Employment at Will
Illinois is an "employment at-will" state, which means that an employer can terminate its employees at any time without warning, and for any reason, or for no reason at all. As long as there is not an employment contract in play, Illinois employers are allowed to freely fire their employees at-will. There are, however, several limitations that protect Illinois employees that an employer should consider first.
By way of example, although it is not illegal in an at-will employment state to terminate an employee because they wear ugly ties to the office or cheer against Notre Dame Football, it is illegal to fire an employee for discriminatory purposes or for reasons that violate employment statutes and/or public policy. The law says that an employee cannot be fired for things like race, religion, sex, national origin, age, marital status, disability, military status, sexual orientation or pregnancy – those reasons are illegal. It is also unlawful to terminate an employee for exercising rights under certain federal statutes such as the Family Medical Leave Act, the Fair Labor Standards Act and the Uniformed Services Employment and Reemployment Rights Act, or if an employee "blows the whistle" on an employer's illegal activity, is called away from work to perform jury duty, or exercises workers' compensation rights.
If a terminated employee suspects that she was fired for any of the foregoing illegal reasons, Illinois law provides that she must exhaust all administrative remedies before initiating an actual lawsuit against her former employer. This means that the employee has to notify an appropriate government agency such as the Equal Employment Opportunity Commission (EEOC) or the Illinois Department of Human Rights (IDHR), who will look at the circumstances surrounding the termination to determine if the employer broke the law. If the investigating agency concludes that the employer broke the law, it could order that the employer pay the employee compensatory damages, punitive damages, attorneys' fees, expert witness fees, court costs, and, in cases of especially malicious or reckless acts of discrimination, back pay. Should the EEOC or IDHR rule in the employee's favor and grant the employee administrative relief, the law says that the employee cannot then turn around and file her own lawsuit against the employer. However, if the agency concludes its investigation and is unable to find that the employer broke the law, it will send the employee a document called a "Notice of Right to Sue" (in the case of the EEOC), which is basically a permission slip saying that the employee has already sought administrative action and been denied, so now she is free to file her own lawsuit.
It is worth knowing that an employer is always allowed to terminate an employee "for cause." Some obvious examples of termination for cause would be poor job performance, embezzlement, constant tardiness, extreme insubordination, creating a hostile work environment or failing a drug test. Depending on the severity of the problem, any of these actions would be acceptable grounds to fire an employee for cause.
In the event that an employee is terminated for cause, it is always advisable for an employer to document the reason for the firing in writing, and to send a letter to the employee explaining why he was let go. This is because if an employee is terminated without cause, they are entitled to seek unemployment insurance benefits from the Illinois Department of Employment Security (IDES) under certain circumstances. In the event that unemployment benefits are sought, and the IDES determines that the reasons given by the employer for the termination allow for unemployment benefits, the employer's Illinois state unemployment tax contribution rates will increase.
A common way for employers to fight an unemployment benefits claim is to allege that the terminated employee committed misconduct during his employment – which would be a disqualifying condition. Of course there are other situations that would keep an employee from getting unemployment benefits, like when the employee voluntarily resigns their position.
When it comes to unemployment benefits, there is no one-size-fits-all legal definition of employee misconduct, and each case is decided on its own merits. However, when analyzing misconduct as grounds for termination, Illinois courts tend to look at three things: (1) whether there was a deliberate and willful violation of a business rule or policy; (2) whether the rule or policy was reasonable; and (3) whether the violation either has harmed the employer or was repeated by the employee despite previous warnings. If all three of these conditions can be shown by the employer, it is likely that unemployment benefits will be denied and the employer will not be stuck with a higher tax bill as a result.
In situations where an employee is under contract with the employer (which include most union employees), the above principles of the employment at-will doctrine can be superseded by any conflicting contractual terms. With this thought in mind, all Illinois employers with contracted employees would be wise to review the terms of their employment contracts before making termination decisions. And, as with all major business decisions, it never hurts for employers to contact a lawyer before taking action. That's what we are here for.