Illinois employers have seen a flood of new state legislation and other employee-friendly changes since this time last year. As many employers and employees alike work on New Year's resolutions, now is a good time to review your policies and practices to ensure compliance with all the changes. To help you keep your resolutions, here is our overview of the 10 most important legal changes for 2020 that Illinois employers should know, along with practical advice for addressing them.
1. Cannabis Regulation and Tax Act
On January 1, 2020, Illinois became the 11th state to legalize adult-use cannabis. The Cannabis Regulation and Tax Act is comprehensive and will impact employers in many ways. Following Illinois' legalization of medical cannabis in 2014, marijuana now will be available for recreational use by all adults age 21 and older, while remaining an unlawful controlled substance under federal law. As a result, Illinois employers must ensure that they have considered their organization's philosophy for dealing with marijuana in the application and disciplinary process for all positions and employees.
The Cannabis Act permits employers to maintain reasonable workplace drug policies that prohibit employees from appearing for work while impaired or under the influence of marijuana, and that provide for applicant and employee drug testing that is reasonable and nondiscriminatory. Employers may continue to bar all use or possession of cannabis on all company property, including company vehicles. Employers that are subject to federal contract requirements have additional drug-free workplace requirements. Employers may discipline employees or withdraw job offers for violations of reasonable and nondiscriminatory workplace drug policies, which may include actions taken as a result of a failed drug test. However, a "reasonable" workplace drug policy is neither defined nor described in the Cannabis Act. In addition, to establish that an employee is impaired or under the influence of marijuana, the Cannabis Act requires employers show a good faith belief based on observation of specific, articulable symptoms of the employee's impairment, and to allow the employee a reasonable opportunity to contest the employer's determination. Employees may have a private right of action under the Right to Privacy in the Workplace Act for any employment actions taken in violation of the requirements of the Cannabis Act.
The Cannabis Act also includes a program that provides for automatic expungement of certain cannabis-related criminal convictions. Governor Pritzker announced on December 31, 2019, that he pardoned over 11,000 low-level cannabis convictions, which will expunge such convictions. Employers are prohibited from taking adverse action against an employee or applicant based upon an expunged criminal conviction. Employers should ensure that they do not take any adverse employment actions based on any offenses that have been expunged under the Cannabis Act.
Employers must ensure their substance use and abuse and drug testing policies accurately reflect the company's position on drug testing for cannabis and resulting actions in the wake of a positive test for cannabis for both applicants and employees. Supervisors should be trained on these additional requirements under the Cannabis Act. For employers that intend to test for cannabis and take action in the event of positive tests, it is also essential that employee job descriptions accurately reflect the safety-sensitive, high-functioning, detail-oriented, on-call or other relevant duties and requirements of each position. Illinois companies should review and update their drug testing and substance abuse policies and human resources protocols and procedures carefully and with the assistance of counsel, including instructions to drug testing vendors and training for supervisors, to ensure that they reflect the requirements for taking action under the Cannabis Act, as well as their organization's updated intent for dealing with marijuana in the workplace.
2. Workplace Transparency Act
The Illinois Legislature also enacted the Workplace Transparency Act (WTA), an expansive piece of legislation designed to prevent all forms of harassment and discrimination in the workplace. Most of the WTA requirements became effective January 1, 2020. Although passed as a reaction to the #MeToo movement, the WTA covers more than just sexual harassment. The WTA expanded the definition of discrimination under the Illinois Human Rights Act to make clear that it prohibits adverse employment actions based on both a claimant's actual and perceived protected characteristic. The WTA also expanded the Human Rights Act's protections so that they apply to nonemployees, including contractors, vendors and consultants. Employers may be held liable for workplace discrimination or harassment claimed by these nonemployees.
The WTA also requires that employers using arbitration agreements make clear that claims of harassment and discrimination are excluded from arbitration requirements. While this provision appears likely to conflict with the Federal Arbitration Act, until a legal challenge to this provision is raised and clarified by a court decision, employers should consider updating their arbitration agreements and programs for Illinois employees to address the WTA requirements.
Employers who use nondisclosure or nondisparagement clauses in any agreements with employees―including those found in severance or separation agreements, restrictive covenant agreements and settlement agreements―must ensure that they reflect additional new requirements provided in the WTA. These requirements generally bar any prohibitions that prevent an employee or former employee from reporting allegations of unlawful conduct to any government agency or otherwise require an employee or former employee to maintain confidentiality regarding unlawful employment practices.
Any such provision will be permitted only if:
- It is the documented preference of the employee or former employee;
- It is mutually beneficial to the parties;
- It is agreed upon (i.e., negotiated) with the employee;
- The employee was notified of their right to have an attorney review it;
- The employee's waiver is knowing and voluntary, is given in exchange for valid consideration and does not waive claims not yet accrued;
- The employee is given a 21-day period to review the agreement with counsel, and a seven-day period to revoke the agreement, which employers should recognize as requirements similar to those mandated under the Older Worker Benefit Protection Act for release agreements offered to employees age 40 and over.
Notably, these requirements, including the 21-day consideration period and seven-day revocation period, do not appear to apply to severance or settlement agreements that only require the employee or former employee to keep confidential the terms of the agreement or settlement.
The WTA also includes new affirmative training and reporting obligations for employers. Beginning in 2020, Illinois joins California, New York, Maryland, Delaware and other states that require employers to provide annual sexual harassment training to all employees. The training may be provided internally or by a selected vendor, but it must meet minimum standards, which will be included in a forthcoming model program designed by the Illinois Department of Human Rights.
Finally, beginning July 1, 2020, Illinois employers will be required to submit an annual disclosure report to the Department of Human Rights. The reported disclosures must include certain information about any adverse judgments rendered against the company, as well as all settlement agreements entered into with employees involving claims of unlawful discrimination and/or harassment based on any protected characteristic. A company's disclosures also will be sought during the department's investigations of charges of discriminations.
Illinois employers should review and update their discrimination and harassment policies, employment and arbitration agreements, and severance, settlement and other agreements that include nondisclosure or nondisparagement provisions to ensure compliance with the new standards provided under the WTA. Employers also should review and update existing training programs and plan for annual programming that complies with the WTA requirements.
3. Human Rights Act Expanded Coverage
In addition to the new employer obligations under the WTA, the Illinois Legislature also significantly expanded the coverage of the Human Rights Act to nearly all small businesses. Effective July 1, 2020, the requirements of the Human Rights Act apply to any employer with one or more employees working within Illinois during 20 or more calendar weeks during the current year, or during the year preceding the alleged discrimination violation. The Human Rights Act currently applies only to employers with 15 or more employees for discrimination allegations (other than those related to disability, pregnancy or sexual harassment, which already apply to all employers).
4. Expansion of VESSA Protections
Effective January 1, 2020, the WTA also expanded the victim protections available under the Victims' Economic Security and Safety Act (VESSA). VESSA has long provided for job-protected unpaid leave (similar to that available under the federal Family and Medical Leave Act) for victims of sexual violence, assault or stalking. Such leave is available to victims for a period of four to 12 weeks, depending on the size of the employer. Under the WTA, such leave now is available for victims of "gender violence." Gender violence includes one or more acts of violence or aggression that is based on a person's actual or perceived sex or gender, or a physical intrusion or invasion of a sexual nature under coercive conditions, either of which that satisfy the requirements for any crime under state law. There is no requirement that such gender violence crimes result in an arrest, prosecution or conviction, and gender violence also may include threats of such violence. Employers should ensure their VESSA policies include this expanded coverage.
5. Salary History Ban
Illinois now has joined 16 other states and numerous municipalities (including Chicago) that prohibit employers from inquiring into an applicant's salary history.
Under an amendment to the Equal Pay Act, which became effective September 29, 2019, employers in Illinois are prohibited from screening job applicants based on the person's prior compensation or salary history information and from using such information to set compensation, even if voluntarily disclosed. Employers may not require an applicant's prior compensation to satisfy minimum criteria, request prior compensation information, require disclosure in order to be further considered for a position, seek such information from a prior or current employer, or require an employee to waive these requirements or authorize such inquiries. There are limited exceptions where an employer has such information from publicly available sources (e.g., public employees), from current employees or from the applicant's voluntary disclosure. Employers may ask applicants about their compensation expectations or provide compensation parameters for the applicant to consider. The Equal Pay Act includes a private right of action with damages, penalties and attorneys' fees available to successful plaintiffs for violations.
Employers should update their application, screening, interview and on-boarding documents and processes to ensure all questions about prior salary history information are removed from applications and from interview processes. Employers should require outside vendors (e.g., recruiters, screeners and background check agencies) to confirm their compliance with these requirements. Finally, HR, recruiters and hiring managers should be trained on these new requirements for conducting their interviews and managing the recruitment process.
6. Race to $15 – Minimum Wage Increase
Illinois became the fifth state to join the "Race to $15" and pass a minimum wage increase under which Illinois' minimum wage will reach $15 per hour by 2025. Effective January 1, 2020, Illinois' new minimum wage is $9.25 per hour, followed by an additional increase to $10 per hour effective July 1, 2020. The statewide minimum wage continues to increase by $1 on July 1 of each subsequent year so the minimum wage will be $11 per hour in 2021; $12 per hour in 2022: $13 per hour in 2023; $14 per hour in 2024; and $15 per hour in 2025. The statewide minimum wage increase preserves a lower rate available for tipped workers and for teen workers (under 18) meeting certain requirements. Small employers (under 50 employees) also have tax credits available to help offset the actual costs of complying with the minimum wage increases that will be available through 2025.
Chicago employers should be aware of a pending municipal ordinance that would accelerate the minimum wage increase from $13 per hour (effective July 1, 2020) to $15 per hour by July 1, 2021.
Employers should review job descriptions and postings and ensure all positions meet these new requirements. Small employers (under 50 employees) should consult with their tax providers to ensure they receive accurate tax credits that may be available for their increased wage payments.
7. Annual Report Diversity Disclosures for Corporate Board Membership
Effective August 27, 2019, Illinois' Business Corporation Act of 1983 was amended to require publicly held companies organized or headquartered in Illinois to include detailed demographic diversity information for their corporate board members in their annual reports filed with the Illinois secretary of state. These updated annual report requirements take effect at the end of 2020. Unlike California's similar law, Illinois companies are not mandated to include women or minorities on public company boards, and will not be fined for failure to achieve a specified diversity target. Rather, for now, the changes only require that covered companies report diversity-related information about their board members to the secretary of state. Importantly, the amendment only applies to corporations and does not apply to limited liability companies, limited partnerships, trusts, private investment companies or other types of entities. However, the new disclosure requirements are robust, so covered corporations will need to review them carefully when preparing their 2020 reports.
8. Predictive Scheduling Requirements for Chicago Employers
Effective July 1, 2020, certain Chicago employers must comply with new requirements provided under the Chicago Fair Workweek (CFW) Ordinance. Chicago moves to the forefront of the predictive scheduling movement, joining just a few states and several municipalities that have enacted such new requirements for employers. Predictive scheduling laws require employers to provide employees with advance notice of their weekly work hours and schedule. Such laws vary greatly in their requirements, but generally provide for the employer's payment of "predictability pay" penalties in the form of additional wages owed where the required advance notice is not provided to employees.
The CFW Ordinance applies to certain private sector employers with at least 100 total employees (or more than 250 employees for nonprofit corporations) and at least 50 covered employees. Covered employees must satisfy a number of requirements, which include: (1) working at least 420 hours for the employer within an 18 month period; (2) performing work primarily within the city of Chicago; (3) working primarily in the employer's covered industry; and (4) earning $50,000 or less per year as a salaried employee or $26 or less per hour on an hourly basis. Covered employers must be engaged primarily in specific covered industries, which include building services, healthcare, hotels, restaurants, manufacturing, retail and warehouse services. Employees subject to a collective bargaining agreement in place prior to July 1, 2020, are not impacted, and future collective bargaining agreements may include clear and unambiguous waivers of the CFW Ordinance requirements.
Under the CFW Ordinance requirements, employers' new predictive scheduling requirements may be onerous and include:
- Prior to beginning of employment, providing a written, good faith estimate of the employee's projected days and hours of work for the first 90 days of employment.
- Considering all employee requests to modify projected work days and hours scheduled and notifying the employee of granting or rejecting the request in writing within three days of the request.
- Providing employees with 10 days' advance written notice of work hours and schedule for work performed between July 1, 2020, and June 30, 2022. After July 1, 2022, the advance written notice requirement increases to 14 days.
- Allowing employees to decline previously unscheduled work hours or shifts that begin less than 10 hours after the prior day's shift ended (i.e., inadequate rest shifts).
- Posting a notice of employees' rights under the CFW Ordinance and providing a copy of the notice to new employees.
- Retaining all work schedule records and other documentation related to CFW Ordinance requirements for three years and making such records available to employees upon reasonable request.
If an employer fails to follow these requirements or alters an employee's schedule after the 10-day (and after July 1, 2022, the 14-day) deadlines without express written agreement of the employee, the employee will be entitled to additional compensation over the employee's regular rate of pay. Some of the predictability pay penalties under the CFW Ordinance include shift premiums for the employee's entire shift (1.25 times the regular rate for inadequate rest shift; 0.5 times the regular rate for reduced hours or cancelled shift with less than 24 hours' notice), or for each incident of schedule changes within the 10-day (and after July 1, 2022, the 14-day) deadline period (one hour predictability pay).
The CFW Ordinance provides limited exceptions for employees who self-schedule or work in a large ticketed event venue (capacity of 5,000-plus), and for schedule changes due to limited circumstances outside the employer's control, such as acts of nature, public utility failures, massive public health response or cancellation of a large manufacturing order. Employers may not retaliate against employees for exercising their rights under the CFW Ordinance, which can be enforced by a $1,000 fine against the employer. Other violations may be enforced by penalties for each offense ranging from $300-$500, with each day or shift change counting as a separate offense. Employees also may file a private lawsuit (with available damages not limited to the predictability pay, and including attorneys' fees and costs), but must first file a charge that will be investigated by the Department of Business Affairs and Consumer Protection.
Chicago employers covered by the CFW Ordinance should prepare to comply by reviewing and updating scheduling processes and procedures (including a review of existing scheduling software compliance capabilities), and by adopting specific written protocols for making and posting schedules and any changes and for responding promptly to employee schedule requests. In particular, Chicago employers that routinely need to change schedules due to operational needs or that rely on a more ad hoc method of posting schedules and changes should begin their preparation soon. Employers should review existing practices and begin updating procedures so that they can track potential problems, train employees and supervisors, update documentation and develop compliance strategies well in advance of the July 1, 2020, effective date.
9. Artificial Intelligence Video Interviews
Illinois has become the first state to regulate artificial intelligence used in video interviews. The Artificial Intelligence Video Interview (AIVI) Act became effective on January 1, 2020. Similar to the Biometric Information Privacy Act (BIPA), which governs use of employees' biometric information such as fingerprints and facial scans, the AIVI Act requires all employers who use artificial intelligence in the application process to follow specific criteria. For example, Illinois employers using artificial intelligence to screen videotaped applicant interviews must: provide applicants with notice, including an explanation how the artificial intelligence works; obtain consent from the applicant; limit the disclosure of the recordings; and timely destroy the recordings. Although the AIVI Act does not define "artificial intelligence," we expect that it will include artificial intelligence programs that employers may use to scan resumes, schedule interviews and actually conduct initial job interviews. Vendors have developed sophisticated artificial intelligence programs that evaluate applicants' behaviors during the interview (e.g., facial expressions, tone, etc.), as well as the quality of answers. The AIVI Act is silent on damages and whether applicants have a private right of action, so we expect additional regulations on enforcement issues. In the meantime, employers who use artificial intelligence in recruiting should be thoughtful with how they do so and scrutinize their internal process and forms for compliance with the AIVI requirements and for consideration of disability accommodation issues. In addition, employers should communicate with all vendors providing such services to confirm their awareness of and compliance with the AIVI Act for all interactions involving Illinois employees.
10. Additional Key Reminders
In addition to all of the changes above that are new for 2020, based on our experience in reviewing employers' policies over the past year, there are a number of important additional legal changes for Illinois employers from 2019 that bear repeating.
The Biometric Information Privacy Act (BIPA) survived a challenge before the Illinois Supreme Court in 2019 and continues to be the basis for a large number of very expensive class actions filed against unsuspecting Illinois employers. BIPA requires all companies that capture individuals' biometric information (such as fingerprints, facial or retinal scans, etc.) to obtain written consent and provide notice of how the company uses, stores, retains and destroys such data. Employers commonly may use such biometric information as a security feature (in lieu of providing employees with easily lost physical keys or security access cards) for access to timekeeping programs, electronic records, IT systems or physical property or equipment. As a reminder, to comply with BIPA, employers using employees' biometric information must:
- Adopt a publically available, written policy that governs the company's collection, retention and destruction of the data
- Notify employees in writing of the specific purpose for its use and the length that it will be retained
- Obtain employees' written executed release and authorization for such use; and
- Comply with BIPA's requirements for use, storage, transmission and protection from disclosure of all such data.
Violations can result in available damages of $1,000 per violation (for example, four to 10 violations per day for each employee using fingerprints for a time clock or door access system), which can easily create lawsuits seeking recovery of millions of dollars.
The Illinois Nursing Mothers in the Workplace Act was amended to offer nursing mothers additional protections and to apply to employers with six or more employees. The recent amendments continue to require employers to provide reasonable break times to nursing employees for the purpose of expressing milk, but no longer designate such breaks as unpaid time or require the breaks to run concurrently with break time already provided. The law now makes clear that such breaks must be paid time, but also for the first time clarifies that the period for providing such breaks is limited to one year after the child's birth.
The Illinois Wage Payment and Collection Act was amended in 2019 to require employers to reimburse employees for reasonable, necessary expenditures or losses incurred by the employees that are directly related to the employee's services performed for the employer. Employees may not be eligible for reimbursement where they failed to comply with an employer's written expense policy or exceeded guidelines under a written policy that allows at least 30 days for submission of expenses, unless the employer required or authorized the expense or unless the policy provides for no reimbursement or only de minimis reimbursement of the expense. Reimbursable expenses now potentially include work-related mileage expenses, as well as personal cellphone and internet costs incurred for work-related use. Employees may enforce the act's provision via a wage claim filed with the Department of Labor or by filing suit in state court, with penalties and attorneys' fees available to the employee in a successful action.
Employers should review their biometric privacy, lactation accommodation and expense reimbursement policies and procedures to ensure compliance with all of these recent changes.
For Further Information
If you have any questions about this Alert, please contact Daniel O. Canales, Jennifer Long, any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.