Non-Disparagement Clauses in Illinois: What the Law Says
Illinois has enacted employee-protective legislation that limits the use of non-disparagement clauses in certain employment contexts. The state's Workplace Transparency Act significantly changed the rules.
Illinois Workplace Transparency Act
The Illinois Workplace Transparency Act (WTA), effective January 1, 2020, restricts the use of non-disparagement provisions in employment agreements and settlement agreements involving allegations of unlawful conduct. Under the WTA:
- Employers cannot require employees to agree to non-disparagement clauses as a condition of employment that would prevent disclosure of alleged unlawful employment practices.
- Settlement or termination agreements may include non-disparagement provisions only if they include specific carve-outs allowing the employee to report to government agencies and participate in investigations.
- Employees must be given 21 days to consider the agreement and 7 days to revoke.
Enforceability Factors
- Employment vs. commercial context: The WTA primarily restricts non-disparagement in employment agreements. Commercial and business-to-business non-disparagement clauses remain enforceable under general contract principles.
- Adequate consideration: Courts examine whether the employee received meaningful consideration beyond continued at-will employment.
- Required carve-outs: To be enforceable in a separation or settlement agreement, the clause must include carve-outs for government agency communications and legal proceedings.
- Voluntary agreement: The employee must have adequate time to review and the option to consult an attorney.
Red Flags in Illinois
- Employment agreements conditioning employment on signing a broad non-disparagement clause
- Settlement agreements lacking the required government agency and legal proceeding carve-outs
- No 21-day review period and 7-day revocation right
- Clauses that restrict disclosure of potential unlawful employment practices
When to Consult a Lawyer
Given the specific requirements of the Illinois WTA, consider consulting an Illinois employment attorney before signing any agreement containing a non-disparagement clause. Non-compliant clauses may be voidable, and employers face penalties for violations.
This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for guidance specific to your situation.