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The New Illinois Law Regarding Severance And Release Agreements: Five Commonly Asked Questions
Illinois employers have been truly shell-shocked with many new (and sometimes vague or confusing!) employment laws that became effective January 1, 2020. One big and somewhat surprising change in Illinois law is the new requirement that Illinois employers give certain special treatment to Separation and Release Agreements. The following are five commonly asked questions from our clients:
Question 1: Do we have to use a Separation and Release Agreement every time we fire an employee in Illinois?
Answer: No. This is a decision that an Illinois employer makes within its sole discretion. The only time an Illinois employer must give severance is when there is a contract or a company policy mandating it.
Question 2: If an employee is under the age of 40, must I still give the employee 21 days to think over signing a Separation and Release Agreement?
Answer: Yes, under the new Illinois Workplace Transparency Act effective January 1, 2020, regardless of age, the employee must be given 21 calendar days to consider whether he/she wants to sign the Separation and Release Agreement.
Question 3: Can the Illinois employee sign the Separation and Release Agreement at any time before the end of the 21-day review period?
Answer: Yes, the Illinois employee can knowingly and voluntarily waive in writing any further time for consideration. Caution: Such a waiver MUST be in writing.
Question 4: Under the Illinois Workplace Transparency Act effective January 1, 2020, does the Illinois employer have to give the Illinois employee (regardless of age) seven (7) calendar days to revoke his/her acceptance (i.e., change his/her mind about entering into the Separation and Release Agreement)?
Answer: Yes, the Illinois employee, regardless of age, must be given 7 calendar days to revoke his/her acceptance of a Separation and Release Agreement.
Question 5: Can the Illinois employee waive the 7 days to revoke his/her acceptance of the Separation and Release Agreement?
Answer: Yes, the 7-day revocation period can be knowingly and voluntarily waived by the employee, but only in writing. This kind of written waiver should be written in clear language and also signed and dated by the employee. A witness is advisable.
Note that under the Federal law (Older Workers Benefit Protection Act of 1990), the employee may not waive the 7-day revocation period, even if put in writing and done so willingly and voluntarily. Under Federal law, the employee must be given the 7 days in which the employee may change his/her mind after signing a Separation and Release Agreement.
Caution about Group Terminations: Under Federal law, when Separation and Release Agreements are offered to two or more departing employees (for example, as part of a reduction in force), this fact pattern creates a group termination situation under which the employer will need to use a very special kind of “group release.” For example, under Federal law, one of the requirements for a group release is that each employee be given a 45-day period to consider signing the Separation and Release Agreement.
There is sure to be much confusion this year about how the Federal law differs from Illinois state law under the new Illinois Workplace Transparency Act impacting the legalities of a Separation and Release Agreement in Illinois.
For assistance with Separation and Release Agreements, difficult terminations, IDES benefits claims, etc., contact Attorney Nancy E. Joerg who can be reached at Wessels Sherman’s St. Charles, Illinois office: 630-377-1554 or email her at firstname.lastname@example.org.
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