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Whistleblower Act Creates New Liability For Illinois Employers

Effective January 1, 2004, the Illinois "Whistleblower Act" imposes three new restrictions on employers that prohibit: 1) the adoption of certain policies, 2) retaliation against employees for certain disclosures they make, and 3) retaliation against employees when they refuse to participate in specified activities.

Signed into law on August 18, 2003, the Act applies to all private-sector employers that have one or more employees in Illinois; it does not apply to governmental entities. It provides three new rights to "any individual who is employed on a full-time, part-time, or contractual basis."

First, Section 10 of the Act prohibits employers from adopting certain policies:

"An employer may not make, adopt, or enforce and rule, regulation, or policy preventing an employee from disclosing information to a government or law enforcement agency if the employee has reasonable cause to believe that the information discloses a violation of a State or federal law, rule, or regulation."

At first reading, this provision seems rather innocuous, in that there are few employers that would have a "rule, regulation, or policy" prohibiting employees from speaking to government regulators or law enforcement authorities. However, this provision likely will affect employers' confidentiality agreements and policies that seek to protect confidential information and trade secrets. To the extent such agreements or policies may have inhibited an employee from "blowing the whistle" in the past, this provision removes any such inhibition.

Second, Section 15 of the Act prohibits retaliation for certain disclosures:

"An employer may not retaliate against an employee for 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."

This provision provides protection to the "whistleblower" who informs the government or law enforcement of actual or suspected unlawful activities by his or her employer.

Significantly, under Sections 10 and 15 of the Act, the employee is protected only if he or she has reasonable cause for believing the information disclosed reveals unlawful conduct. Thus, not every disclosure is protected; employees bear some responsibility to consider the reasonableness of their belief prior to informing the government or law enforcement.

Third, Section 20 of the Act prohibits retaliation for specified conduct that otherwise would constitute insubordination:

"An employer may not retaliate against an employee for refusing to participate in an activity that would result in a violation of a State or federal law, rule, or regulation."

Unlike Sections 10 and 15, Section 20 does not protect employees from refusing to participate in their assigned duties based on their having "reasonable cause" to believe their conduct may violate a law; instead, Section 20 protects employees only when they refuse to participate in an activity that would result in a violation of the law. Thus, the Act places a greater risk on an employee for refusing to perform an assigned duty than for disclosing information.

A violation of the Act constitutes a criminal misdemeanor. In addition, violations of Sections 15 (regarding disclosures to the government and law enforcement) or 20 (regarding an employee's refusal to participate in an activity) give rise to civil liability. An employee bringing a claim under Sections 15 or 20 can seek reinstatement, back pay, actual damages, attorneys' fees, and litigation costs. However, the Act does not provide for punitive damages.

In the pantheon of employment-related claims, the Illinois Whistleblower Act takes its place alongside the growing list of common law claims for "retaliatory discharge in violation of public policy." Though the Illinois Whistleblower Act bears some similarity to those "retaliatory discharge" claims, they are not the same and one does not prevent resort to the other. For example, the Illinois Whistleblower Act does not provide for punitive damages; "retaliatory discharge" claims allow for the recovery of punitive damages. Also, "retaliatory discharge" claims arise only upon discharge; Sections 15 and 20 of the Illinois Whistleblower Act prevent any retaliatory conduct (denial of promotions, transfers, denial of wage increases, etc.).