United States: Illinois' New #MeToo-Inspired Law Creates Sweeping Employer Obligations

In line with recently passed legislation in New York and California, Illinois' legislature rallied to create a bill that would help increase employee protections by combating discrimination and harassment in the workplace. On June 2, 2019, the General Assembly, through bi-partisan efforts, passed S.B. 75, which created three new laws and amended others that relate to sexual harassment and discrimination. On August 9, 2019, Governor J.B. Pritzker signed Public Act 101-0221 (hereinafter referred to as "S.B. 75") into law, comprehensively re-shaping the landscape of sexual harassment and discrimination law in Illinois. The new law not only prohibits unilateral agreements to arbitrate claims involving discrimination, harassment, and retaliation for complaining about discrimination or harassment, but also changes sexual harassment reporting and training requirements, and impacts how union representation is handled during the course of proceedings related to claims of sexual harassment.

New Laws Created by S.B. 75

Workplace Transparency Act

S.B. 75 creates the Workplace Transparency Act (WTA). This Act prohibits any "contract, agreement, clause, covenant, waiver, or other document" from restricting an employee from reporting allegations of unlawful conduct to federal, state, or local officials for investigation. The WTA does not apply, however to collective bargaining agreements covered by the National Labor Relations Act (NLRA). In sum, employers may not unilaterally compel an employee to keep silent about alleged unlawful employment practices in the workplace.

Most significant, any contract or the like that requires an employee to waive or arbitrate existing or future claims of unlawful employment practices is "void to the extent that it denies the employee a substantive or procedural right or remedy." The WTA defines an "unlawful employment practice" to cover employment discrimination or harassment based on any protected category, or retaliation for complaining of such discrimination or harassment. Illinois employers will thus need to rethink the language used in their standard arbitration agreements to the extent that such agreements are conditioned upon employment or continued employment. As a minor concession to employers with existing arbitration agreements, the WTA does provide for the severability of non-compliant terms from an otherwise enforceable agreement.

As an additional compromise, however costly, employers may negotiate arbitration agreements with individual employees in exchange for consideration. The WTA expressly permits such a practice by stating that any agreement "that is a mutual condition of employment or continued employment" may include provisions "that would otherwise be against public policy," but only if the agreement demonstrates "actual, knowing, and bargained-for consideration from both parties" and acknowledges the right of the employee or prospective employee to:

  1. report any good-faith allegation of unlawful employment practices to any appropriate federal, state, or local government agency enforcing discrimination laws;
  2. report any good-faith allegation of criminal conduct to any appropriate federal, state, or local official;
  3. participate in a proceeding with any appropriate federal, state, or local government agency enforcing discrimination laws;
  4. make any truthful statements or disclosures required by law, regulation, or legal process; and
  5. request or receive confidential legal advice.

Many practical questions for employers remain. For example, how much consideration is necessary to ensure that an agreement to arbitrate discrimination, harassment, or retaliation claims is a "mutual" condition of employment? Must the consideration be purely monetary in nature? The answers to these questions likely will depend on the facts and circumstances surrounding an individual's employment or prospective employment and the extent to which a court could find that the employee is coerced into accepting the terms of an arbitration agreement.

In a similar vein, the WTA continues to permit employers to require confidentiality related to unlawful employment practices in settlement or termination agreements, so long as:

  • confidentiality is the documented preference of the employee;
  • the employer notifies the employee, in writing, of his or her right to have an attorney or representative of his or her choice to review the settlement or termination agreement before it is executed;
  • there is valid, bargained-for consideration in exchange for the confidentiality;
  • the settlement or termination agreement does not waive any claims of unlawful employment practices that accrue after the date of execution of the settlement or termination agreement;
  • the settlement or termination agreement is provided, in writing, to the parties and the employee is given 21 calendar days to consider the agreement before execution; and,
  • unless knowingly and voluntarily waived by the employee, he or she has seven calendar days following the execution of the agreement to revoke the agreement and the agreement is not effective or enforceable until the revocation period has expired.

The WTA incentivizes employees to risk contesting the enforceability of any agreements entered into under these exceptional provisions by providing for the award of attorneys' fees and costs in the event of a favorable, non-appealable ruling.

Employers seeking to challenge the enforceability of the Workplace Transparency Act may have the opportunity to do so. There is a strong argument that the Federal Arbitration Act preempts the Illinois law on its terms relating to mandatory arbitration agreements. In fact, a federal court in New York recently held in the case Latif v. Morgan Stanley & Co., LLC, that a plaintiff's claims of employment were subject to mandatory arbitration, despite New York's recently-enacted CPLR § 7515, which limits the extent to which sexual harassment claims are subject to arbitration. As stated by the court in that decision:

Under the terms of the Arbitration Agreement, [Plaintiff's] sexual harassment claims are subject to mandatory arbitration. Section 7515 renders agreements to arbitrate sexual harassment claims null and void "[e]xcept where inconsistent with federal law." N.Y. C.P.L.R. 7515(b)(iii). Here, application of Section 7515 to invalidate the parties' agreement to arbitrate [Plaintiff's] claims would be inconsistent with the FAA. The FAA sets forth a strong presumption that arbitration agreements are enforceable and this presumption is not displaced by § 7515.

Further, the Supreme Court has clearly held that "the Federal Arbitration Act (FAA) will preempt a state law that "discriminat[es] on its face against arbitration [...]". See Kindred Nursing Ctrs. L.P. v. Clark, 137 S. Ct. 1421 (2017). Therefore, despite all of its fanfare, the WTA may ultimately reveal itself to be lacking in teeth, at least with respect to its mandatory arbitration provisions.

Hotel and Casino Employee Safety Act

Another law S.B. 75 creates is the Hotel and Casino Employee Safety Act. Employers in affected industries must equip employees who work alone with a notification device, often referred to as a "panic button," that will alert someone for help if the employee is in danger of being sexually assaulted or harassed. The device must be provided to the employee at no cost. Also, hotels and casinos must develop written, anti-sexual-harassment policies that protect employees against sexual assault and harassment by patrons.

Sexual Harassment Victim Representation Act

S.B. 75 also creates the Sexual Harassment Victim Representation Act. This requires unions and employers to ensure that in a proceeding where a union member has been sexually harassed by another union member, the victim has a different union representative than that of the accused. The Act further states, "the union must designate separate union representatives to represent the parties in the proceeding."

IHRA Amendments

S.B. 75 also brings about significant changes to the Illinois Human Rights Act (IHRA), and broadens the responsibilities of all employers covered by its terms. Importantly, S.B. 75 amends the IHRA to include new reporting requirements and mandatory sexual harassment training.

Disclosures

Beginning July 1, 2020, and every July 1 thereafter, an employer that has had at least one adverse judgment or ruling against it in the preceding calendar year must disclose to the Illinois Department of Human Rights (Department) the total number of final, non-appealable judgments or final, non-appealable administrative rulings entered against the employer in which there was a finding of sexual harassment or unlawful discrimination. At this time, it is unclear whether this applies to all judgments against an employer or only to those that have occurred in the State of Illinois.

When the employer reports the adverse judgment or administrative ruling, the employer must also indicate whether any equitable relief was ordered against the employer in any of those final judgments, and provide a breakdown of the number of final judgments that were entered in cases involving:

  • sexual harassment;
  • discrimination/harassment on the basis of sex;
  • discrimination /harassment on the basis of race, color, or national origin;
  • discrimination /harassment on the basis of religion;
  • discrimination /harassment on the basis of age;
  • discrimination /harassment on the basis of a disability;
  • discrimination /harassment on the basis of military status;
  • discrimination /harassment on the basis of sexual orientation or gender identity; and
  • discrimination /harassment on the basis of any other protected characteristic.

As a concession to employer's privacy concerns, these statistics provided to the Department of Human Rights will remain confidential and are not privy to the public under the Freedom of Information Act.

Training

The bill requires that all employers covered by the IHRA must provide sexual harassment prevention training to their employees at least once a year. The Department will be tasked with creating a model training program that will be provided to the public at no cost. Employers can base their training program on the Department-provided model or create a sexual harassment training program that equals or exceeds the model program.

Specifically for restaurants and bars operating in Illinois, employers must create a written sexual harassment policy, in both English and Spanish, and provide it to employees within the first calendar week of their employment. Employers are also required to develop a supplemental training program aimed at preventing sexual harassment, addressing issues that are specific to the restaurant and bar industry. The IHRA has also been tasked with providing a model supplemental training to employers in the restaurant and bar industry.

Employers that fail to follow the new reporting and training requirements will be subject to civil penalties imposed by the Department of Human Rights.

Key Takeaways for Employers

Employers should take time to familiarize themselves with S.B. 75. Most of the provisions take effect January 1, 2020, while the Hotel and Casino Employee Safety Act takes effect July 1, 2020. Employers can take the following steps:

  • Consider negotiating or renegotiating agreements that unilaterally compel mandatory arbitration for employment discrimination, harassment, or related retaliation claims;
  • Provide employees who work alone in a hotel or casino with a safety device that will summon help if needed, or, consider implementing a "buddy program";
  • Check to see that unions assign different union representatives to the accused and the accuser in a sexual harassment investigation;
  • Report adverse judgments or administrative rulings in discrimination and harassment cases to the Department of Human Rights each year on July 1; and
  • Provide annual sexual harassment training that meets or exceeds the requirements of the Department's model training.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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