Category: Labor and Employment

Court Orders New Overtime Rules Delayed

Employers Question How To Pay Overtime Now That New Overtime Rules Delayed

By Joshua Herman

email: joshua.herman@mhtlaw.com

For now, implementation of new federal overtime regulations has been delayed. A federal court halted the December 1, 2016, implementation of the Department of Labor’s (“DOL’s”) new regulations doubling the minimum annual salary from $23,660 ($455 weekly) to $47,476 ($913 weekly) in order for an executive, administrative or professional employee to be exempt from overtime requirements. Following the court’s ruling in State of Nevada v. U.S. Dep’t of Labor, No. 16-00731 (E.D. Tex. Nov. 22, 2016), employees exempt from overtime requirements will continue – for now – to be those receiving $23,660 annually ($455 weekly).

How this change impacts Illinois employers is less than clear.

The underlying opinion (available at http://src.bna.com/kgs) is the product of a coalition of states and businesses seeking to overturn the new rule. The coalition argued the DOL overstepped its authority because the Fair Labor Standards Act (“FLSA”) enacted by Congress provides that “any employee employed in a bona fide executive, administrative, or professional capacity… as such terms are defined and delimited from time to time by regulations of the Secretary” shall be exempt from minimum wage and overtime requirements. 29 U.S.C. § 213(a)(1). The FLSA overtime exemptions do not refer to any salary requirement.  In analyzing Congress’ actual language, the court found that Congress intended to exempt employees based on their executive, administrative, or professional (“EAP”) duties, not their salaries.

The court’s preliminary injunction states the new regulations are unlawful because the DOL “exceeds its delegated authority and ignores Congress’ intent by raising the minimum salary level such that it supplants the duties test.” The court explains that “[i]f Congress intended the salary requirement to supplant the duties test, then Congress, and not the Department, should make that change.”

Despite the fact that the DOL has stated it cannot evaluate overtime exemption based on salary alone, the court found that the new rules would essentially create a de facto salary-only test. The court further held that the new regulations would cause irreparable damage due to the significant expense of compliance if they were allowed to go into effect.

The court held that public interest is best-served by an injunction, stating that:

If the Department lacks the authority to promulgate the Final Rule, then the Final Rule will be rendered invalid and the public will not be harmed by its enforcement. However, if the Final Rule is valid, then an injunction will only delay the regulation’s implementation. Due to the approaching effective date of the Final Rule, the Court’s ability to render a meaningful decision on the merits is in jeopardy. A preliminary injunction preserves the status quo while the Court determines the Department’s authority to make the Final Rule as well as the Final Rule’s validity.

Consequently, the court imposed a nationwide injunction because the DOL’s regulations are applicable to all states, extending the scope of alleged irreparable injury nationwide.

The injunction prevents the DOL from implementing and enforcing the new overtime regulations; however, the impact of this ruling on Illinois employers is less than clear. The injunction is only temporary, pending further action by that court. The court can lift the injunction at any time, or if the court makes it permanent, the injunction can be reversed upon appeal. If lifted or reversed, courts dispute whether the regulations would retroactively apply to employers who delayed implementation.

Should I implement overtime changes now that new overtime rules have been delayed?

Employers have significantly invested in preparing for the new regulations, but they are now faced with the crucial question: “Should I delay implementing changes to comply with the new regulations to avoid significant and possibly unnecessary costs, or should I proceed?” If the regulations eventually become effective, employers who violate them may be fined up to twice the unpaid overtime, civil penalties, and be responsible for employees’ attorneys’ fees.

Employers should consider the risks of further action and proceed on a case by case basis, seeking legal advice where necessary.

Generally, employers who have prepared no-cost solutions (such as limiting employees to 40 hours a week, or converting a salaried employee to hourly compensation at a rate that will not incur additional costs after considering overtime), should implement those solutions. Costly changes (such as raising an employee’s salary to the new threshold) can be delayed while the temporary injunction is in effect; however, employers should immediately begin to track impacted employee hours. If the injunction is lifted, or applied retroactively, these records should allow employers to adequately compensate employees in compliance with the new laws while minimizing potential risks associated with their delay.

Employers that have already implemented costly changes should exercise extreme caution before reverting to earlier practices. Not only will such actions have practical effects on current employee morale, they may also be prohibited based on collective bargaining requirements or other property rights employees may have in their new salaries.

It is uncertain whether the current exempt salary threshold will remain, increase as a compromise, or be completely eradicated. Further, it is unclear whether the incoming Trump administration will continue to push for these regulations, which were created at the Obama administration’s request. Only time will tell. Wise employers will pay close attention to developments on this matter.

For more information or to receive fact-specific advice, contact Joshua Herman and our Labor and Employment team.

Coins stacked in front of clock

Park Districts & Governments Must Know the New Overtime Rules and Other Legal Developments

We invite elected officials, officers, and administrative employees of local governments or park districts, and other interested parties to review how new Fair Labor Standards Act (FLSA) overtime rules will automatically extend overtime pay to over 4 million newly eligible employees. This focused seminar will also address new travel and expense reimbursement rules, as well as practical advice on implementing email and cell phone policies following recent Illinois Attorney General’s decisions subjecting private employee emails to the Freedom of Information Act (FOIA).

The seminar will include materials and educate attendees as to the following:

New FLSA Overtime Rules Impact  Local Governments & Park Districts and as of December 1, 2016

  • What will change and how the new rules apply to your employees.
  • How to identify employees exempt from the overtime requirements after the changes.
  • How to evaluate exemptions for employees who do not work year-round.
  • Whether you can still offer compensatory time instead of paying overtime.
  • Special considerations for local governments and park districts.
  • How to prepare for and minimize the impact of the new regulations.
  • Penalties for failure to comply with the new rules.

Illinois Travel and Expense Reimbursement Requirements (P.A. 99-604)

  • New prohibitions on reimbursement for “entertainment” expenses.
  • Required policies that must be adopted before employees, officers and officials may be reimbursed for travel, meal and lodging expenses.
  • How FOIA impacts records related to reimbursement under the new law.
  • The regularly “misunderstood deadline” for implementing the new travel expense reimbursement requirements.

Employee Emails and Text Messages Subject to FOIA

  • What issues and pitfalls email and text messages pose with respect to FOIA and the Open Meetings Act (OMA).
  • Important FOIA and OMA considerations that email and text-message policies should address.
  • Impacts of recent decisions regarding electronic messages, including the recent August, 2016 decision finding that employees’ private emails can be subject to FOIA.

OUR SPEAKERS

Herman presents seminar on New Overtime Rules
Joshua Herman presents seminar on New Overtime Rules to area business leaders.

Joshua HermanJoshua concentrates in advising schools and educational institutions, focusing on labor and employment, commercial law, and related litigation. He has previously been interviewed regarding the impact of the new overtime regulations by WMBD, WYZZ, and the Peoria Journal Star. In August, Joshua also lectured on the impact of the new overtime regulations in cooperation with the Small Business Development Center at Bradley University to local Small Business Leaders (pictured above). Joshua has focused on educational and local government law since 2008. He received his Bachelor’s degree in 2003 from Bradley University in Peoria, Illinois. After his deployment to Iraq as an Army Reservist 2003-2005, Joshua attended the Chicago-Kent and the University of Illinois Colleges of Law, graduating Summa Cum Laude.  Joshua was selected by the Illinois State Bar Association as Young Lawyer of the Year in 2011 and he is one of the 2014 Peoria 40 Leaders Under Forty.

Richard M. Joseph
Richard M. Joseph

Richard JosephRick has authored on the subject of the new Illinois Local Government Travel Expense Control Act and regularly advises units of local government on related matters. Rick has over 30 years’ experience in representing public bodies in all areas of practice, including experience with acquisition and sale of real estate, procurement, construction matters, public and bond financing, taxation, open meetings and public records laws, review and revision of policies and assisting public officials and employees with understanding their roles and duties, including legal  and ethical standards and assisting key staff members in fulfillment of their responsibilities.  Rick received his Bachelor’s degree in 1982 from the University of Notre Dame and his Juris Doctor from Marquette University, Cum Laude, in 1985.

Christopher Oswald
Christopher Oswald

Christopher OswaldChris has 14 years of experience counseling public bodies, and those interacting with public bodies with respect to FOIA and the Open Meetings Act.  Chris’ practice is focused on assisting local governments and private clients as general counsel and in structuring transactions relating to real estate, development incentives, construction, taxation, finance, acquisitions, and special matters unique to public bodies.   Chris received his Bachelor of Science degree in Agricultural Economics with honors from the University of Illinois at Urbana-Champaign and his Juris Doctor, Cum Laude, from Northern Illinois University College of Law.

Join us for this informative lunch and learn on October 26, 2016

5:00 p.m.  – 6:30 p.m.
Jump Trading & Simulation Center, OSF
1306 N. Berkeley Avenue • Peoria, Illinois 61603

Cost: $35 (includes handouts and Hors d’Oeuvres)
4:30 p.m. – 5:00 p.m.:    Registration and Hors d’Oeuvres
5:00 p.m. –  6:30 p.m.: Presentation, Q & A

Tiled sheet of $1 Bills

What Schools Need to Know Now about the New FLSA Overtime Regulations and Other Legal Developments

We invite school administrators, board members and other interested parties to review how new Fair Labor Standards Act (FLSA) overtime rules will automatically extend overtime pay to over 4 million newly eligible employees. The October 26, 2016 lunch-and-learn seminar will also address new travel and expense reimbursement rules, as well as practical advice on implementing email and cell phone policies following recent Illinois Attorney General’s decisions subjecting private employee emails to the Freedom of Information Act (FOIA). Do not wait to learn about these changes at the Illinois Association of School Boards’ conference – it could be too late!

The seminar will include materials and educate attendees as to the following:

New FLSA Overtime Rules Impact Schools as of December 1, 2016

  • What will change and how the new rules apply to your employees.
  • How to identify employees exempt from the overtime requirements after the changes.
  • How to evaluate exemptions for employees who do not work year-round.
  • Whether you can still offer compensatory time instead of paying overtime.
  • Special considerations for schools and educational institutions.
  • How to prepare for and minimize the impact of the new regulations.
  • Penalties for failure to comply with the new rules.

Illinois Travel and Expense Reimbursement Requirements (P.A. 99-604)

  • New prohibitions on reimbursement for “entertainment” expenses.
  • Required policies that must be adopted before employees, officers and officials may be reimbursed for travel, meal and lodging expenses.
  • How FOIA impacts records related to reimbursement under the new law.
  • The regularly “misunderstood deadline” for implementing the new travel expense reimbursement requirements.

School Emails and Text Messages Subject to FOIA

  • What issues and pitfalls email and text messages pose with respect to FOIA and the Open Meetings Act (OMA).
  • Important FOIA and OMA considerations that email and text-message policies should address.
  • Impacts of recent decisions regarding electronic messages, including the recent August, 2016 decision finding that employees’ private emails can be subject to FOIA.

OUR SPEAKERS

Herman presents seminar on New Overtime Rules
Joshua Herman presents seminar on New Overtime Rules

Joshua HermanJoshua concentrates in advising schools and educational institutions, focusing on labor and employment, commercial law, and related litigation. He has previously been interviewed regarding the impact of the new overtime regulations by WMBD, WYZZ, and the Peoria Journal Star. In August, Joshua also lectured on the impact of the new overtime regulations in cooperation with the Small Business Development Center at Bradley University to local Small Business Leaders. Joshua has focused on educational and local government law since 2008. He received his Bachelor’s degree in 2003 from Bradley University in Peoria, Illinois. After his deployment to Iraq as an Army Reservist 2003-2005, Joshua attended the Chicago-Kent and the University of Illinois Colleges of Law, graduating Summa Cum Laude.  Joshua was selected by the Illinois State Bar Association as Young Lawyer of the Year in 2011 and he is one of the 2014 Peoria 40 Leaders Under Forty.

 

Richard M. Joseph
Richard M. Joseph

Richard JosephRick has authored on the subject of the new Illinois Local Government Travel Expense Control Act and regularly advises units of local government on related matters. Rick has over 30 years’ experience in representing public bodies in all areas of practice, including experience with acquisition and sale of real estate, procurement, construction matters, public and bond financing, taxation, open meetings and public records laws, review and revision of policies and assisting public officials and employees with understanding their roles and duties, including legal  and ethical standards and assisting key staff members in fulfillment of their responsibilities.  Rick received his Bachelor’s degree in 1982 from the University of Notre Dame and his Juris Doctor from Marquette University, Cum Laude, in 1985.

 

Christopher Oswald
Christopher Oswald

Christopher OswaldChris has 14 years of experience counseling public bodies, and those interacting with public bodies with respect to FOIA and the Open Meetings Act.  Chris’ practice is focused on assisting local governments and private clients as general counsel and in structuring transactions relating to real estate, development incentives, construction, taxation, finance, acquisitions, and special matters unique to public bodies.   Chris received his Bachelor of Science degree in Agricultural Economics with honors from the University of Illinois at Urbana-Champaign and his Juris Doctor, Cum Laude, from Northern Illinois University College of Law.

Join us for this informative lunch and learn on October 26, 2016

12:00 p.m.  – 1:30 p.m.
Jump Trading & Simulation Center, OSF
1306 N. Berkeley Avenue • Peoria, Illinois 61603

Cost: $35 (includes handouts and lunch)
11:30 a.m. – 12:00 p.m.:    Registration and lunch
12:00 p.m. –  1:30 p.m.: Presentation, Q & A

Image of cashbox with money

New Overtime Rules Double Salary Requirements for Exempt Employees

On December 1, 2016, Most Employees’ Annual Salaries Must be at Least $47,476 to Qualify as Exempt from Overtime Pay Requirements

By Kathleen M. Carter

kathleen.carter@mhtlaw.com

On May 23, 2016, the Department of Labor issued new rules regarding the Fair Labor Standards Act (“FLSA”) that almost double the threshold salary requirements for employees to qualify as exempt from overtime pay requirements, raising the minimum salary from $455/weekly ($22,750 annually) to $913/weekly ($47,476 annually) (the “Adjusted Salary Threshold”). The new rules take effect on December 1, 2016, and will result in nearly 4.2 million more people qualifying for overtime pay.  Although these new rules apply to all employers, including units of local government, the FLSA also contains provisions specific to local governments.

Generally, the FLSA requires that overtime compensation be paid at a rate not less than one and one-half times a non-exempt employee’s regular rate of pay for each hour worked in excess of 40 hours per work week. Certain employees, however, are exempt from these requirements and need not be paid overtime.

In order to qualify as exempt, an employee must satisfy a “duties test” and be paid a specified minimum salary. It was this minimum salary requirement that was adjusted by the new overtime rules and with which employers must comply by December 1, 2016.

In addition to the Adjusted Salary Threshold, the new rules: (1) raised the compensation level for “highly compensated individuals” to be considered exempt to $134,004, annually; (2) defined that up to 10% of an employee’s standard salary level can come from non-discretionary bonuses, incentive payments, and commission, paid at least quarterly; and (3) established a mechanism for an automatic 3-year adjustment of the salary threshold.

Not all municipal employees will be affected by the new rules. For example, the new rules will not impact currently non-exempt hourly and salaried employees, who will continue to be entitled to overtime if they work more than 40 hours in a work week. Moreover, the new rules will not affect any employees who are not covered by the FLSA, such as independent contractors.  The FLSA also provides several exemptions unique to public bodies, such as the “small-agency” exemption for law enforcement or firefighter agencies that employ fewer than five such employees.  Otherwise, the new rules will significantly impact many municipal employees previously considered to be “exempt.”

With respect to municipal employees to whom the new rules apply, there are several options that municipal employers may use to comply with the new rules, including:

  • Raise salaries of currently exempt employees to meet the new threshold and maintain their exempt status;
  • Maintain salaries and either prohibit overtime or pay overtime for hours worked over 40;
  • Adjust wages so that when overtime is calculated, average pay remains the same; or
  • Utilize compensatory time rather than cash overtime payments (only applicable to state and local governmental employers and in certain instances).

The penalties can be steep for violations of the FLSA overtime provisions. Accordingly, regardless of the method chosen, municipal employers should review employee compensation and their “duties” classifications to ensure that they are prepared to comply with the new rules.

MHT will soon provide a seminar to public bodies that addresses the new rules and offers guidance for how public bodies should proceed. Additional information related to the new overtime rules can also be found at http://mhtlaw.com/overtime/.

Herman presents seminar on New Overtime Rules

MHT Presents Seminar on New Overtime Regulations to Local Businesses

MHT Partner Joshua D. Herman, in coordination with the Illinois Small Business Development Center at Bradley University, presented a Lunch and Learn Seminar for the New Overtime Rules on July 26, 2016.

The new Overtime Rules almost double the salary employees must be paid in order to be exempt from overtime payment protections, requiring all business – large and small – review their current employees and prepare.

The Illinois Small Business Development Center at Bradley University and Joshua Herman, a partner at the law firm of Miller, Hall & Triggs, LLC, cosponsored a lunch-and-learn regarding the new Overtime Regulations to address the significantly impact to local businesses.  Attendees learned about:

  • What the new rules change;
  • How the new rules apply to their business;
  • The need audit employee classifications and how to do so;
  • How to maintain exemptions or otherwise handle newly non-exempt employees after Dec. 1; and,
  • Severe penalties for failing to comply with the rule.

If you would like a copy of the written materials provided to attendees, or if you would like more information about what you must do to prepare for the changes in the law, contact Joshua Herman.

For more information, see the recent news broadcasts regarding the new overtime rules by visiting WMBD New Overtime Law or by reading the Peoria Journal Star article: “Many employers unaware of how new overtime rules affect them.”

New Occupational Safety and Health Requirements in 2015

Law Repeals Current Requirements and Imposes New Ones

By Joshua Herman

joshua.herman@mhtlaw.com

Effective January 1, 2015, the new Occupational Safety and Health Act (the “Act” or “OSHA”) becomes effective pursuant to Public Act 98-874, repealing the Safety Inspection and Education Act and the Health and Safety Act.  The new law establishes federal occupational safety and health standards as default requirements and it applies to every public employer and its employees.  While the Act permits the Illinois Department of Labor to adopt restrictions even more stringent than federal law requires, it also permits the Department to allow temporary and permanent variances from the Act upon request.

Generally, the Act requires a public employer to “provide reasonable protection to the lives, health, and safety of its employees” and to provide “each of its employees employment and a workplace which are free from recognized hazards that cause or are likely to cause death or serious physical harm.”  The Act requires the Director of Labor to adopt rules requiring public employers to keep accurate records and make reports of “work-related deaths, injuries, and illnesses” as well as maintain records of employee exposure to “potentially toxic material or harmful physical agents.”

Employers should review their workplace notices because the Act requires public employers to inform their employees of their protections and obligations under the new Act. Because these notices must include applicable standards or rules the Department of Labor adopts under this Act, the Department will likely provide updated notices soon. Public employers must also provide employees “with information regarding hazards in the workplace, including information about suitable precautions, relevant symptoms, and emergency treatment.”

An employee who believes a violation of the Act has occurred may request an inspection by the Director of Labor, the enforcer of the Act.  The Director may issue citations for violations, which are punishable by civil penalties (up to $10,000.00 per violation) and criminal penalties (ranging from a Class B misdemeanor to a Class 4 felony).  A public employer or its representative may contest a citation or notice of violation by filing a request for hearing with the Director.

At a minimum, public employers should review their workplace policies, potential safety and health risks facing employees, and revise workplace notices to comply with the Act.

 

Ban the Box

New Law Prohibits Asking About Job Applicant’s Criminal History

By Kateah M. McMasters

Beginning January 1, 2015, the Job Opportunities for Qualified Applicants Act (the “Act”), P.A. 98-774, prohibits employers from asking potential employees to “check a box” or to otherwise provide detailed information about his or her criminal history on a job application.
The General Assembly’s purpose in passing the Act is “to do more to give Illinois employers access to the broadest pool of qualified applicants possible, protect the civil rights of those seeking employment, and ensure that all qualified applicants are properly considered for employment opportunities and are not pre-screened or denied an employment opportunity unnecessarily or unjustly.”
Despite the Act’s prohibition, employers may notify applicants in writing that certain offenses will disqualify the applicant from ultimately securing employment due to Federal law, State law, or the employer’s policy. Further, the Act does permit employers to inquire about an applicant’s criminal history if the applicant is determined to be qualified for the position and selected for an interview or, if there is no interview, until after a conditional offer of employment has been made.
Importantly, the Act does not apply to positions where (i) an employer is required by federal or state law to exclude an applicant with certain criminal convictions; (ii) a standard fidelity bond or similar bond is required and an applicant would be disqualified from obtaining a bond because of one or more specific criminal convictions; and (iii) individuals are licensed under the Emergency Medical Services (EMS) Systems Act.
The Act does not provide applicants a private cause of action; instead, the Department of Labor enforces the Act. An employer’s first violation of the Act will result in a written warning giving the employer 30 days to remedy the violation. If the violation is not remedied within 30 days or a second violation occurs, the employer will be subject to a civil penalty of up to $500. If the first violation is not remedied within 60 days or a third violation occurs, the employer will be subject to a civil penalty of up to $1,500. A fourth or subsequent violation, and any violation persisting for more than 90 days, is subject to a civil penalty of up to $1,500 for every 30 days of noncompliance.
It is important to note the Act defines an “employer” as “any person or private entity that has 15 or more employees in the current or preceding calendar year, and any agent of such an entity or person.” It appears from the plain language of the Act that it does not apply to public bodies such as school districts and municipalities. However, the Department of Labor (DOL) has not provided a definition of the terms “person” and “private entity,” thus it is unclear whether the Act does in fact apply to public bodies. Until the DOL provides clarification, public bodies should consult with legal counsel to ensure their hiring process conforms with the Act’s requirements.

New Law for Pregnant Employees and Working Mothers

Illinois Human Rights Act Amended to Increase Pregnancy-Related Protection

By Kateah M. McMasters

kateah.mcmasters@mhtlaw.com

Effective January 1, 2015, a recent amendment to the Illinois Human Rights Act (the “Act”) adds pregnancy to the list of characteristics protected from discrimination.  “Pregnancy” includes pregnancy, childbirth, and conditions related to pregnancy or childbirth, expanding the Act to apply to pregnancy, childbirth, and postpartum conditions.

The Act currently prohibits employers from refusing to hire, promote, renew employment, discharge, or discipline employees on the basis of pregnancy.  The amended Act will also prohibit employers from denying “reasonable accommodations” to employees (including part-time, full-time, or probationary employees) and job applicants that are new or expectant mothers.  The Act requires employers provide pregnant employees the already-familiar “reasonable accommodation”, which requires employers to make reasonable modifications or adjustments to the job application process, the work environment, or a position to enable “an applicant or employee affected by pregnancy . . . to be considered for the position . . . or to perform the essential functions of that position.”  The amended Act provides a non-exhaustive list of typical accommodations, which includes: more frequent or longer bathroom breaks, providing private non-bathroom space for expressing breast milk, assistance with manual labor, light-duty, job restructuring, and modified work schedules.

Employers must participate in a timely, good faith and meaningful exchange with an employee in order to evaluate and implement reasonable accommodations.  An employer cannot force an employee to accept a reasonable accommodation or to take leave if another reasonable accommodation can be provided.  Additionally, employers are not required to create new or additional employment opportunities to accommodate pregnancy, unless the employer would do so for other employees who need accommodations.

Despite the general prohibitions contained in the Act, employers are allowed to require medical certification for the requested accommodation(s) but they may only require the following information: (i) the medical reason for the accommodation, (ii) a description of the accommodation, (iii) the date the accommodation became medically necessary, and (iv) the approximate time the accommodation will be required.

An employer may also refuse to provide accommodations if such accommodations would impose an “undue hardship” on the ordinary operation of business.  An accommodation causes “undue hardship” when it is “prohibitively expensive or disruptive.”  To determine whether an accommodation constitutes an undue hardship, the following factors will be considered:

  • the nature and cost of the accommodation;
  • the financial resources of the facility, the number of employees at the facility, and the financial impact on the operation of the facility;
  • the financial resources of the employer, the size of the business, and the number, type and location of the facilities; and
  • the composition, structure, and functions of the employer.

The employer bears the burden of proving a requested accommodation constitutes an undue hardship. Further, the fact an employer has provided or would be required to provide a similar accommodation to a similarly situated employee creates a presumption that an accommodation is not an undue hardship.

As a final matter, the Act requires employers to post a notice of the employee’s rights prepared by the Illinois Department of Human Rights in a conspicuous location, as well as include such rights in an employee handbook.

While the amendments aim to increase the protections afforded to pregnant employees and new working mothers, the Act does not require employers to take extraordinary measures to accommodate employees.  The key to the new law is reasonableness, and there are numerous ways in which an employer can accommodate new and expectant mothers with minimal workplace disruption.  In light of the changes to the Act, employers should evaluate whether any employee requires reasonable accommodation and begin a dialogue regarding the provision of the same.

 

Rule Barring Former Public Employee Lawsuits

Court Rules Former Public Employees Have Only Six Months To Bring Suit For Backpay

By Joshua D. Herman

joshua.herman@mhtlaw.com

Plaintiffs are required to bring an action enforcing their legal rights within a limited time after they are injured.  A statute of limitations typically establishes the maximum time after an injury that a suit can be filed. Failure to bring a lawsuit within this period usually results in the lawsuit’s dismissal. The Illinois Local Governmental and Governmental Employees Tort Immunity Act requires that most lawsuits against a public body be brought within a year of injury. However, a recent court decision held that suits against a public body by former employees must be brought within six months of their termination.

Recently, the Illinois Appellate Court upheld the dismissal of a former public employee’s suit seeking backpay because the complaint was not filed within six months of the date she resigned, despite the fact that the Tort Immunity Act would have permitted her to bring suit up to five months later. The court upheld the dismissal pursuant to the laches doctrine, which is an equitable defense that prohibits a plaintiff from asserting a claim when an unreasonable delay in doing so prejudices the other party.

Illinois courts have established a rule regarding the application of laches to public sector employee claims seeking reinstatement or backpay. The rule is that a delay of longer than six months from the date of termination to the filing of suit is per se unreasonable and will justify dismissal on the ground of laches if: (a) the plaintiff can show no reasonable excuse for the delay; and (b) the employer would suffer prejudice by having to pay both a replacement worker’s salary and a successful plaintiff’s back wages during the period of delay.  Courts have held that a public sector employee’s delay in bringing suit for reinstatement or backpay inherently prejudices the public because of the duplicative cost the public body who has already replaced the former employee will suffer if the plaintiff prevails.

Generally, the shorter a time in which a plaintiff may bring a suit, the better protected against liability a public body is. While there are few cases addressing this rule of laches, this recent decision suggests that it could become a more prominent defense in the future.

To better take advantage of this rule restricting former employees from bringing suit more than six months after their termination, public bodies should actively take some precautions where feasible. First, they should clarify when the employee’s last day of employment occurred. Doing so will help to determine exactly when the six-month clock starts to run. Second, a public body should clearly identify any employee hired to replace the former employee as a “replacement,” which will help demonstrate the prejudice that will be caused by the plaintiff’s delay in the event that the plaintiff prevails. Finally, the public body should also consider and document any other prejudice that it suffered, such as having considered and acted upon promotion lists or job applications.

While the scope of this rule is relatively narrow (limited to former employees seeking backpay or reinstatement) and it has not yet become widely used, the six-month rule provides public bodies another tool to combat uncertainty and prevent former employees from burdening the public through costly litigation after their employment has ended.