Chicago Business Litigation Lawyer Blog
You let an employee go, and your office pulls the same separation agreement it has used since before the pandemic. It has a release, a confidentiality clause, a non-disparagement clause, and perhaps a Delaware forum clause inherited from a parent company. The check is ready. The employee signs. Everyone assumes the matter is closed.
It may not be. The Illinois Workplace Transparency Act was amended by Public Act 104-0320, effective January 1, 2026, and an agreement that ignores the amended Act can lose the promises the employer paid for. The release itself can survive while the confidentiality promise falls away, and the employer that sues to enforce that promise can end up paying the employee’s damages and fees. If your forms were last reviewed before 2026, they deserve a fresh look now.
When can a separation agreement still require confidentiality?
It can, but only on the statute’s conditions. Section 1-30 allows a settlement or termination agreement to include promises of confidentiality about alleged unlawful employment practices so long as six things are true. 820 ILCS 96/1-30(a). Confidentiality must be the documented preference of the employee and mutually beneficial. The employer must notify the employee in writing of the right to have an attorney or representative review the agreement. There must be valid, bargained-for consideration for confidentiality “separate from any consideration that is provided in exchange for a release of claims.” 820 ILCS 96/1-30(a)(3). The agreement cannot waive claims of unlawful employment practices that accrue after it is signed. The employee must receive the agreement in writing and have 21 calendar days to consider it, although the employee may knowingly and voluntarily sign sooner. And unless knowingly and voluntarily waived, the employee has 7 calendar days to revoke.
That separate consideration requirement is the one most older forms miss. A single severance figure recited as consideration for everything may not do the job. The agreement should show what is being paid for confidentiality and what is being paid for the release.
Can the employer simply write in that confidentiality was the employee’s idea?
No. An employer “may not unilaterally include any clause” stating “that the promises of confidentiality are the preference of the employee.” 820 ILCS 96/1-30(b). The preference has to be real, and it has to be documented. A recital dropped into a template does not make it so. The same subsection bars the employer from unilaterally including a clause that prohibits truthful statements or disclosures about unlawful employment practices.
What about concerted activity?
This is where non-disparagement and confidentiality clauses written for another era can get into trouble. The Act now says no contract or other document shall restrict an employee, prospective employee, or former employee from reporting allegations of unlawful conduct to officials or from “engaging in concerted activity to address work-related issues.” 820 ILCS 96/1-20. Section 1-30(a) also carves “future or prospective concerted activity related to workplace conditions” out of what a settlement or termination agreement may keep confidential. The Act defines concerted activity by reference to collective bargaining and other mutual aid or protection under federal and Illinois labor statutes. 820 ILCS 96/1-15. An employer does not need a union in the building for this to matter. A former employee’s ordinary conversation with former coworkers about pay or safety may be exactly what a broad clause appears to forbid.
Does the Act reach the agreements employees sign when they are hired?
Yes, and that may be the larger exposure. A term that is a unilateral condition of employment and requires an employee to waive, arbitrate, or otherwise diminish a claim related to an unlawful employment practice is against public policy and void to that extent. That includes a term that purports to shorten the statute of limitations, “apply non-Illinois law to an Illinois employee’s claim,” or “require a venue outside of Illinois to adjudicate an Illinois employee’s claim.” 820 ILCS 96/1-25(b). The offending term is severable, so the rest of the contract can stand.
An employer may still use such a term as a mutual condition of employment, but the agreement must be in writing, demonstrate actual, knowing, and bargained-for consideration from both parties, and acknowledge a list of employee rights that now includes taking part in proceedings and engaging in concerted activity. 820 ILCS 96/1-25(c). Failing to meet those requirements creates a rebuttable presumption that the term is unilateral. 820 ILCS 96/1-25(d). The Act does not apply to collective bargaining agreements under the Illinois Public Labor Relations Act or the National Labor Relations Act. 820 ILCS 96/1-10(a). How these provisions will fare against federal arbitration law is a question employers should raise with counsel, because the statute does not answer it.
What does a mistake actually cost?
Two things. First, the promise itself. Failure to comply with section 1-30 renders the promise of confidentiality void and severable. 820 ILCS 96/1-30(c). The employer has paid for silence it does not have. Second, money. An employee is entitled to “consequential damages, in addition to reasonable attorney’s fees and costs,” incurred in challenging a contract for violation of the Act, upon a final, non-appealable ruling in the employee’s favor on the contract’s validity and enforceability, or in defending an action for breach of a confidentiality agreement. 820 ILCS 96/1-35. Suing a former employee to enforce a defective clause can turn a contract claim into a fee award against the company.
Separately, no agreement may waive the right to testify in a proceeding about alleged criminal conduct or unlawful employment practices when the person has been required or requested to attend by court order, subpoena, or written request from an agency or the legislature. 820 ILCS 96/1-40.
Does this mean an employer can no longer get a release?
No. The Act expressly preserves a mutually agreed settlement or termination agreement that releases remedies for an unlawful employment practice claim that occurred before the agreement was signed. 820 ILCS 96/1-30(d). Employers can still buy peace. They simply have to buy it on the statute’s terms.
Three steps protect an employer now. First, pull every form that touches confidentiality, non-disparagement, arbitration, limitations periods, choice of law, or venue, including offer letters and handbook acknowledgments. Second, rebuild the separation agreement so that the attorney review notice, the 21 and 7 day periods, the separate consideration, and the carve-outs for reporting and concerted activity appear on the page. Third, stop and get advice before sending a demand to enforce confidentiality against a former employee, because the Act’s fee and damages exposure runs in one direction.
A separation agreement is supposed to end a dispute, not start one. An old form is cheap until the day a court reads it against a statute it was never written to satisfy.
If you employ people in Illinois and your separation, confidentiality, or arbitration forms predate 2026, or a former employee is challenging one, we can review where they stand. Call DiTommaso Lubin, P.C. at 630-333-0333 for a free consultation, or contact us online.
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Peter S. Lubin and James V. DiTommaso are Chicago business litigation lawyers who try cases throughout Illinois. Peter is a graduate of the University of Chicago Law School, where he has taught trial practice for decades, and he has been recognized as an Illinois Super Lawyer. He has served as lead counsel in more than one hundred class actions and has handled more than one hundred shareholder, LLC, derivative, breach of fiduciary duty, and fraud matters, on both the plaintiff and the defense side. Crain’s Chicago Business credited him with the largest class action settlement of the year for a $40 million recovery in Erikson v. Ameritech, and the firm has been named DuPage County Law Firm of the Year. The firm and its lawyers have represented clients such as McDonald’s, Motorola, and Experian, and have litigated against companies including AT&T and General Motors. James DiTommaso, a graduate of Chicago-Kent College of Law with a certificate in business law, has served with the Illinois Appellate Court and has argued a case before the Illinois Supreme Court. He litigates these disputes in the Illinois trial and appellate courts and in the federal courts. When you hire this firm, the lawyers whose names are on the door are the ones who handle your case.
This post is for general information and is not legal advice.