At-will employment

Bright-Line Two-Year Rule for Noncompetition Agreements Reaffirmed by the Illinois Appellate Court

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.

Seventh Circuit Affirms Summary Judgment for Employer on Illinois Common Law Retaliatory Discharge Claim

On February 20, 2019, the U.S. Court of Appeals for the Seventh Circuit affirmed an order of summary judgment in favor of a defendant-employer on an Illinois common law retaliatory discharge claim.  Walker v. Ingersoll Cutting Tool Company, No. 18-2673 (7th Cir. Feb. 20, 2019).  The employer discharged the employee after he was involved in a physical altercation with another employee.  He sued the employer, alleging race discrimination under Title VII and retaliatory discharge under Illinois law.  The district court granted summary judgment for the employer on all claims.  On appeal, the plaintiff abandoned his Title VII racial discrimination claim.  The retaliatory discharge claim failed for lack of evidence of a causal connection between any protected activity and the plaintiff's discharge.

7th Circuit Affirms Summary Judgment on Claim for Breach of Employee Compensation Plan but Reverses Summary Judgment on Illinois Wage Claim

On June 25, 2018, the 7th Circuit affirmed the district court's grant of summary judgment on a claim for breach of an employment compensation plan, but reversed the district court's grant of summary judgment on the plaintiff's wage claim under the Illinois Wage Payment and Collection Act.  Sutula-Johnson v. Office Depot, Inc., No. 17-1855 (7th Cir. 6/25/2018).  The plaintiff sued her former employer alleging that its changes to her employee compensation plan for selling office furniture breached its employment contract with her and violated the Illinois Wage Payment and Collection Act (the "Act").  In her claim for breach of employment contract, the plaintiff contended that the defendant did not effectively amend its employment contract with her until she signed a written acknowledgement form on a certain date.  She argued that prior thereto, any amendment to her employment contract was without consideration; and that she did not accept the new terms until she signed them.  Thus, it was the plaintiff's position that a new contract was not formed until she signed the acknowledgment, and that the defendant breached her previous contract by failing to comply with the old compensation plan through the date she signed the acknowledgement.  She also argued that the defendant breached her employment contract by retroactively reducing her commissions.

Covenant not to Compete Held Unenforceable under Illinois Law

On April 17, 2018, a U.S. District Court judge for the Northern District of Illinois ruled that under Illinois law, a covenant not to compete is unenforceable per se if the covenant, on its face, restricts an employee from taking any position with another company that engages in the same business as the employer, without regard to whether that position is similar to the position that the employee held with the employer or otherwise competes with the employer.  Medix Staffing Solutions, Inc. v. Dumrauf, 17 C 6648 (N.D.Ill 4/17/2018).  The employee entered into an employment at-will, confidentiality, and non-compete agreement with the employer and subsequently executed an employee confidentiality/non-compete agreement.  The agreement included a covenant not to compete that restricted the employee, for a period of eighteen (18) months following termination of employment, within a radius of 50 miles from any office of the employer where the employee performed services for the employer, from employment in any capacity with any business that either offers a product or services in actual competition with the employer, or which may be engaged directly or indirectly in the employer's business.

Illinois Appellate Court Reverses Dismissal of Retaliatory Discharge Claim

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.

Federal Judge Rules that Non-solicitation Provision of Employment Agreement is Enforceable

On October 20, 2017, a federal district court judge for the Northern District of Illinois held that a non-solicitation restrictive covenant contained in an employment contract was not unenforceable for lack of adequate consideration, even though the defendants were employed for fewer than two (2) years.  Stericycle, Inc. v. Simota, et al., No. 16 C 4782 (N.D.Ill. 10/20/2017).  In so holding, the court rejected the Illinois Appellate Court's ruling in Fifield v. Premier Dealer Servs., 2013 IL App (1st) 120327, which held that a non-competition or non-solicitation restrictive covenant contained in an employment at-will employment agreement is unenforceable for lack of adequate consideration when the employee was employed for fewer than two (2) years.  Several other Illinois Appellate Court decisions have followed Fifield and adopted the so-called "two-year rule," but the Illinois Supreme Court has not reached the issue.  Accordingly, federal court judges are not bound to follow Fifield, and instead must make a predictive judgment on how the Illinois Supreme Court would decide the issue.

No Waiver of Employer's Right to Terminate Employment Contract when Employer gave Employee a Chance to Improve his Performance

On March 13, 2017, the 7th Circuit affirmed a jury verdict in favor of an employer in a lawsuit in which an employee alleged that the employer breached and waived its right to terminate an employment agreement that was terminable only for cause.  Burford v. Accounting Practice Sales, Inc., et al., No. 16-1871 (7th Cir. 3/13/2017).  This case involved an employment contract that provided the employee with an exclusive sales territory.  The employment agreement stated that the employer could not terminate the contract unless it was violated by the employee.  Based on this language, the contract was not terminable "at will," but only terminable for cause.  The contract gave the employer the option to terminate the agreement if the employee failed to meet his sales goals.

Illinois Appellate Court Reverses Dismissal of Claims for Breach of Employment Contract and Promissory Estoppel

On December 20, 2016, the Illinois Appellate Court, First District, reversed an order of the trial court that had dismissed an employee's claims for breach of an employment agreement and promissory estoppel.  Boswell v. City of Chicago, 2016 IL App (1st) 150871 (12/20/2016).  Promissory estoppel is an employment law claim that is not dependent upon the existence of an employment contract.  To state a claim for promissory estoppel, a employee must allege: (1) the employer made an unambiguous promise; (2) he relied on the promise; (3) his reliance was expected and foreseeable; and (4) he relied on the promise to his detriment.  In this case, the employee alleged that the employer made representations that his employment would include certain terms and conditions, upon which he reasonably relied to his detriment by resigning from his previous employment and relocating his family to Chicago.

Illinois Appellate Court Affirms Summary Judgment in Retaliatory Discharge Lawsuit

On September 19, 2016, the Illinois Appellate Court, Third District, affirmed the trial court's order granting summary judgment in a retaliatory discharge case.  Seeman v. Wes Kochel, Inc., 2016 IL App (3d) 150640 (9/19/2016).  The plaintiff alleged that he was fired because of his protected activity of service to a volunteer fire department because he was fired for tardiness due to responding to a fire call.  Under Illinois law there is a common-law tort claim for retaliatory discharge, which is an exception to the doctrine of employment "at will."  A plaintiff must allege that he or she was discharged in retaliation for his or her protected activities and that the discharge violates public policy.  Examples of retaliatory discharge that contravened public policy include where an employee was fired for refusing to violate a statute or evade jury duty, engaging in statutorily protected union activities or whistleblower activities, and filing a workers' compensation claim.  Retaliatory discharge claims have not been successful when only private interests are at stake.

Illinois Appellate Court Affirms Summary Judgment in Retaliatory Discharge and Employment Discrimination Lawsuit

On September 2, 2016, the Illinois Appellate Court, First District, affirmed an order of summary judgment in a state court lawsuit in which the plaintiff alleged that his employment was terminated in retaliation for his workers' compensation claim and because of a work-related disability.  Vulpitta v. Walsh Construction Company, et al., 2016 IL App (1st) 152203 (9/2/2016).  The plaintiff worked for the defendant as a carpenter and carpenter foreman for approximately 12 years until he was laid off.  The defendant contended that it laid off the plaintiff due to a work shortage, while the plaintiff alleged that he was terminated unlawfully in retaliation for exercising his rights under the Illinois Workers' Compensation Act and on account of his work-related disability.  The Illinois Human Rights Act makes it unlawful for an employer to discriminate against an employee because of his or her disability.  There is also an Illinois common law tort claim for retaliatory discharge, which is an exception to the general rule in Illinois of employment at-will.  To state a claim for workers' compensation retaliatory discharge, a plaintiff must establish: (1) he was an employee of the defendant at or before the time of the injury; (2) he exercised a right under the Workers' Compensation Act; and (3) his discharge was causally related to the exercise of his rights.  The element of causation cannot be met if the employer establishes a valid, nonpretextual basis for the discharge.  The ultimate issue is the employer's motive in discharging the employee.

Pages

Subscribe to RSS - At-will employment