Duane Morris LLP

1

GENERAL PRINCIPLES

Forums For Adjudicating Employment Disputes

Claims alleging violations of the Illinois Human Rights Act (“IHRA”) must first be presented to the Illinois Department of Human Rights for investigation. If the investigation reveals substantial evidence that a violation of the IHRA occurred, claimants may then continue pursuing their human rights claims before either the Illinois Human Rights Commission or an Illinois State court. The Illinois Labor Relations Board and the Illinois Educational Labor Relations Board administer the State laws governing relations between unions and public employers. Certain claims can be asserted before the Illinois Department of Labor. Most claims can be asserted in courts of general jurisdiction although certain claims must be first presented to the appropriate administrative agency.


The Main Sources Of Employment Law

Employment arrangements in Illinois are governed by general common law principles of contract law, but there are common law and legislative requirements which override those general principles in some instances. Individual contracts (whether written or oral), collective bargaining agreements, and, in some instances, employee handbooks form part of the contractual relationship.


National Law And Employees Working For Foreign Companies

Federal law, Illinois State common law, and Illinois statutes apply to all individuals physically working in the State, regardless of nationality, and regardless of the law governing their contract of employment, although in certain narrow instances a national treaty with a foreign government may pre-empt the application of national law. The parties may agree by contract to apply State law in some circumstances.


National Law And Employees Of National Companies Working In Another Jurisdiction

Federal law applies to all employees working in the United States and, in some circumstances, to employees outside of the United States for U.S.-based companies. Illinois State law applies only when the employee is physically working in the State or when both parties have agreed in writing to the application of the laws of Illinois.


Data privacy

Regarding confidential employee information, Illinois was the first state to regulate artificial intelligence and biometric privacy commonly used in the application process and during employment. The Artificial Intelligence Video Interview (AIVI) Act requires all employers who use artificial intelligence in the hiring process to follow specific criteria. Among the restrictions include advanced notice to, and consent of, the applicant to the use of artificial intelligence; limiting the disclosure of any application recordings; and timely destroying collected data. Similarly, the Biometric Information Privacy Act (BIPA) governs an employer’s use of an individual’s biometric information (fingerprints, retinal or facial scans, etc.), which employers use with increasing frequency for various security related reasons. Under BIPA, employers must: adopt a public written policy governing the collection, retention, and destruction of biometric data; provide notice to employees of the purpose and duration of time that the data will be used; and obtain employee release and consent to use such data for the designated purpose. Employers’ failure to comply with these requirements have been the subject of hundreds of class action lawsuits in recent years. Under the Personal Information Protection Act, data collectors (defined in a way that includes most employers) also must maintain reasonable security measures to protect employee personal data records from unauthorized access, acquisition, destruction, use, modification, or disclosure. Employee personal data protected under PIPA includes social security, driver’s license and other financial account number, and health insurance and medical information when connected to the employee’s name.

2

HIRING THE EMPLOYEE

Legal Requirements As To The Form Of Agreement

Illinois is an “at-will” employment State, meaning that unless otherwise expressly agreed by the parties, both the employer and the employee retain the mutual right to terminate the employment relationship at will, for any reason, with or with cause and with or without warning or notice. If the employer and employee choose to enter into a contractual employment agreement, there are no legal requirements under Illinois law as to the form of the agreement.


Mandatory Requirements
  • Trial Period

    • None.

  • Hours Of Work

    • None for adults age 18 and over, although the Illinois Child Labor Law does place various limits on the working hours for minors under 16 years of age. “Non-exempt” employees who work more than 40 hours per week must be paid overtime compensation.

    The Chicago Fair Workweek Ordinance requires Chicago employers to provide 10 days advance notice of their employee’s weekly hours and schedule beginning July 1, 2020 and and continuing through July 1, 2022, when the advance notice period increases to 14 days. Failure to provide the appropriate notice and follow additional requirements for changing employees’ schedules can result in penalties, including additional hourly or per shift compensation payable to the affected employees.

  • Special Rules For Part-time Work

    • None.

  • Earnings

    • Effective January 1, 2021, the minimum wage in Illinois is $11.00 per hour, and increases by $1 every January 1 thereafter until reaching $15.00 per hour in 2025. Lower rates apply for tipped and teen workers, and tax credits for small employers (50 or less employees) that are negatively impacted by complying with these legislative increases also may apply. The minimum wage for Chicago employees is $14.00 per hour as of July 1, 2020, and $15.00 per hour effective July 1, 2021, with additional increases based on the CPI planned for every July 1 thereafter. A separate local minimum wage ordinance also applies to employers in certain Cook County municipalities.

  • Holidays/Rest Periods

    • Paid holidays are not required under Illinois law. Illinois does require employers to allow employees a meal period of at least 20 minutes for employees working for 7.5 hours. Employers also must provide break time for nursing mothers to express breast milk. Employees generally also must be provided one day of rest (24 hours) per calendar week. In addition, Illinois law establishes various compulsory daily rest periods for certain professions.

  • Minimum/Maximum Age

    • The Illinois Child Labor Law generally requires employees to be at least 14 years of age, although certain exceptions exist for certain circumstances. Illinois law does apply different rules for working hours and permits different minimum wage rates for certain young workers. Mandatory requirements at a specified age is almost always contrary to federal and Illinois antidiscrimination laws absent unique circumstances.

  • Illness/Disability

    • Both federal and state law impose requirements for dealing with qualified individuals with a disability. Illinois law also requires employers to accommodate an employee’s pregnancy or related medical condition. Federal law also provides protections for eligible employees who require medical leave to care for themselves or family members. Illinois does not have a family and medical leave act, but does have the Victims’ Economic Security and Safety Act (“VESSA”), which requires employers to offer unpaid leave of up to 12 weeks to victims of domestic, sexual or gender violence.

    The Illinois Employee Sick Leave Act took effect on January 1, 2017, and requires Illinois employers that do provide personal sick leave benefits to employees to allow them to use these benefits for reasons related to the illness, injury, or medical appointments of a “family member.” Family member is defined as a spouse, child, parent, sibling, grandparent, grandchild, step-parent, or parent-in-law. Employers may limit the amount of benefits available to employees care for family members to one-half of employees’ annual personal sick leave benefits. The Employee Sick Leave Act does not include any affirmative obligation for employers to provide paid sick leave to employees.

    Chicago and certain Cook County employers also must comply with the requirements of local Paid Sick Leave Ordinances. These local ordinances require all employers to provide all employees who work at least 80 hours in any 120-day period to accrue up to five days of paid sick leave annually and to comply with various obligations regarding employees’ permitted use of such time.

  • Location Of Work/Mobility

    • No specific requirements.

  • Pension Plans

    • Federal law applies. Beginning June 1, 2015, Illinois employers with 25 or more employees must offer an employer-sponsored retirement savings plan (e.g., 401(k)) or must automatically enroll their employees in a portable Roth Individual Retirement Account under the Illinois Secure Choice Savings program at a five percent (5%) contribution rate. Under the Illinois Secure Choice Savings program, employees can thereafter elect out of the program or alter their contribution rate. Employers who fail to comply with the requirements face penalties of $250 per employee beginning in 2021 and $500 per employee in each subsequent year.

  • Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)

    • In addition to applicable federal laws, the Illinois Human Rights Act prohibits discrimination or retaliation against employees on the basis of pregnancy, marital status, parental status or child-bearing status. Illinois law also requires employers to accommodate an employee’s pregnancy, childbirth or related medical condition. Under the Illinois Nursing Mothers in the Workplace Act, employers with six or more employees must provide reasonable paid break time for nursing employees to express milk, for the one year after the child’s birth. The Illinois School Visitation Rights Act also requires employers to provide parental leave for attendance at school activities under certain circumstances. Outside of the above provisions, Illinois does not have any specific laws requiring or providing for paid or unpaid parental leave.

  • Compulsory Terms

    • All employers must notify an employee at the time of hiring of the employee’s rate of pay, and the time and place of payment, preferably in a writing acknowledged by both parties.

  • Non-Compulsory Terms

    • Allowed at the parties’ discretion unless unenforceable under other laws.


Types Of Agreement

No particular forms of agreements are required.


Secrecy/Confidentiality

Illinois courts generally will enforce the parties’ agreements regarding the secrecy and/or confidentiality of trade secrets or other confidential or proprietary information. In addition, the Illinois Trade Secrets Act and other common law provisions also imply confidentiality obligations in all employment relationships.


Ownership of Inventions/Other Intellectual Property (IP) Rights

In the absence of a written agreement between the parties, ownership of IP rights is determined by federal statute.


Pre-Employment Considerations

Illinois employers are prohibited from inquiring about or using the credit history of an employee or applicant as the reason for an employment decision unless a satisfactory credit history is a bona fide occupational requirement for the position. Employers also may not request or require employees or applicants to provide the employer with access to the employee or applicant’s social networking or social media accounts (e.g., Facebook, etc.). Employers may not inquire into, consider or request disclosure of an applicant’s criminal history records until the employee has been selected for an interview or a conditional offer of employment. This law is commonly called “Ban the Box,” which refers to employers being required to remove all questions (or check boxes) about applicants’ criminal history from the initial employment application. Employers may not consider an employee’s or applicant’s criminal conviction history in making employment decisions except where a “substantial relationship” exists between the employment and the conviction, or where granting or continuing the employment would present a risk to safety or property. Even if one of these exceptions applies, employers are still required to consider a list of six mitigating factors as to the relevancy of the criminal conviction(s), and engage in an interactive process with the applicant about the possible disqualifying nature of the conviction and the employee’s response to the information contained in the background report.


Hiring Non-Nationals

Employers are obliged by federal law to ensure that all employees are entitled to work in the U.S.; different requirements may apply depending on the nationality/status of the individual concerned. Illinois law imposes additional non-discrimination and employee privacy obligations on employers during the employment eligibility confirmation process.


Hiring Specified Categories Of Individuals

The Illinois Child Labor Law regulates the employment of minors.

The Illinois Domestic Workers Bill of Rights extends laws governing minimum wage, hour limitations, and protections against sexual harassment and discrimination to domestic workers, such as nannies, housekeepers, and home care workers.


Outsourcing And/Or Sub-Contracting/Temporary Agency Work

No prohibitions unless mutually agreed.

3

MAINTAINING THE EMPLOYEE RELATIONSHIP

Changes To The Contract

Employers are allowed to make changes to the contract, unless the contract provides that changes may only be made with the consent of both parties.


Change In Ownership Of The Business

Federal law and Illinois state law require 60 days’ prior notice to employees and state and local agencies in the event of plant closings or mass layoffs affecting specific numbers of employees. Employers also must file various notices with the state Department of Employment Security in advance of any changes in control. Local laws require transfer of employees and existing contracts for certain industries. Collective bargaining agreements or the presence of a union also may provide additional requirements.


Social Security Contributions

Both the employer and the employee have compulsory Social Security contributions required under federal law.


Accidents At Work

Employers are required to pay for workers’ compensation benefits and may not discriminate or retaliate against employees for taking workers’ compensation leave or benefits.


Discipline And Grievance

The employment agreement or applicable collective bargaining agreement will govern.


Harassment/Discrimination/Equal pay

Both federal and state laws include non-discrimination and anti-harassment provisions. Equal pay protections also are included in federal and state laws. Under the Illinois Human Rights Act, employees are protected from discrimination based on sex, race, color, religion, national origin, age, disability, marital status, parental status, pregnancy, child-bearing status, military status, unfavourable discharge from the military, arrest or conviction records, sexual orientation, gender identity, or order of protection status. Employers also must engage in an interactive process to respond to an employee’s request to provide reasonable accommodations of an employee’s disability, pregnancy or related medical condition, or request to wear religious clothing, head coverings or facial hair. Effective July 2020, these protections apply to all employees, contractors, vendors and consultants of any employer with one or more employees working within Illinois during 20 or more calendar weeks during the current year or the year preceding the alleged discrimination.

Illinois recognizes same sex marriages and businesses or employers may not discriminate in their employee policies or benefit plans with regard to the sexual orientation of a married couple.

Retaliation for opposition to discrimination or participation in an agency proceeding is also prohibited. Local ordinances may provide additional protections.

Beginning in 2020, employers are required to submit annual disclosure reports to the Illinois Department of Human Rights, detailing any adverse judgments rendered against the company based on an employee’s claims of unlawful discrimination.


Compulsory Training Obligations

Beginning in 2020, all Illinois employers are required to provide annual sexual harassment training to all employees. While employers can select their own vendors for administering the training, the training must meet certain minimum standards.


Offsetting Earnings

The Illinois Wage Deduction Act, Wage Assignment Act, and Wage Payment Collection Act govern an employer’s ability to offset earnings against an employee’s debts. Offsets for employee debts also may not result in a payment of less than minimum wages to the employee for all hours worked during any pay period.


Payments For Maternity And Disability Leave

Paid maternity or disability leave is not required under federal or state law. Illinois law requires employers to accommodate an employee’s pregnancy, childbirth or related medical condition.


Compulsory Insurance

Under Illinois law, employers must provide for workers’ compensation insurance benefits and unemployment compensation benefits.

A recent amendment to the Equal Pay Act mandates employers to acquire an equal pay registration certificate from the Illinois Department of Labor by March 23, 2024, and to be recertified biannually thereafter.


Absence For Military Or Public Service Duties

Both federal and state laws provide requirements for providing for leaves of absence to a military member and/or member of his/her family for circumstances related to military service or health conditions resulting from military service.


Works Councils or Trade Unions

Under federal law, employees can force the employer in certain cases to recognize a collective bargaining representative or labor union. Individuals who are involved as representatives on such bodies are protected from retaliation because of their activities in that role.


Employees’ Right To Strike

Under federal law, groups of employees may strike even if there is not a collective bargaining agreement or formal union at the site of employment, subject to limits for public service employees.


Employees On Strike

Employers may not typically terminate striking employees, unless the employees engage in serious misconduct while striking or if the strike was unlawful and unprotected. However, if employees are on an economic strike, they may be permanently replaced by the employer and may be denied reinstatement if there are no open positions upon the conclusion of the strike, and until open positions materialize.


Employers’ Responsibility For Actions Of Their Employees

Under Illinois common law, an employer may be held liable for the actions of its employees unless the employee was acting outside the course of employment or for personal reasons. Employers may be held strictly liable for the harassing acts of any employee with supervisory authority.

4

FIRING THE EMPLOYEE

Procedures For Terminating the Agreement

None, unless specified in a collective bargaining agreement or other agreement with the employee.


Instant Dismissal

Illinois is an “at-will” employment state, meaning that unless otherwise expressly agreed by the parties, both the employer and the employee retain the mutual right to terminate the employment relationship at will, for any reason, with or without cause and with or without warning or notice.


Employee's Resignation

Employees may terminate the employment relationship by resigning, with or without notice.


Termination On Notice

Unless otherwise agreed by the parties, no termination notice is required, except in plant closing or mass layoff situations that trigger 60-day prior notice requirements under federal and/or state law.


Termination By Reason Of The Employee's Age

Discrimination based on age is prohibited except in very limited circumstances usually involving professions related to public safety. The parties may contractually agree to a mandatory retirement age.


Automatic Termination In Cases Of Force Majeure

Employment agreements may be terminated in cases of force majeure; however, such instances are exceedingly rare.


Collective Dismissals

The Worker Adjustment and Retraining Notification Act (the “WARN Act”) requires “employers” (as that term is defined by the statute) which are planning a “plant closing” or a “mass layoff” to give affected employees at least 60 days’ notice of such an employment-related action. The Illinois “mini-WARN” statute applies to any business enterprise that employs 75 or more employees, excluding part-time employees; or 75 or more employees, including part-time employees who in the aggregate work at least 4,000 hours per week (exclusive of overtime hours).

The WARN Act states that “an employer shall not order a plant closing or mass layoff until the end of a 60-day period after the employer serves written notice of such an order.” Therefore, an employer which is anticipating carrying out a plant closing or mass layoff is required to give notice to affected employees or their representatives, the State Dislocated Worker Unit, and the chief elected official of a unit of local government. Notice must be given at least 60 calendar days prior to any planned plant closing or mass layoff, and there are specific items that the notice must contain. If the closure date is uncertain, certain requirements for providing updated notice must be provided. Failure to provide the required WARN Act notice can result in significant liabilities to the employer, including back wages and benefits for the 60 day notice period, as well as penalties of $500 per day for failing to provide notice to state and local officials.


Termination By Parties’ Agreement

The parties are free to agree to terminate the employment relationship on any grounds they wish except for discriminatory reasons prohibited by federal or state law or contrary to public policy.


Directors Or Other Senior Officers

In the case of a director, termination of the employment relationship does not automatically end the board membership. Separate steps as required by the company’s articles of incorporation are required to end the directorship.


Special Rules For Categories Of Employee

Prior notice may be required if plant closing or mass layoff notice requirements are triggered.


Specific Rules For Companies in Financial Difficulties

An employer’s obligation to its employees continues, and may take priority over claims by its other creditors, during times of financial difficulties.


Restricting Future Activities

Illinois courts will review an employer’s restrictions on employees’ future activities to ensure that they are no more reasonable than necessary, supported by adequate consideration (whether entered into at the beginning of employment which continues for at least two years or through additional consideration provided during or at the end of employment), do not impose undue hardship on the employee, are not injurious to the public, and narrowly tailored to protect the employer’s legitimate business interests. Each case will be considered individually, so restrictions that may be appropriate for one employee’s circumstances may be found unreasonable for other employees.

Under the Illinois Freedom to Work Act (“IFWA”), any employment agreements entered into after January 1, 2017, with any “low wage” employees may not include any restrictive covenants. “Low wage” is defined currently as employees who make less than the prevailing federal, state, or local minimum wage, or $13.00 per hour, whichever is greater. However, under new amendments to the IFWA which await the governor’s expected signature into law as of this date, the minimum income threshold for application of the prohibitions on post-employment non-competition restrictions increases to $75,000 annual income effective January 1, 2022 (with regular increases thereafter: $80,000 effective January 1, 2027, $85,000 effective January 1, 2032, and $90,000 effective January 1, 2037). The IFWA amendments include a similar increase to the “low wage” definition for application of the prohibitions on employers’ use of non-solicitation covenants ($45,000 effective January 1, 2022, $47,500 effective January 1, 2027, $52,000 effective January 1, 2032, and $52,500 effective January 1, 2037).

The IFWA amendments also prohibit an employer’s enforcement of restrictive covenants against employees who are terminated as a result of circumstances related to the COVID-19 pandemic or similar circumstances (with limited exceptions), who are covered by a collective bargaining agreement, or who are employed in certain industry positions. Employers also must advise employees in writing of their right to consult with an attorney and provide at least 14 days to consider the restrictive covenant agreement prior to it taking effect. Employees who prevail in litigation brought by the employer to enforce a non-compliant restrictive covenant may recover attorneys’ fees and costs and additional relief.

The IFWA amendments will not apply retroactively to restrictive covenant agreements entered into prior to January 1, 2022. Employers should review and amend all restrictive covenants intended to be signed with employees after January 1, 2022, to ensure compliance with the new requirements.


Whistleblower Laws

Under the Illinois Whistleblower Act, employers may not have policies that prohibit or otherwise retaliate against an employee who discloses information in a court or administrative hearing, before a legislative commission or committee, or in any other proceeding, or to a government or law enforcement agency, where the employee has reasonable cause to believe that the information discloses a violation of a State or federal law, rule, or regulation. Violations may subject employers to civil penalties and to damages that may be awarded in an employee’s private legal action.

Other Illinois employee protection laws also have whistleblower or anti-retaliation provisions which prohibit retaliation against employees for making certain disclosures or for refusing to participate in specified activities (e.g., Illinois Human Rights Act, Illinois Workers’ Compensation Act, etc.).


Special Rules For Garden Leave

None. Illinois does not have any laws recognizing the concept of “Garden Leave.”


Severance Payments

Severance payments are not required unless specifically provided by the employer’s severance policy, a collective bargaining agreement, or the parties’ employment agreement. Federal law provides requirements for the terms of a valid release agreement related to severance payments.


Special Tax Provisions And Severance Payments

Severance payments are subject to ordinary income, social security, and other employment taxes.


Allowances Payable To Employees After Termination

Employers must contribute to the State unemployment compensation fund.


Time Limits For Claims Following Termination

Statutes of limitations for filing claims after termination vary depending on the type of claim. Wage payment claims may be subject to a 10 year statute of limitations. Charges of discrimination must be filed with the Department of Human Rights within 300 days of the disputed action.

5

GENERAL

Specific Matters Which Are Important Or Unique To This Jurisdiction

Illinois wage laws require payment of all final compensation by the next regularly scheduled pay date after termination. Final compensation may include all earned bonuses, commissions, and accrued but unused vacation or paid time off. Claims for unpaid wages or compensation may not be waived by agreement of the parties but may be offset by other gratuitous payments at the time of termination (e.g., severance).

Illinois employees must be allowed to review their personnel records upon request up to twice per year and may request a copy be provided after termination.

Effective January 1, 2020, Illinois legalized recreational marijuana use by adults aged 21 and older. Under the Cannabis Recreation and Tax Act, employers are permitted to retain reasonable workplace drug policies that prohibit employees from appearing at work under the impairment of marijuana, and that provide for applicant and employee drug testing that is neither discriminatory nor unreasonable (undefined in the Act). Employers are still permitted to bar all marijuana use on business grounds or while using company property, and can discipline employees or withdraw job offers for violating workplace drug policies.



Search by:
Need more information?
Contact a Contributing Author:
Jennifer L. Long
Duane Morris LLP
United States


Disclaimer:

© 2021, Duane Morris LLP. All rights reserved by Duane Morris LLP as author and the owner of the copyright in this chapter. Duane Morris LLP has granted to Multilaw non-exclusive worldwide license to use and include this chapter in this guide and to sublicense Lexis Nexis, a division of RELX Inc. and its affiliates certain rights to use and distribute this Guide.

The information in the How to Hire and Fire Guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: June 2021