Illinois Termination Laws

When it comes to employment, understanding your rights and responsibilities is crucial, especially when facing the possibility of termination. Illinois termination laws provide a framework that governs how and when an employee can be dismissed from their job.

This article discusses the key aspects of Illinois termination laws, covering wrongful termination, at-will employment, and the rights of both employee and employer when it comes to ending the employment relationship.

This Guide Covers

Legal Considerations for Termination in Illinois
At-Will Employment in Illinois
Lawful Termination in Illinois
Legal Protections During Termination in Illinois
Terminated Employee Benefits in Illinois
Layoffs in Illinois
Resignations in Illinois
Legal Case Related to Wrongful Termination in Illinois

Legal Considerations for Termination in Illinois

When terminating an employee in Illinois, employers must consider several factors to ensure the termination is lawful and does not result in potential claims of wrongful termination. Key legal considerations include:

  • Anti-Discrimination Laws: Employers cannot terminate an employee based on protected characteristics such as race, color, religion, sex, national origin, age (40 or older), disability, or genetic information, as prohibited by federal and state anti-discrimination laws.
  • Retaliation: It is illegal to terminate an employee in retaliation for engaging in legally protected activities, such as filing a discrimination complaint, reporting workplace safety violations, or taking leave under the Family and Medical Leave Act (FMLA).
  • Notice Requirements: Under the federal and state WARN, employers must provide 60 days’ notice before a mass layoff or plant closure if certain thresholds are met. Failure to comply with these requirements can result in legal penalties.
  • Documentation: Employers should thoroughly document the reasons for termination, including any performance issues, misconduct, or business-related reasons, to protect against potential legal challenges. Clear documentation can provide a defense if the termination is later contested.

Employment Framework in Illinois

What is an At-Will Employment?

Yes, Illinois is an at-will employment state. This means an employer can terminate an employee at any time for any reason or no reason as long as the termination does not violate any specific legal protections (such as those against discrimination, retaliation, or breach of contract). Similarly, employees can leave their jobs anytime without a reason.

What are the Exceptions to At-Will Employment in Illinois?

While Illinois follows at-will employment, meaning employers can generally fire employees without cause, there are important exceptions that protect workers from unfair termination. These exceptions prevent employers from firing people in certain situations where doing so would be illegal or unethical:

  • Public Policy Exception: Employers cannot terminate employees for reasons that go against established public policy. For example, firing someone because they refused to participate in illegal activities, exercised a legal right (like filing a workers’ compensation), or fulfilled a legal duty (such as serving on a jury) would violate this exception.
  • Implied Contract Exception: In some cases, an implied contract may arise from company policies, verbal agreements, or promises made by the employer. Employees may be protected from being dismissed without following the process if an employer has indicated job security or a certain process before termination.
  • Discrimination Laws: Federal and state laws protect employees from being fired based on characteristics like race, color, national origin, religion, sex, disability, and other protected statuses. Employees who are terminated due to discrimination can pursue legal action.
  • Retaliation Protections: Employees cannot be fired for engaging in legally protected activities, such as reporting discrimination, sexual harassment, or safety violations. Employers also cannot retaliate against employees for participating in investigations or filing complaints about unlawful workplace conditions.

Employment Under Contract in Illinois

Employment contracts in Illinois are governed by the Illinois Employment Contract Act, which ensures that the terms outlined in the contract, such as salary, job duties, and termination conditions, are legally binding. Unlike at-will employment, these contracts provide protections for both parties and specify the terms for resolving disputes. Termination clauses within contracts define specific grounds for dismissal.

Restrictive covenants like non-compete and non-solicitation agreements are enforceable under Illinois law but must meet strict standards to be valid. Non-competes must be reasonable in scope, duration, and location and require adequate consideration, such as continued employment.

Recent changes in the statutes, like those introduced by the Illinois Freedom to Work Act, limit the use of non-competes for employees earning under $75,000 annually. Non-solicitation agreements also require a clear, reasonable necessity to protect the employer’s legitimate business interests without overly restricting the employee’s ability to work.

Lawful Termination in Illinois

Legal Grounds for Termination in Illinois

In Illinois, employers can fire employees at will, provided the reasons do not violate any federal and state regulations. Legal and reasonable reasons for terminating an employee include:

  • Performance or Conduct Issues: Employers can legally terminate employees for poor performance, misconduct, violation of company policies, or failure to meet job requirements.
  • Economic Reasons: Layoffs due to economic downturns, restructuring, or other business-related reasons are legally permissible grounds for termination.
  • Violation of Employment Contract: If an employee violates the terms of their employment contract, an employer can terminate them based on those violations.
  • Reductions in Workforce: Employers may legally reduce their workforce due to downsizing or cost-cutting measures, provided the layoffs are not discriminatory or retaliatory and comply with the federal and state WARN Acts.
  • Insubordination: Termination may be necessary to comply with laws, regulations, or licensing requirements that affect the employee’s role or the business.
  • Expiration of Employment Contract: If an employment contract has a set term and that term expires, an employer can legally terminate the employee when the contract ends.

Read our comprehensive guide to firing employees in Illinois for further information.

How Do I File a Wrongful Termination Claim in Illinois?

When filing a wrongful termination claim in Illinois, employees are advised to gather all relevant evidence that supports their claim, such as employment contracts, emails, performance reviews, and any correspondence related to termination. Employees can file their claims with the Illinois Department of Human Rights (IDHR) or the U.S. Equal Employment Opportunity Commission (EEOC) if they believe their termination was due to discrimination based on protected characteristics. The IDHR and EEOC will investigate the claim, and if they find sufficient evidence, they may issue a “Right to Sue” letter, allowing employees to file a lawsuit in state or federal court.

Legal Protections During Termination in Illinois

In Illinois, employees are protected by both federal and state laws during the termination process to ensure fair treatment and prevent discrimination. These protections are:

  • Federal Anti-Discrimination Law: Title VII of the Civil Rights Act of 1964 prohibits employers from terminating employees based on race, color, religion, sex, or national origin. Terminations that violate this law are considered discriminatory and illegal.
  • Age Discrimination in Employment Act (ADEA): The Age Discrimination in Employment Act (ADEA) protects employees aged 40 and older from termination based on age. Employers cannot dismiss employees simply because they are older; doing so would constitute age discrimination.
  • Americans with Disabilities Act (ADA): The Americans with Disabilities Act (ADA) prohibits termination of employees due to a disability as long as the employee can perform essential job functions with or without reasonable accommodation. Employers must ensure terminations are not based on discriminatory practices against disabled employees.
  • Family and Medical Leave Act (FMLA): The FMLA employee protection provides job protection for employees taking leave for specified family and medical reasons. Employers cannot terminate employees for taking FMLA leave, nor can they retaliate against employees for exercising their rights under the Act.
  • Worker Adjustment and Retraining Notification (WARN) Act: The WARN Act requires employers to provide 60 days’ notice before a mass layoff or plant closing affects many employees. This Act helps protect employees from sudden job losses.
  • Illinois Human Rights Act (IHRA): The Illinois Human Rights Act (IHRA) expands upon federal protections by prohibiting termination based on additional characteristics, such as marital status, sexual orientation, and military status. This Act ensures broader protection against discriminatory terminations in Illinois.
  • Illinois Worker Adjustment and Retraining Notification (WARN) Act: Similar to the federal WARN Act, the Illinois WARN Act requires 60 days’ notice for plant closings or mass layoffs affecting a certain number of employees. The state version may apply to smaller employers than the federal law.
  • Illinois Wage Payment and Collection Act (IWPCA): The Illinois Wage Payment and Collection Act (IWPCA) governs the payment of final wages to terminated employees, including any earned but unused vacation time. Employers must provide final compensation by the next scheduled payday.
  • Illinois Whistleblower Act: The Illinois Whistleblower Act protects employees from retaliation, including termination, for reporting illegal activities or violations of public policy by their employer. Under this law, employees who are terminated for whistleblowing can seek reinstatement, back pay, and other damages. The Act protects employees who expose wrongful conduct in the workplace.
  • Illinois Equal Pay Act: The Illinois Equal Pay Act prohibits wage discrimination based on sex or race and protects employees from retaliation, including termination, for asserting their rights under the Act. Employers cannot terminate employees for filing a complaint or participating in an investigation related to wage disparities.
  • Illinois Right to Privacy in the Workplace Act: The Illinois Right to Privacy in the Workplace Act protects employees from termination based on their lawful activities outside of work, such as political activities or the use of legal products. Employers are prohibited from firing employees for engaging in these activities during non-working hours.

Terminated Employee Benefits in Illinois

In Illinois, when an employee is terminated, they may be entitled to certain benefits depending on the circumstances of their termination and employment agreement. Terminated employee benefits in Illinois include:

  • Final Paycheck: Illinois employers must provide a terminated employee with their final paycheck by the next regularly scheduled payday. This paycheck must include all earned wages, including any unpaid overtime.
  • Severance Pay: Illinois law does not require employers to provide severance pay unless stipulated in an employment contract, collective bargaining agreement, or company policy.
  • Health Insurance: Under the federal Consolidated Omnibus Budget Reconciliation Act (COBRA), employers with 20 or more employees must offer the option to continue health insurance coverage to terminated employees for a limited period, typically 18 months. In addition to the federal COBRA, Illinois Mini-COBRA provides added coverage to employers with fewer than 20 employees, allowing eligible terminated employees to continue their health coverage for up to 12 months.
  • Unemployment Insurance: Terminated employees may be eligible for unemployment benefits if terminated through no fault of their own (e.g., layoffs). Employees who are fired for misconduct may not be eligible. Employees must apply for unemployment benefits through the Illinois Department of Employment Security (IDES) and meet certain eligibility criteria, including being able and available to work.

Layoffs in Illinois

The federal Worker Adjustment and Retraining Notification (WARN) Act and the Illinois Worker Adjustment and Retraining Notification (IL WARN) Act are both designed to protect employees by requiring employers to provide advance notice in the event of significant layoffs and plant closures. While the federal WARN Act sets the baseline for these protections, the IL WARN Act expands upon these requirements, offering additional protections to employees within the state of Illinois.

The table below shows the criteria of the federal and state WARN Acts.

Criteria

Federal WARN Act

Illinois WARN Act
Employer Coverage Applies to employers with 100+ full-time employees Applies to employers with 75+ full-time employees or 75+ employees, including part-time employees who collectively work at least 4,000 hours per week
Covered Events Mass layoffs affecting 50+ employees at a single site; Plant closures affecting 50+ employees Mass layoffs affecting 25+ full-time employees or one-third of the workforce;

Plant closures affecting 50+ full-time employees;

Relocations affecting 25+ full-time employees 
Notice Period 60 days notice required 60 days notice required
Notice Recipients Affected employees, State Dislocated Worker Unit, local government officials Affected employees, Illinois Department of Commerce and Economic Opportunity (DCEO), local government officials
Penalties for Non-Compliance Back pay and benefits for up to 60 days; Civil penalty of up to $500 for each day of the notice violation Same as the federal WARN
Exceptions Natural disasters, unforeseen business circumstances, faltering companies Same as federal WARN, with additional provisions specific to state law, including temporary facilities and project-based employment, labor strikes, and lockouts
Relocation Requirement Not explicitly covered Requires notice if 25+ full-time employees are affected by the relocation

Resignations in Illinois

In Illinois, the rules and guidelines surrounding resignations can vary depending on whether the resignation is voluntary or involuntary.

Voluntary Resignations

A voluntary resignation occurs when an employee leaves the job of their own accord, usually by providing notice to the employer. Illinois has no state law that mandates a specific period for resignations. But, it is a common practice for employees to provide at least two weeks’ notice. The notice period may vary based on company policy or employment contracts.

Under the Illinois Wage Payment and Collection Act (IWPCA), employers are required to issue the final paycheck by the next regular payday following the employee’s last day of work. The final paycheck must include payment for all earned wages, including any accrued but unused vacation days, if applicable under company policy.

Involuntary Resignations

An involuntary resignation occurs when an employee is essentially forced to resign due to pressure or coercion from the employer. This can be in the form of constructive discharge or as an alternative to termination. If the work environment becomes so intolerable due to actions by the employer that the employee feels compelled to resign, this is considered a constructive discharge. The employee may have grounds to file a claim for wrongful termination if they can prove the employer’s actions created an unbearable work environment.

The final paycheck must be issued by the next regular payday following the last day of employment. Employees who resigned voluntarily are not eligible for unemployment benefits unless they can demonstrate that their resignation was due to a compelling reason, such as harassment or unsafe working conditions. In cases of constructive discharge, employees may be eligible for unemployment benefits.

Legal Case Related to Wrongful Termination in Illinois

Childcare Center Pays $31,000 for Wrongful Termination Over Pregnancy Discrimination

In the case of EEOC v. Adventures in Learning Aurora, Inc., the U.S. Equal Employment Opportunity Commission (EEOC) brought a lawsuit against Adventures in Learning, an Aurora, Illinois-based childcare center, for pregnancy discrimination. The EEOC alleged that the center refused to allow a pregnant employee to continue working after her fourth month of pregnancy, effectively forcing her to resign.

The case was resolved through a legal agreement in which Adventures in Learning agreed to pay $31,000 to the affected employee. The company must also report all pregnancy discrimination complaints to the EEOC for the next two years, provide training on preventing discrimination, and implement a new policy against pregnancy discrimination.

Key Lessons Learned from the Case:
  • Employers must ensure that their practices align with the Pregnancy Discrimination Act of 1978, which prohibits discrimination based on pregnancy. Refusing to accommodate pregnant employees or forcing them to leave work is illegal and can lead to significant financial consequences.
  • This case underscores the importance of having clear, well-communicated policies against pregnancy discrimination. Training programs and regular reporting to oversight bodies, like the EEOC, can help prevent such issues from arising and demonstrate a company’s commitment to fair employment practices.

Learn more about Illinois Labor Laws through our detailed guide.

Important Cautionary Note

This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.