• Illinois -- New Developments in Retaliatory Discharge Law
  • October 17, 2007
  • Law Firm: Holland & Knight LLP - Chicago Office
  • Since 1978, Illinois courts have recognized an exception to the employment at-will doctrine when an employer discharges an employee in violation of public policy. Under this exception, an employer may not terminate an employee in retaliation for filing a workers’ compensation claim or for whistleblowing (reporting a violation of the law or refusing to violate the law). Under this common-law retaliatory discharge tort, employees engage in a protected whistleblowing activity if they report a violation of the law to their employer.

    On January 1, 2004, the Illinois Whistleblower Act (the Act) became effective. The Act prohibits an employer from retaliating against an employee for (1) “disclosing information 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” (740 ILCS 174/15); or (2) “for refusing to participate in an activity that would result in a violation of a State or federal law, rule, or regulation” (740 ILCS 174/20). After its enactment, employers argued that the Act preempted the common-law retaliatory discharge tort, and that it was no longer sufficient for an employee to report a violation of the law only to the employer.

    Initially, the Illinois federal courts agreed, ruling that the Act preempted the common-law retaliatory discharge tort and that employees could recover for retaliatory discharge only by satisfying the Act. But the Illinois Appellate Court, First District, recently ruled differently. In Callahan v. Edgewater Care & Rehab. Ctr., the Court concluded that the Act does not preempt the common-law retaliatory discharge tort. 2007 Ill. App. LEXIS 750 (1st Dist. 2007). It reasoned that because the Act does not expressly abrogate the common-law retaliatory discharge tort, any preemption could only occur by implication. Upon examination, the Court determined that neither the statute nor the legislative history indicated an intent to repeal or preempt the common-law protection for employees who report violations of law to their employers. The Court thus concluded that the Act does not preempt the common-law retaliatory discharge cause of action for employees who are discharged in retaliation for reporting violations of law to their employers.

    On August 15, 2007, the Illinois House enacted a bill that expands the Illinois Whistleblower Act to apply to governmental entities and to preclude retaliation for disclosure of information to or in a court, administrative hearing, before a legislative commission or committee, or “in any other proceeding,” provided the employee has reasonable cause to believe that the information discloses a violation of a state or federal law, rule or regulation. The bill does not include protection for disclosing information to one’s employer.

    Although the issue of whether the Whistleblower Act preempts the common-law tort of retaliatory discharge is unsettled, what remains true is that whistleblower claims are dangerous for employers. Employers should exercise discretion before terminating someone known to have reported a violation of the law, either internally or externally.