Successor corporations may be liable for employment discrimination claims against their predecessor corporations under Illinois law. Department of Human Rights v. Oakridge Nursing & Rehab Center, 2019 IL App 170806 (First Dist. March 11, 2019). An employee filed a charge of age and disability discrimination under the Illinois Human Rights Act against her employer. After receiving notice of the charge, the employer transferred substantially all of its assets for no consideration to another related business entity. The employee obtained a money judgment against the employer, which it failed to satisfy. The State filed a complaint against the successor entity to enforce compliance with the judgment. The circuit granted granted summary judgment in favor of the successor entity. The State appealed. The Illinois Appellate Court, First District, reversed, holding, in a case of first impression, that Illinois courts shall recognize successor liability for violations of the Illinois Human Rights Act.
Illinois Appellate Court
On August 7, 2019, the Illinois Appellate Court, Third District, affirmed the circuit court's grant of summary judgment in favor of the defendant in a retaliation claim under the Illinois Human Rights Act ("IHRA"). Zoepfel-Thuline v. Black Hawk College, 2019 IL App (3d) 180524 (Third Dist. August 7, 2019). The plaintiff, a teacher, alleged that the defendant delayed offering her employment contracts in retaliation for reporting sexual harassment, then later terminated her employment in retaliation for the employment discrimination lawsuit that she filed against the defendant. In order to prevail on a retaliation claim under the IHRA, a plaintiff must establish that he or she engaged in protected activity under the IHRA. The IHRA provides two ways in which a person's civil rights may be violated through retaliation.
On May 17, 2019, the Illinois Appellate Court, Third District, held that a corporate employer may be liable under the Illinois Gender Violence Act ("IGVA") (740 ILCS 82/10 (West 2016)) arising from gender-related violence perpetrated by the employer's corporate employees (which would include 'physical' workplace sexual harassment). Gasic v. Marquette Management, Inc., 2019 IL App (3d) 170756 (3d Dist. May 17, 2019). The Gasic decision expands the liability of Illinois employers for gender-based workplace violence, workplace sexual assault, and physical sexual harassment committed by their employees. In this case, the plaintiff, an alleged victim of sexual violence, filed a complaint against the employer of the alleged perpetrator, alleging a statutory cause of action against the defendant employer under section 10 of the IGVA, based on the alleged acts of the employer's employee. The trial court dismissed the claim on the basis that the IGVA does not apply to corporate conduct. The following question was certified for appeal: "[C]an an entity be considered a 'person' committing acts 'personally' for purposes of liability under the Gender Violence Act?" The Illinois Appellate Court answered the question in the affirmative, and reversed the trial court's dismissal of the plaintiff's statutory claim under the IGVA.
On May 23, 2019, the Illinois Supreme Court upheld a plaintiff's complaint against an employer for negligent hiring, retention, and supervision of an employee. Jane Doe, et al. v. Chad Coe, et al., 2019 IL 123521 (May 23, 2019). This case involved an alleged sexual assault by a youth pastor who was employed by the employer. The plaintiff alleged that the employer negligently and willfully and wantonly hired, supervised, and retained the employee. The plaintiff filed a complaint alleging five counts: (1) negligent supervision; (2) negligent retention; (3) willful and wanton failure to protect; (4) willful and wanton retention and failure to supervise; and (5) negligent hiring. Under Illinois negligence law, an employer may be liable for an employee's torts in one of two ways, depending on whether the employee was acting within the scope of his employment. If the employee was within the scope of his employment, the employer can be found liable for his actions under a theory of vicarious liability, or respondeat superior. If an employee acts outside of the scope of his employment, however, the plaintiff can bring a direct cause of action against the employer for the employer's misconduct. Negligent hiring, negligent supervision, and negligent retention are all direct causes of action against the employer for the employer's misconduct in failing to reasonably hire, supervise, or retain the employee.
On May 10, 2019, the Illinois Appellate Court, First District, reversed the trial court's dismissal of an employer's two-count complaint for breach of fiduciary duty and tortious interference with prospective economic advantage. Advantage Marketing Group, Inc. v. Keane, 2019 IL App (1st) 181126 (First District May 10, 2019). The First District held that the employer's complaint stated causes of action against the employee for breach of fiduciary duty and tortious interference, even though the employee was not an officer or director of the company. The employer alleged that the employee breached his fiduciary duty to the employer when he allegedly failed to disclose and misappropriated a corporate opportunity to purchase a competing business. Under Illinois law, an employee owes fiduciary duties to his or her employer, which arise from the employment relationship. These include the duties of loyalty and fidelity as well as the duty to avoid self-dealing at the expense of the employer.
On April 2, 2019, the Illinois Appellate Court, Second District, reversed the trial court's order of summary judgment in favor of the defendant-employer in an employment discrimination lawsuit under the Illinois Human Rights Act ("IHRA"), in which the plaintiff-employee claimed that her employer unlawfully discriminated against her because of her sex, race, national origin, and age, and unlawfully retaliated against her for complaining about it. Lau v. Abbott Laboratories, 2019 IL App (2d) 180456 (Second Dist. April 2, 2019). The IHRA is an Illinois anti-discrimination statute that contains the same employee protections as the federal anti-discrimination statutes (as well as some additional protected classifications that are not covered by the federal laws). Illinois courts interpreting the IHRA are guided by federal case law interpreting the federal anti-discrimination laws. The same legal standards and proof paradigms apply.
On March 29, 2019, the Illinois Appellate Court, First District, upheld the rule that continued employment for less than two years does not constitute adequate consideration to support noncompetition or nonsolicitation provisions contained in Illinois at-will employment contracts. Axion RMS, Ltd. v. Booth, 2019 IL App (1st) 180724 (First Dist. March 29, 2019). This is the so-called "two-year rule," established by the Illinois Appellate Court, First District, in its decision in Fifield v. Premier Dealer Services, Inc., 2013 IL App (1st) 120327, which remains fluid and controversial, because the Illinois Supreme Court has not decided the issue. Consequently, federal district court judges may, but are not required to follow the "two-year" rule when determining the enforceability of noncompetition or nonsolicitation agreements under Illinois law. Federal judges in the U.S. District Court for the Northern District of Illinois have split on the issue--some follow the bright-line "two-year rule," while others determine the enforceability of employment restrictive covenants based upon the totality of the circumstances.
On March 11, 2019, the Illinois Appellate Court, First District, held that under Illinois law, a successor business entity may be liable for an employment discrimination claim against an employer that transferred its assets to the successor in order to avoid liability for the employment discrimination claim. Illinois Department of Human Rights v. Oakridge Nursing & Rehab Center, et al., 2019 IL App (1st) 170806, March 11, 2019. The employee filed an age and disability discrimination charge (the "Charge") against his employer under the Illinois Human Rights Act ("IHRA"). After the employer received notice of the Charge, it transferred substantially all of its assets to a related but separate business entity. Subsequently, a judgment in the amount of $30,000 was awarded by the Illinois Human Rights Commission to the employee and against the employer, which the employer failed to pay.
On December 11, 2018, the Illinois Appellate Court, Third District, declined to establish a per se standard of reasonableness for the temporal scope of employment-based restrictive covenants, indicating that reasonableness must be determined based upon the totality of the facts and circumstances of each individual case. Pam's Academy of Dance/Forte Arts Center v. Marik, 2018 IL App (3d) 170803 (12/11/2018). In this case, the plaintiff alleged two counts of breach of an employment contract and a third count for breach of the Illinois Trade Secrets Act. The plaintiff alleged that the defendant, a former employee, breached their employment non-disclosure and restrictive covenant agreement by opening a dance studio within 25 miles of the plaintiff's studio and soliciting students and teachers through an improperly-obtained customer list.
On April 16, 2018, the Illinois Appellate Court, First District, reversed the dismissal of an Illinois common law retaliatory discharge claim. Roberts v. Board of Trustees Community College, 2018 IL App (1st) 170067 (4/16/2018). The plaintiff filed a lawsuit against his former employer alleging claims for common law retaliatory discharge, violation of the Illinois Whistleblower Act, and wrongful termination. The circuit court dismissed the retaliatory discharge claim and whistleblower claim. The First District reversed the dismissal of the plaintiff's retaliatory discharge claim, but affirmed the dismissal of his claim under the Whistleblower Act. Illinois follows the employment at-will rule, which means that an employee who does not have a specified term of employment under an employment contract is subject to termination by the employer at any time for any or no reason, with or without notice. However, Illinois recognizes an exception to the general employment at-will rule when the discharge violates a clear mandate of public policy.