Illinois Expands Workplace Transparency Rules: HB 3628 Imposes Stricter Limits on Confidentiality and Waiver Clauses

On August 15, 2025, Illinois Governor J.B. Pritzker signed House Bill 3628 (“HB 3628”) into law, enacting significant amendments to the Illinois Workplace Transparency Act (“IWTA”). This legislation marks a major step in expanding employee rights and increasing regulatory oversight of confidentiality, arbitration, and waiver clauses in employment agreements.

If you or your business operates in Illinois and needs legal support with employment contract compliance, separation agreements, or workplace policies, contact the ILS legal team at contact@consultils.com. We offer tailored, practical solutions to help employers reduce risk and stay compliant.

Key Provisions

Expanded Definition of Unlawful Employment Practices

Previously, the IWTA only restricted confidentiality clauses that prevented employees from disclosing workplace discrimination, harassment, or retaliation. Under HB 3628, the definition of “unlawful employment practices” is broadened to include any violations of federal or Illinois labor laws, including:

• Unfair labor practices under the National Labor Relations Act (NLRA)

• Wage and hour violations

• Safety concerns

• Any conduct under the jurisdiction of federal or state labor agencies

Stricter Scrutiny of Unilateral Terms in Offer Letters and Employment Contracts

Employers can no longer unilaterally impose the following provisions in offer letters or employment contracts:

• Prohibitions on truthful statements regarding potential unlawful conduct

• Mandatory arbitration clauses

• Choice-of-law or forum-selection clauses that require disputes to be resolved out-of-state

  
  

If any of the above terms are included, the employer must have documented evidence that the provision was mutually negotiated and supported by consideration. The burden of proof lies with the employer in the event of a dispute.

Higher Standards for Confidentiality in Separation and Settlement Agreements

Confidentiality clauses in separation or settlement agreements involving unlawful employment practices are only enforceable if:

• The employee affirmatively expresses a documented preference for confidentiality

• The confidentiality clause is supported by separate consideration, distinct from any severance payments

  
  

Employers are prohibited from unilaterally stating that “confidentiality is the employee’s preference.”

Consequential Damages Now Available

If an employer is found to have violated the IWTA, employees may now recover consequential damages in addition to attorneys’ fees and costs.

Implications for Employers

• Broader Disclosure Rights: Employers can no longer limit employee disclosures to only discrimination or harassment claims. Any conduct potentially violating labor laws—such as pay practices, safety issues, or union rights—may not be silenced through confidentiality clauses.

• Greater Separation Complexity: The requirement of separate consideration and written employee preference makes settlement negotiations more complex and could hinder the resolution of certain disputes.

• Increased Litigation Risk: With the availability of consequential damages, employees and their attorneys may be more inclined to litigate IWTA violations. Employers face a higher financial and reputational risk if they fail to comply.

Recommended Actions for Employers

To mitigate legal exposure, employers should immediately begin internal reviews and adopt the following strategies:

• Update Contracts and Policy Documents: Promptly revise employment agreements, employee handbooks, separation agreements, and settlement templates. Pay close attention to confidentiality clauses, non-disparagement provisions, and dispute resolution terms to ensure full compliance with the new law.

• Adjust Separation Procedures and Negotiation Strategy: Allow for longer negotiation timelines where appropriate. For executive departures, consider implementing a structured “standalone confidentiality consideration” model to reduce uncertainty in individual negotiations. For general employees, reassess whether a confidentiality clause is necessary.

• Establish Standardized Documentation Protocols: Maintain records of whether the employee affirmatively requested confidentiality, the nature of negotiations between the parties, and the specific consideration provided. These records will help demonstrate that the clause was not unilaterally imposed.

• Strengthen Compliance Awareness Among HR and Management: Provide targeted training for HR personnel and managers to ensure they avoid making statements during conversations or exit interviews that could be interpreted as restricting employees’ statutory rights.

If you or your business operates in Illinois and needs legal support with employment contract compliance, separation agreements, or workplace policies, contact the ILS legal team at contact@consultils.com. We offer tailored, practical solutions to help employers reduce risk and stay compliant.

Disclaimer: The materials provided on this website are for general informational purposes only and do not, and are not intended to, constitute legal advice. You should not act or refrain from acting based on any information provided here. Please consult with your own legal counsel regarding your specific situation and legal questions.

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As Managing Partner at ILS, Richard Liu ranks among the leading U.S. attorneys in corporate, employment, and regulatory law. He is known for crafting legal strategies aligned with clients’ business objectives and advising Fortune 500 companies, startups, and executives on corporate transactions, financing, privacy, and employment matters across the technology, healthcare, and financial sectors.

Before founding ILS, Richard practiced at top defense firms, where he developed a reputation for anticipating risks and designing strategies that balance protection with growth. He has secured favorable outcomes in contract and intellectual property disputes, represented clients in state and federal courts, and is recognized for combining large-firm expertise with boutique-firm agility. Richard is also a frequent speaker at industry and legal conferences.

Email: contact@consultils.com | Phone: 626-344-8949

Susan is specialized in employment law and compliance, with additional experience in cross-border investments. With years of experience advising multinational clients, Susan focuses on employment-related matters, including workforce structuring, employee transfers, terminations, compensation and benefits, and workplace policies. She has extensive experience assisting companies in navigating complex labor regulations, managing cross-border employment issues, and resolving workplace disputes.

In addition to her employment law practice, Susan advises on M&A, private equity, venture capital, and cross-border investments. She has assisted international investors with complex deal structures, including VIE frameworks, and prepared due diligence reports and transaction documents.

Email:  contact@consultils.com | Phone: 626-344-8949