Fair Labor Standards Act

Although not legal terms, historically, a “blue-collar worker” referred to a manual labourer or someone in the skilled trades, thus working at an hourly rate and likely eligible to receive overtime pay; a “white-collar worker” was traditionally employed in a professional field, paid a salary, and generally not entitled to overtime pay.

In the US, workers are classified under the Fair Labor Standards Act (FLSA) as either “exempt” or “non-exempt”. Non-exempt employees are entitled to the core protections of the FLSA, which include minimum wage, overtime pay, and record-keeping standards. Exempt employees are not eligible to receive overtime pay.

Non-Exempt Employees

Non-exempt employees must be paid at least the federal minimum wage (USD7.25 per hour, but many states and localities have higher rates), are entitled to 1.5 times their regular rate of pay for any hours worked beyond 40 in a single workweek, and must have their work hours accurately tracked and recorded by employers.

To qualify as a non-exempt employee, one must earn less than USD684 per week (or USD35,568 per year) and not meet the requirements for any exemption. Non-exempt employees are typically paid for each hour worked, rather than a set annual or weekly salary.

Exempt Employees

To qualify for a FLSA exemption, an employee must make more than USD684 per week (or USD35,568 per year) and must perform executive, administrative, professional, outside sales or certain computer-related duties. Exempt employees are also salaried, meaning they are paid a predetermined fixed amount per pay period or year. If an employee does not satisfy all three requirements, they are non-exempt and entitled to overtime pay and other applicable FLSA protections.

Independent Contractors

Not every worker is an employee; workers external to an organisation who are employed for discrete projects are referred to as “independent contractors”. Illinois presumes that a worker is an employee. Any party claiming independent contractor status for a worker bears the burden of proving it, applying different tests depending on the law at issue (eg, the “economic realities test” for wage and hour cases). Misclassifying an employee as a contractor is a common problem and can expose an employer to unpaid wages liability, taxes and penalties.

Joint Employment

Two businesses may jointly employ the same worker and be jointly and severally liable for wage and hour violations. Under the Illinois Minimum Wage Law regulations and the FLSA, whether a joint employment relationship exists turns on control-based factors such as who hires and fires, sets schedules, supervises, determines pay and maintains employment records.

Interns

Interns and students are not always considered “employees” entitled to wages. Courts use a “primary beneficiary” test to decide whether the intern or the employer is the primary beneficiary of their relationship. If the employer is, the intern is an employee entitled to wages. Even when an intern is not considered an employee, Illinois separately protects interns from workplace harassment and discrimination.

At-Will Employment

At-will employment is the prevailing doctrine in most of the US, including Illinois. It allows either the employer or the employee to terminate employment at any time, without notice or cause (subject to certain legal exceptions). At-will employment is generally not governed by a contract, although other aspects of one’s employment may be (eg, via a non-competition agreement).

In practice, “at will” means an employer does not need to prove just cause or give advance notice before a termination, unless a contract or statute requires otherwise. Likewise, employees also have the right to terminate employment at any time. However, “at will” does not mean an employer can justify termination for an illegal reason. Employers cannot terminate or punish an employee for engaging in protected activity, which could include reporting workplace violations, filing claims related to discrimination, or exercising leave rights. Employers also cannot base decisions to terminate on race, colour, religion, sex or any other protected characteristic.

Fixed-Term Employment

In fixed-term employment, an employee is hired with a predetermined end date – either a set period of work or the completion of a defined project – generally set by contract. Early termination of a fixed contract constitutes a breach that could lead to legal or financial consequences. Fixed-term employment is relatively rare and is used in roles such as seasonal work, project-based positions or executive contracts.

Contract Provisions

Written employment contracts are generally not required in Illinois, as most employment laws apply to workers regardless of a contract. In Illinois, an employment contract can take several forms: oral, written or implied. Where one exists, Illinois courts will enforce it according to its terms. Given that employment contracts are not required, there are no required provisions that must be included. However, common provisions include the following:

• confidentiality clauses that prohibit an employee from sharing or disclosing sensitive information with outside parties;
• intellectual property language that outlines who owns the work product prepared by the employee during their employment;
• restrictive covenants that limit what an employee can do during and after leaving a job; and
• at-will language explicitly stating no promise of continued employment.

Work Hours

Maximum work hours can be outlined in an employment contract, but there is generally no federal limit on the maximum number of hours an adult can work per day or week. Several states, however, have laws requiring rest days or other limits on working hours.

The Illinois One Day Rest In Seven Act requires employers to provide employees with at least 24 hours of consecutive rest in every consecutive seven-day period. It also requires employers to provide at least a 20-minute break to employees working a shift of 7.5 hours or longer, and this break must start no later than the fifth hour of the shift. Additionally, if a shift lasts 12 hours or longer, employees must receive an additional 20-minute break.

Minors, defined as children under eighteen years of age, enjoy special considerations: they may only work a maximum of 18 hours during the school week, up to three hours per day, and a maximum 40 hours during non-school weeks, up to eight hours per day. Additionally, minors cannot work before 7am or after 7pm.

Flexible Arrangements

Many employers offer flexible work arrangements as part of their employee benefits or policies, but these arrangements are not required unless an employee specifically requests an accommodation under the Americans with Disabilities Act or the Pregnancy Discrimination Act or takes leave under the Family and Medical Leave Act. Examples of flexible arrangements include:

• remote or hybrid work, which allows employees to work from home or off-site;
• flex time, which offers flexible start and end times within core work hours;
• job sharing, which allows two part-time employees to share one full-time role; and
• a compressed workweek, which allows employees to work longer hours per day over a shorter work week.

Part-Time Contracts

There is no universal legal definition of part-time work, but it is commonly defined as working less than a full-time employee, or 30 to 35 hours per week. Part-time contracts can outline benefits eligibility, at-will employment, compensation, essential job descriptions, and employee classification. Part-time workers in Illinois are entitled to the same core protections as full-time workers, including minimum wage, anti-discrimination protections, overtime pay, etc. However, employers may have discretion over which additional benefits to offer, such as health insurance or retirement plans.

Overtime Regulations

Overtime is additional compensation required for any hours a non-exempt employee works beyond 40 in a single work week; daily hours alone do not trigger overtime. If an employee makes less than USD684 a week, or does not perform exempt-level duties, the employee is considered non-exempt and entitled to overtime pay. Overtime pay is not less than 1.5 times the employee’s regular rate of pay. Employers who fail to pay overtime may be required to pay back pay for unpaid overtime, liquidated damages, attorney’s fees, or civil penalties.

Government Intervention

The federal, state and local governments intervene by setting minimum wages, mandating overtime pay through applicable laws (eg, the FLSA and the Illinois Minimum Wage Law) and establishing retirement savings requirements.

Minimum Wage

The US federal minimum wage is established by the FLSA and currently stands at USD7.25 per hour; however, states and localities often require higher minimums and employers must pay the highest applicable wage.

• The Illinois Minimum Wage Law guarantees USD15 per hour for workers 18 years of age or older. An employer may pay 60% of minimum wage to employees who receive gratuities (referred to as “tipped employees”, these are workers who receive tips as part of their wage – usually restaurant servers and bartenders). Minors working less than 650 hours per calendar year have a minimum wage of USD13.
• The City of Chicago sets its minimum wage at USD17.05 and USD12.96 for tipped employees.
• Cook County sets its minimum wage at USD15.40 and USD9.25 for tipped employees.

Non-Discretionary Bonuses

Workers are not legally entitled to bonuses, unless the bonus is “non-discretionary”, meaning it is a promised and expected reward (generally a payment) based on predetermined criteria. Non-discretionary bonuses are included in the regular rate of pay, and the understanding of how an employee can earn the bonus may lead to an expectation that the bonus be paid.

Discretionary Bonuses

Discretionary bonuses are excluded from the regular rate of pay and must meet all the following statutory requirements to be considered discretionary.

• The employer has the sole discretion, until at or near the end of the period that corresponds to the bonus, to determine whether to pay the bonus.
• The employer has the sole discretion, until at or near the end of the period that corresponds to the bonus, to determine the amount of the bonus.
• The bonus payment is not made according to any prior contract, agreement or promise causing an employee to expect such payments regularly.

If a bonus does not meet the requirements above, then it is non-discretionary, even if the employer labels it as discretionary.

13th-Month Pay

Unlike many countries, the United States, including Illinois, does not require employers to pay a 13th-month salary or any mandatory annual bonus.

Retirement Savings Programmes

Illinois requires most private employers to offer some sort of retirement savings plan to its employees. If an employer has employed at least five employees in the state during every quarter of the previous calendar year and it has been in business at least two years, then it must offer a programme, in accordance with the Illinois Secure Choice Savings Program Act. If an employer does not offer its own programme, it is required to enrol its employees in the state-administered Illinois Choice Savings Program.

Paid Leave

Paid leave is authorised time off from work in which an employee continues to receive their regular wages or salary. It is a legally protected or contractually guaranteed benefit that allows employees to be absent from work without losing income.

There is no federal law that provides for paid leave, holidays or time off for workers. However, Illinois’ Paid Leave for All Workers Act (PLAWA) entitles employees to earn up to one hour of paid leave for every 40 hours worked, up to 40 hours per year, to use for any reason. Similarly, the City of Chicago’s Paid Sick and Safe Leave Act requires employers to provide up to 80 paid hours per year (40 hours for paid sick leave and 40 hours for paid leave) for most employees. Under the Chicago ordinance, employers can either front-load the time (ie, award all time at the beginning of each year) or enact an accrual system, wherein the employee accrues one hour of paid leave for every 35 hours worked.

Payment of Earned, Unused Paid Time Off

If an employer offers a set amount of paid time off, earned but unused vacation is part of an employee’s “final compensation” under the Illinois Wage Payment and Collection Act (IWPCA) and must be paid out when employment ends.

Family Medical Leave Act

While Illinois does not have a separate medical leave act, the federal Family and Medical Leave Act (FMLA) entitles employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons. Employees can get up to 12 weeks of unpaid leave per year for qualifying reasons or up to 26 weeks of leave to care for a covered service member with a serious injury or illness. Leave can be taken all at once, intermittently or on a reduced schedule. An employer must maintain group health benefits during the leave and the employee is entitled to return to the same or equivalent job after leave.

Covered employers include:

• private employers with 50 or more employees;
• all public agencies (federal, state and local governments); and
• public and private elementary and secondary schools.

Covered employees include:

• employees who have worked for the employer for at least 12 months;
• employees who have worked at least 1,250 hours in the past 12 months; and
• employees who work at a location where the employer has 50 or more employees within 75 miles.

Leave for Victims of Domestic Violence and Other Violent Crime

The Illinois Victims’ Economic Security and Safety Act (known as VESSA), allows work leave for employees who are victims of a violent crime, including domestic violence, sexual violence, gender violence and stalking, or who have a family or household member who is a victim. The leave can be used for such things as accessing medical care, relocating or seeking legal assistance. VESSA also protects workers from discrimination and retaliation in connection with what they suffered or for taking protected leave under the law.

The Family Bereavement Leave Act

Federal law does not provide bereavement leave and the FMLA does not permit leave simply because a family member has died. Illinois addresses this gap through the Family Bereavement Leave Act (FBLA), which entitles eligible employees to up to two weeks (ten workdays) of unpaid leave to attend the funeral (or an alternative to a funeral) of a covered family member, make arrangements necessitated by the death or grieve the following:

• death of a covered family member;
• stillbirth;
• miscarriage;
• unsuccessful reproductive procedure;
• failed adoption match or unfinalised adoption agreement;
• failed surrogacy agreement; or
• diagnosis that negatively impacts pregnancy or fertility.

An employee is eligible for FBLA leave if they have worked at least 1,250 hours for the employer during the prior 12-month period. Not all employers are covered and only employers subject to the FMLA must provide FBLA leave.

Neonatal Intensive Care Unit Leave

Illinois’ Family Neonatal Intensive Care Leave Act allows work leave to be taken by a parent whose newborn requires extended medical care in a hospital’s neonatal intensive care unit (NICU) after birth. The law allows parents to take up to 30 days of unpaid leave, in addition to other available leave, such as FMLA.

Americans with Disabilities Act

The federal Americans with Disabilities Act (ADA) prohibits discrimination against people with disabilities in several areas of public life. Employers with 15 or more employees must provide reasonable accommodations to enable qualified employees with a disability to perform their jobs. Such accommodations may include leave for a defined period to allow an employee to recover from a condition and return to work. While ADA leave can extend beyond the 12 weeks provided under the FMLA, it must not impose an undue hardship on the employer.

Pregnancy Accommodation

The Illinois Human Rights Act (IHRA) requires employers of every size to provide reasonable accommodations for pregnancy, childbirth, and medical or common conditions related to pregnancy or childbirth, unless the employer can show undue hardship. Examples include but are not limited to more frequent or longer breaks, time off to recover from childbirth, and a private space to express breast milk. The employer and employee must engage in the interactive process (similar to that under the federal ADA), and an employer may not force an employee to take leave or accept an accommodation if another reasonable accommodation would allow her to keep working.

Confidentiality

The Illinois Workplace Transparency Act (IWTA) limits the use of confidentiality, non-disparagement and arbitration provisions in employment contracts and settlement agreements. Employers cannot require employees to sign unilateral agreements that prohibit employees from disclosing, discussing or reporting sexual harassment, discrimination or other unlawful conduct. Confidentiality clauses in settlement or termination agreements related to harassment or discrimination claims are still permitted, but only if:

• the employee is given 21 days to consider the agreement;
• the employee has seven days to revoke after signing; and
• the employee is advised to consult an attorney.

Non-disparagement clauses that prevent employees from making truthful statements about unlawful workplace conduct are restricted, and employers cannot require employees to arbitrate claims of harassment or discrimination as a condition of employment.

Employee Liability

Employees can be liable to their employer for their own prohibited conduct: for example, breaching a valid restrictive covenant or misappropriating trade secrets under the Illinois Trade Secrets Act. Such breaches can result in employers pursuing both contractual remedies, such as claw-backs and entitlement to attorney’s fees for enforcing restrictive covenants, or statutory remedies in the context of the Illinois Trade Secrets Act.

Illinois also limits an employer’s ability to shift losses onto employees. Under the IWPCA, an employer generally cannot deduct from an employee’s wages or final pay for things such as damaged property and cash register shortages absent written consent at the time of the deduction. In no event can any deduction, even with proper consent, reduce pay below minimum wage.

Illinois Freedom to Work Act

The Illinois Freedom to Work Act governs non-competes and allows non-competes to be enforceable, but only if the following statutory requirements are met.

• The clause is related to a valid employment relationship.
• There must be adequate consideration (which includes professional or financial benefits) that the employer provides to the employee specifically in exchange for the non-compete clause, or the employee must work for the employer for at least two years after signing the non-compete agreement.
• The clause must be narrowly tailored in scope, duration and geography to protect a legitimate business interest of the employer.
• The clause cannot impose undue hardship on the employee.
• The clause cannot violate public policy.

Additional requirements include the following.

• Non-compete clauses are prohibited for employees earning USD75,000 or less annually, which will increase to USD90,000 in 2037. This threshold protects workers from unfair agreement terms when they lack the resources to defend themselves and are unlikely to have information to competitively harm a former employer.
• Employers are required to provide employees with a copy of the non-compete agreement 14 days before the start of the role or allow 14 days to consider and review any non-compete agreement.
• Employers must provide written notice advising the employee to consult an attorney.

Enforcement

In Illinois, courts are hesitant to restrict trade and want to encourage fair competition. Courts are also wary of revising (referred to as “blue pencilling”) overly broad non-competes because doing so could create a chilling effect on employee mobility. However, restrictive covenants are generally enforced if they are drafted in accordance with the law and are necessary to protect an employer’s legitimate business interests.

As with non-competes, the Illinois Freedom to Work Act governs the enforceability of non-solicits. The Act splits non-solicitation into two categories: (i) restricting an employee from soliciting employment from other employees, and (ii) restricting interference with an employer’s current or prospective clients, vendors, suppliers, or other business relationships. Enforceability of a non-solicit clause depends on whether statutory requirements are met, which are the same as those that govern non-compete clauses (see 2.1 Non-Competes).

Additional requirements include the following.

• An employer is prohibited from entering into a non-solicit with any employee unless the employee’s actual or expected annualised earnings exceed USD45,000, which will increase to USD52,500 in 2037. This threshold protects workers from unfair agreement terms when they lack the resources to defend themselves and are unlikely to have information that would harm a former employer.
• Employers are required to provide employees with a copy of the non-solicit agreement 14 days before the start of the new role or allow 14 days to review any non-solicit agreement. This helps employees understand their obligations and promises.
• Employers must provide written notice advising the employee to consult an attorney.

Biometric Information and Privacy Act

Illinois’ Biometric Information Privacy Act (BIPA) regulates the collection, use, storage and disclosure of biometric identifiers and information, such as fingerprints, retina or iris scans, voice prints or scans of hand or face geometry.

Private employers must develop a public written policy establishing a retention schedule and guidelines for destroying biometric information when the initial purpose for obtaining the information is satisfied, or within three years, whichever occurs first.

Before collecting biometric data, BIPA requires a business to:

• inform the subject in writing that a biometric identifier or biometric information is being collected or stored;
• inform the subject in writing of the specific purpose and length of term for which a biometric identifier or information is being collected, stored and used; and
• receive a written release executed by the subject of the biometric identifier or biometric information or the legally authorised representative.

Biometric information cannot be sold, leased, traded or otherwise profited from unless the business obtains individual consent. Additionally, a private entity may not disclose such information unless the subject has authorised a financial transaction, disclosure is required by law, or the subject has provided consent. Biometric data must be stored, transmitted and protected in accordance with the reasonable standard of care within its industry.

Genetic Information Privacy Act

Illinois’ Genetic Information Privacy Act (GIPA) regulates the collection, use, storage and disclosure of genetic information, such as genetic tests of an individual, family medical history, genetic information about a foetus or embryo, or requests for or a receipt of genetic services.

GIPA requires entities to do the following.

• Obtain informed consent and provide notice before collecting genetic information. Notices should include why the information is being used, how the information will be used, who will have access to the information, and the retention period.
• Establish a written policy on the retention, storage and destruction of genetic information.
• Prevent genetic information from being disclosed to anyone without written consent, except the individuals themselves, a health care provider for medical treatment, for research (under strict conditions), and as required by law.
• Protect genetic information using reasonable safeguards.

Under GIPA, employers cannot:

• require or request genetic information as a condition of hiring, continued employment or a promotion;
• discriminate against employees or job applicants based on genetic information regarding any terms or conditions of employment; or
• disclose an employee’s genetic information to others without written consent, except as required by law.

Form I-9 “Employment Eligibility Verification”

Employers in the US cannot legally employ someone unless that person is authorised to work in the US. The federal government issues Form I-9 “Employment Eligibility Verification”, which employers use to confirm each new hire’s identity and to verify work authorisation.

The Immigration Reform and Control Act of 1986 requires that employers verify an employee’s legal immigration or citizenship status before hiring. By presenting approved documents, such as a US passport, permanent resident “green card”, driver’s licence, state ID, social security card or birth certificate, an employee can demonstrate eligibility to work in the US. Errors, missing forms or knowingly hiring unauthorised workers can result in civil fines and, in serious cases, criminal penalties.

Illinois Limits on “Employment Eligibility Verification”

Illinois’ Right to Privacy in the Workplace Act bars Illinois employers from requiring employment verification authorisation beyond federal requirements. Further, employers must allow employees to explain any reasons for a failed verification and must refrain from terminating employment or taking any other adverse action until the employee receives a final notice of non-confirmation from a government agency.

Work Visa

A work visa is an official government-issued document (or passport stamp) that authorises a foreign national to legally enter and work in a specific country for a defined period of time. Work visas are typically non-immigrant visas, meaning they are temporary and do not automatically grant permanent residency or citizenship rights.

Common requirements for a work visa in the United States include:

• a valid job offer from a US-based employer;
• a petition filed by an employer on the petitioner’s behalf with the US Citizenship and Immigration Services (USCIS);
• a valid passport for at least six months beyond one’s intended stay;
• a bachelor’s degree or higher may be required depending on the visa type;
• a clean background with no disqualifying criminal history or immigration violations; and
• a medical examination depending on the visa type.

The most common types of work visas are as follows.

• H-1B: Applies to employers seeking to hire non-immigrant workers in specialty occupations that require at least a bachelor’s degree (or equivalent) in a specific field.
• H-2A: Applies to employers seeking to hire seasonal or temporary agricultural workers.
• H-2B: Applies to employers seeking to hire temporary non-agricultural roles, such as seasonal, peak-load or intermittent work. 
• H-3: Covers individuals receiving structured training or special education exchange visitors working with children who have physical, mental or emotional disabilities.
• I: Applies to foreign press members representing a foreign media outlet.
• L-1A: Applies to intra-company transfers of executives.
• L-1B: Applies to specialised knowledge employees.
• F-1: Applies to full-time academic students at accredited US institutions.
• J-1: Applies to exchange visitors in cultural exchange programmes.
• O-1: Applies to individuals with extraordinary ability in sciences, arts, education, business or athletics.

There are also immigrant visas that can lead to permanent residency if the holder meets eligibility requirements.

• E-1: Applies to treaty traders from treaty countries engaging in substantial trade.
• E-2: Applies to treaty investors from treaty countries establishing or acquiring a business.
• E-3: Applies to Australian citizens in specialised occupations.

Form I-9 “Employment Eligibility Verification”

Additionally, employers must utilise Form I-9 “Employment Eligibility Verification” when hiring a foreign worker. Employees can present a work visa to prove both identity and work authorisation for I-9 documentation. (See 4.1 Limitations on Foreign Workers for more information.)

Remote Work

In the US, remote work (whether total or “hybrid”) is an elective offering by employers, unless it is a disability accommodation. If remote work is offered, employers should ensure data privacy through strong information technology (IT) systems and processes.

Common technical safeguards include the following.

• A Virtual Private Network (VPN) to allow employees to encrypt data in transit.
• Multi-Factor Authentication (MFA) that requires an employee to provide two or more verification factors to access an account or system.
• A Zero Trust Architecture (ZTA) to verify every user and device before granting access, regardless of location.
• Endpoint Detection and Response (EDR) that continuously monitors end-user devices to detect and neutralise threats like malware and ransomware.

Employers must also ensure that employees continue to adhere to employer policies when working from home or remotely, just as they would if they were working in the office. Ensuring proper data handling and security is paramount, as well as maintaining a safe working environment to reduce potential worker’s compensation claims.

Employers should also be aware that employees working from states other than Illinois significantly increases an employer’s exposure to additional state-specific requirements and laws, especially in heavily regulated states such as New York and California. If an employee works from a different state, even if the employer only services clients in Illinois and only has offices in Illinois, the employer must still register and pay taxes in the state where the employee works and must adhere to that state’s employment laws.

Mobile Work

Certain employees, such as employees working in sales positions, may spend significant time travelling between worksites or client sites as part of their core job duties. Illinois does not address whether an employee’s travel time is compensable. Under the FLSA, certain travel time is compensable, but it depends on the circumstances. For example, travel from home to work (ie, commuting) is not compensable, whereas travel during the workday between job sites, special one-day assignments to another city, and overnight travel that cuts across normal working hours must be compensated as hours worked.

There is no federal or Illinois law that requires employers to offer sabbatical leave. Employers have discretion to offer sabbatical leave and to determine who qualifies for it, how long it will last, and whether it is paid or unpaid. If an employer offers sabbatical leave, a formal written policy is strongly recommended for consistency, fairness and clarity. Offering a sabbatical leave as a benefit is relatively rare for US and Illinois employers.

Hybrid Work

Hybrid work is a flexible work arrangement where employees split their time between working remotely and working in-person at a physical place of business. Many office workers now expect some flexible arrangement as a benefit of employment.

Common types of hybrid models include the following.

• Fixed hybrid: an employer outlines which days specifically an employee may work remotely, and which days they must work in office.
• Flexible hybrid: an employee chooses which days to work in office.
• Team-based hybrid: work teams co-ordinate in-office days together.
• Remote-first hybrid: primarily remote, with occasional required in-office time.

Hybrid work is not a legally enforceable issue unless it constitutes a disability accommodation. Employees often seek hybrid work to enhance work–life balance, reduce commute time to work, and allow for schedule flexibility.

Desk Sharing/Hotelling

Desk sharing, or “hotelling”, refers to employees not having a permanently assigned desk or workspace, but instead using available workstations on a first-come, first-served basis, or by reservation through a booking app or system. Personal belongings are typically stored in lockers or personal storage units, and workstations are standardised so that employees can sit anywhere.

Labour Unions

A labour union is a group of workers who organise themselves together to protect and advance their common interests in the workplace. Unions are typically formed by workers who share the same employer, industry, trade or skill.

Applicable Laws

The National Labor Relations Act (NLRA) of 1935 is landmark federal legislation designed to protect workers’ rights to organise and act collectively and to encourage collective bargaining, usually with the aim of improving wages, schedules or working conditions. The NLRA can protect workers who opt not to participate in union activities (with some limitations).

The NLRA prohibits certain actions by employers, including:

• interfering with employees’ rights to organise;
• threatening or coercing workers away from union activity;
• discriminating against employees for union involvement;
• refusing to bargain in good faith with a certified union; and
• spying on union meetings or activities.

Under the NLRA, unions cannot coerce employees into joining a union, refuse to bargain in good faith with employers, or pressure a neutral third party to cease doing business with another company that is the subject of a primary dispute. Most private-sector employees across the country, and thus in Illinois, are covered by the NLRA. Public-sector employees in Illinois are governed by the Illinois Public Labor Relations Act (IPLRA) and the Illinois Educational Labor Relations Act (IELRA), which are largely modelled on the NLRA.

Collective Bargaining Agreement

A collective bargaining agreement (CBA) is a legally binding, written contract between an employer and a labour union that governs the terms and conditions of employment for union-represented workers. After the union and employer negotiate in good faith over employment terms, both parties reach a deal, and the signed CBA goes into effect for its agreed term (typically two to five years). During the contract term, neither side can unilaterally change agreed terms. As the expiration date approaches, the union and employer renegotiate a new agreement.

A CBA typically addresses a wide range of workplace issues, including:

• wages and compensation;
• benefits;
• working hours;
• job security;
• workplace safety;
• discipline and termination; and
• leave policies.

If negotiations break down, workers may strike, or employers may lock out workers. If a CBA is violated, either party can file a grievance, and, if left unresolved, the dispute can lead to arbitration. Courts can enforce CBA terms and arbitration awards.

Representative bodies serve as the sole bargaining agents of employees. They have the authority and obligation to negotiate with employers over wages, hours, and other terms and conditions of employment. Statutory frameworks regulate recognition, election procedures and the negotiation of security agreements.

For private-sector employers in Illinois, these processes are governed primarily by the federal National Labor Relations Act (NLRA). A representative body, statutorily defined as a labour organisation, includes any organisation, agency or employee representation committee or plan in which employees participate and which exists, in whole or in part, to deal with employers regarding grievances, labour disputes, wages, rates of pay, hours of employment, or conditions of work. Once designated or selected by a majority of employees in an appropriate bargaining unit, the representative body serves as the exclusive representative of all employees in that unit for collective bargaining. 

A representative body is formally instituted through employee petitions and secret ballot elections or employer petitions conducted under the oversight of the National Labor Relations Board (NLRB). The legal standards governing representative bodies differ significantly based on whether the employer is in the private or public sector, with public-sector representation governed by the Illinois Public Labor Relations Act (IPLRA) and the Illinois Educational Labor Relations Act (IELRA). Certain classes of workers, including agricultural labourers, domestic workers, independent contractors, and supervisors, are expressly excluded from the definition of “employee” under the federal framework governing private employers. As a practical matter, most Illinois private employers will only encounter a representative body if their workforce has voted to unionise, at which point the employer must recognise and bargain with the union as the employees’ exclusive representative.

Collective bargaining agreements (CBAs) involving private-sector employees and employers are governed by the federal National Labor Relations Act (NLRA), which establishes the foundational rights to self-organise, bargain collectively, and negotiate union security agreements. Illinois does not have a state-law equivalent; as such, Illinois policy aligns with federal standards.

Under federal law, private sector employees have the right to self-organisation, to form or assist labour organisations, and to bargain collectively through representatives of their own choosing, subject to authorised union security agreements. Employers and employee representatives are bound by a mutual obligation to bargain collectively in good faith, requiring the parties to meet at reasonable times and confer regarding wages, hours, and other terms and conditions of employment.

Illinois law expressly reinforces the freedom of private sector parties to negotiate collective bargaining agreements and guarantees that they may freely negotiate union security agreements. Illinois law prohibits any local government from creating or enforcing laws that restrict federally permitted union security agreements. While Illinois public labour relations utilise specific state statutory frameworks, the private sector is strictly governed by the federal NLRA framework, which prohibits employers from discriminating against non-membership in a labour organisation when membership was not available on standard terms.

Illinois is an at-will employment state, meaning an employment relationship may be terminated by either the employer or the employee at any time, with or without cause, unless a statute, administrative rule or contract provides otherwise.

However, the at-will presumption is subject to narrow statutory, common law and contractual exceptions. The common law tort of retaliatory discharge prohibits a termination that violates a clearly mandated public policy, such as discharging an employee for asserting workers’ compensation rights or reporting criminal, health or safety violations. The at-will presumption may also be overcome where the parties have contracted otherwise, including through an individual employment agreement or a CBA.

Strictly at-will dismissals carry no mandatory procedural steps or notice requirements, and notice may be given orally or in writing. Contractual and policy-based dismissals, by contrast, require strict adherence to any procedures specified in the governing instrument.

Collective redundancies trigger additional obligations under two overlapping Worker Adjustment and Retraining Notification (WARN) statutes:

• the Illinois WARN Act generally applies to employers with 75 or more full-time employees, capturing many mid-sized Illinois employers that fall below the federal threshold; and
• the federal WARN Act generally applies to employers with 100 or more full-time employees.

Both statutes generally require at least sixty days’ advance written notice to affected employees and relevant government officials of a covered closing or mass lay-off, subject to limited exceptions for unforeseeable business circumstances, natural disasters, transfer offers and certain temporary employment.

For an at-will employee, Illinois imposes no required notice period or formalities that are required to be observed with terminating an employee. Likewise, no severance is required to be paid to the terminated employee unless an employment contract, collective bargaining agreement, or other employer policy states otherwise. Notice and severance obligations can arise, however, through contractual or policy-based commitments.

Separate notice obligations apply to mass lay-offs and closings. When the federal or Illinois WARN Act is triggered, the employer must provide written notice to affected employees, the Department of Commerce and Economic Opportunity, the Illinois Department of Labor, and the chief elected official of each relevant municipality and county.

When terminating an employee, the best practice for an employer is to end the relationship in person with a concise and respectful discussion, and to have a second member of management present as a witness. During the meeting, management should have final pay and any separation documents ready.

Employment relationships are presumed to be at will unless the employee and employer establish a contrary intent. Immediate dismissal, or summary dismissal, usually only occurs for a grave and valid reason, typically involving offences that justify bypassing progressive disciplinary procedures. Recognised grave offences include:

• the mistreatment of a patient;
• engaging in a physical altercation on company premises;
• the unauthorised possession of weapons;
• reporting to work under the influence of intoxicants or unauthorised drugs;
• grossly negligent conduct endangering safety; and
• serious misconduct or insubordination that intentionally and substantially disregards the employer’s interest.

When an employee is accused of conduct that presents a safety risk, a common best practice is to suspend the employee’s employment pending an investigation rather than to terminate immediately, which both limits ongoing risk and reduces the employer’s exposure if allegations are not substantiated.

Termination agreements in Illinois are permissible when they comply with specific statutory procedures and substantive limitations. For a release of legal claims in exchange for severance benefits, a waiver of statutory protections must be made voluntarily and knowingly and be supported by additional consideration. Where the agreement releases federal age-discrimination claims, the Older Workers Benefit Protection Act requires that the employee be given at least 21 days to consider the agreement (45 days in a group lay-off) and seven days to revoke after signing.

A private settlement cannot waive claims relating to an employer’s violation of the Illinois Wage Payment and Collection Act, as such waivers are prohibited.

Under the Illinois Workplace Transparency Act (IWTA), if a termination agreement contains promises of confidentiality related to alleged unlawful employment practices, an employer may not prohibit the employee from making truthful statements or unilaterally represent that confidentiality reflects the employee’s preference. Rather, the IWTA requires confidentiality to be the employee’s documented preference and mutually beneficial to both parties. If a termination agreement contains language requiring an employee to keep unlawful employment practices confidential, then the employer must provide additional consideration in exchange for the employee’s agreement to the confidentiality language.

Further, any unilateral agreement requiring an employee to waive or arbitrate claims related to unlawful employment practices, including shortening statutes of limitations or requiring non-Illinois venues, is void. Finally, termination agreements cannot waive an employee’s right to testify in proceedings concerning alleged criminal conduct or unlawful employment practices, and employers cannot prevent employees from reporting unlawful conduct to government officials.

Termination agreements sometimes contain restrictive covenants, such as non-competition and non-solicitation obligations. These covenants must be reasonable and necessary to protect legitimate business interests. Overly broad agreements restricting any activity for a competitor or covering territories where the employer does not do business will be invalidated.

Under Illinois law, employment is generally at will. However, Illinois recognises several statutory and common law exceptions that protect categories of private-sector employees from dismissal or retaliatory discharge.

Title VII of the Civil Rights Act of 1964 (Title VII) and the Illinois Human Rights Act (IHRA) both prohibit unlawful employment discrimination. See 8.2 Anti-Discrimination for a full list of protected categories.

Employees who serve as union or employee representatives receive additional protection under Illinois and federal law, as discharging or discriminating against an employee because of union membership or protected concerted activity is unlawful.

Although Illinois generally follows the at-will employment doctrine, “wrongful termination” (or wrongful dismissal) refers to a termination of employment that violates statutory, regulatory, contractual, or common law protections. Illinois courts recognize the common-law tort of retaliatory discharge as a narrow exception to at-will employment; it requires a plaintiff to show that the employer discharged the employee, the discharge was in retaliation for the employee’s activities, and the discharge violated a clearly mandated public policy.

Employers in Illinois are also prohibited from discharging or retaliating against employees for taking protected leave. Under the federal Family and Medical Leave Act (FMLA), employers may not interfere with, restrain, or deny the exercise of FMLA rights, and the taking of FMLA leave cannot be used as a negative factor in employment actions or counted under no-fault attendance policies. Illinois paid leave and sick leave statutes similarly prohibit adverse action against employees for exercising their rights, and paid leave cannot be used as a negative factor in evaluating, disciplining, or counting under a no-fault attendance policy. Under the Illinois Human Rights Act, it is a civil rights violation to require an employee to take leave when another reasonable accommodation can be provided for known medical conditions related to pregnancy or childbirth.

The Illinois Whistleblower Act prohibits retaliation against employees who disclose or threaten to disclose information they reasonably believe would reveal a violation of law or pose a substantial and specific danger to public health or safety.

Potential remedies for wrongful dismissal or retaliation depend on the claims asserted. Employees retaliated against under the paid leave rules may recover appropriate legal and equitable relief and civil penalties, and may recover costs and reasonable attorneys’ fees. A common-law retaliatory discharge claim allows recovery of compensatory, and, where the employer’s conduct is sufficiently wilful or egregious, punitive damages.

Title VII of the Civil Rights Act of 1964 (Title VII) and the Illinois Human Rights Act (IHRA) both prohibit unlawful employment discrimination. Notably, the IHRA is broader than Title VII, encompassing more protected classes of employees and applying to employers with as few as one employee.

Title VII is federal law that makes it an unlawful employment practice for an employer to fail or refuse to hire, to discharge, or to otherwise discriminate against any individual with respect to compensation, terms, conditions or privileges of employment because of the individual’s race, colour, religion, sex or national origin.

The Illinois Human Rights Act (IHRA) declares it a civil rights violation for employers, employment agencies and labour organisations to discriminate against individuals based on protected categories, including:

• race (and traits associated with race, such as hair texture and protective hairstyles);
• colour;
• religion;
• national origin;
• ancestry;
• sex;
• sexual orientation;
• age (at least 40 years old, except in training or apprenticeship programmes where it refers to individuals between 18 and 39);
• pregnancy, childbirth or related medical conditions (including reproductive health decisions);
• physical or mental disability;
• marital status;
• order of protection status;
• family responsibilities;
• military status;
• unfavourable discharge from military service; and
• citizenship or work authorisation status.

The IHRA also prohibits discrimination resulting from an employer’s use of artificial intelligence in employment decisions or the use of zip codes as a proxy for protected classes.

To prove an employment discrimination claim, Illinois applies the three-stage McDonnell Douglas burden-shifting framework borrowed from Title VII litigation:

• first, the complainant must establish a prima facie case of discrimination;
• second, the respondent must articulate a legitimate, non-discriminatory reason for its action; and
• third, the complainant must prove, by a preponderance of the evidence, that the articulated reason was a pretext for unlawful discrimination.

Upon finding a civil rights violation, the Illinois Human Rights Commission is authorised to award various forms of make-whole relief, including:

• actual damages;
• equitable relief;
• reasonable attorney’s and expert witness’s fees;
• pre-judgment interest; and
• civil penalties.

Unlike Title VII, the IHRA does not authorise the recovery of punitive damages.

In Illinois, employment disputes may be digitalised through remote court proceedings, including video conferencing, subject to judicial discretion, regulatory guidelines and constitutional safeguards. In fact, most non-evidentiary proceedings are conducted via video conference.

Illinois Supreme Court Rules govern the participation of case participants in civil trials and evidentiary hearings by telephone or video conference, allowing a presiding judge, upon request or on the judge’s own order, to permit remote participation by video conference. Trial courts enjoy broad discretion to allow or refuse remote proceedings.

Illinois Supreme Court Rules also regulate how these proceedings are recorded and preserved, permitting the official record to be taken by an approved electronic recording system. While remote proceedings are encouraged to the extent reasonable, feasible and appropriate, they remain bound by constitutional limits.

Illinois uses specialised administrative and judicial forums to hear different types of employment claims. Under the Illinois Human Rights Act (IHRA), the Illinois Department of Human Rights (IDHR) has exclusive authority to investigate civil rights violations, and the Illinois Human Rights Commission (IHRC) has exclusive jurisdiction to adjudicate them. When a charge is filed with the United States Equal Employment Opportunity Commission (EEOC), it is automatically cross-filed with the IDHR. If the EEOC leads the investigation, the IDHR tolls its own process and awaits the EEOC’s final determination (usually a “right to sue” letter), which the complainant must submit to the IDHR within 30 days to preserve rights under the IHRA.

Under the Illinois Wage Payment and Collection Act, however, no administrative exhaustion is required, and employees may file suit directly in circuit court or proceed through the Illinois Department of Labor (IDOL).

Class actions are unavailable under the IHRA, but collective actions are expressly permitted under the Illinois Wage Payment and Collection Act, and the Illinois Department of Labor may join multiple wage claims against the same employer. Once claims reach court, complainants may request court-appointed counsel and the EEOC or Illinois Attorney General may intervene in cases of public importance. Remedies include injunctions, reinstatement and back pay (under the federal Title VII, back pay generally cannot accrue more than two years before the administrative charge was filed).

Arbitration is a valid and enforceable clause in employment agreements. The Illinois Uniform Arbitration Act provides that a written agreement to submit any existing or future controversy to arbitration is valid, enforceable and irrevocable, subject only to the standard grounds that exist at law or in equity for the revocation of any contract, such as fraud, duress or unconscionability. Public policy in Illinois favours arbitration, and the legislature has placed arbitration agreements on equal footing with other contractual promises.

When a valid arbitration agreement exists and a dispute falls within its scope, a trial court must compel arbitration. Federal law likewise generally enforces pre-dispute arbitration agreements in the employment context under the Federal Arbitration Act, extending enforcement to agreements requiring the arbitration of statutory employment discrimination claims. By agreeing to arbitrate statutory claims, an employee does not waive the substantive rights afforded by the statute but instead submits to their resolution in an arbitral rather than a judicial forum.

Despite their enforceability, mandatory pre-dispute arbitration agreements are frequently viewed as disadvantageous to employees. A significant limitation applies to sexual harassment claims: under the federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, an employee may elect to void a pre-dispute arbitration agreement for such claims. Class action waivers often require claims to be brought strictly in an individual capacity, prohibiting class-wide proceedings. Formal alternative dispute resolution (ADR) and conciliation pathways are built into the regulatory systems of the EEOC and federal district courts, alongside similar state court and administrative avenues.

In Illinois, a prevailing party in an employment dispute is generally not entitled to recover attorney’s fees or costs unless there is an express statutory or contractual provision allowing for such recovery. However, the Illinois General Assembly has enacted several fee-shifting statutes that allow prevailing employees to recover reasonable attorney’s fees and costs under specific circumstances. Employers may only recover attorney’s fees or costs in highly restricted contexts, such as defending against frivolous filings.

Several Illinois labour and employment statutes authorise the award of attorneys’ fees and costs to prevailing employees. An employee who has been unlawfully retaliated against and prevails in a civil action is entitled to recover all appropriate legal and equitable relief, as well as costs and all reasonable attorney’s fees. Under the Illinois Minimum Wage Law, an employee who is paid less than the wage to which they are entitled may recover in a civil action treble the amount of underpayments, 5% monthly damages, costs, and reasonable attorney’s fees. If the Illinois Department of Labor brings the collection action on behalf of the employee, the employer is statutorily required to pay the costs incurred in collecting the claim. The Illinois Worker Freedom of Speech Act also authorises an aggrieved employee to bring a civil action for appropriate relief, and the court must award a prevailing employee reasonable attorney’s fees and costs.