A Hole in the Golden Parachute: Government Severance Act Becomes Law in Illinois

By Patrick G. Connelly

On August 14, 2018 Governor Rauner signed the Government Service Act into law. Effective January 1, 2019, The Act applies to all units of local government and is aimed at curbing excessive severance payments. A number of public officials have received lavish severance payments over the past few years, particularly at the State’s Institutions of Higher Learning. Perhaps the case that received the most coverage was the $762,000 severance payment the College of DuPage made to its outgoing President Robert Breuder.

The newly enacted law provides two main restrictions in terms of Severance Agreements. The first limits any agreement for severance pay not to exceed 20 weeks of the employee’s compensation. For purposes of the Act, Severance pay includes actual and constructive compensation including salary, benefits and perquisites.

The Second restriction provided by the Act is that all employment agreements that contain severance pay agreements have a prohibition on such pay when the employee has been fired for misconduct by the unit of local government. The Act provides a rather broad definition of misconduct which includes:

1. Conduct demonstrating conscious disregard of an employer’s interest and found to be a deliberative violation or disregard of the reasonable standards of behavior which the employer expects of his or her employee. Such conduct may include, but is not limited to, willful damage of more than $50, or theft of employer property or property of customer or invitees of the employer;
2. Carelessness or neglect to a degree or recurrence that manifests culpability or wrongful intent, or shows an intentional and substantial disregard of the employer’s interests or of the employee’s duties and obligations to his or her employer;
3. Chronic absenteeism or tardiness in deliberate violation of a known policy of the employer or one or more unapproved absences following a written reprimand or warning relating to more than one unapproved absence:
4. A willful and deliberative violation of a standard or regulation of this State, which violation would cause the employer to be sanctioned or have its license or certification suspended by this state.
5. A violation of an employer’s rule, unless the claimant can demonstrate that:
   (a) He or she did not know, and could not reasonably know, of the rule’s requirements;
   (b) The rule is not lawful or not reasonably related to the job environment and performance; or
   (c) The rule is not fairly or consistently enforced.
6. Other conduct, including, but not limited to committing criminal assault or battery on another employee, or on a customer or invitee of the employer, or committing abuse or neglect of a patient, resident, disabled person, or child in her or his professional care.

It appears that the new law is proactive and does not apply to existing employment agreements; however, the law would apply to any renegotiated agreements. All local governments should be mindful of these provisions when negotiating or renegotiating any employment contracts going forward.