severance offer, drafting a new employment agreement, or seeking to understand your rights under the Illinois Workplace Transparency Act, our firm can help.
O’Malley & Madden, P.C. advises on all aspects of employment law, civil rights law, and workplace compliance, helping clients navigate evolving regulations with clarity and confidence. To learn how the Illinois Workplace Transparency Act changes might affect your workplace, contact the employment and civil rights law firm of O’Malley & Madden, P.C.
