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Illinois Ends “Golden Parachute” Severance for Some Fired Employees in the Government Severance Pay Act

Article written by Illinois & Iowa Attorney Kevin O'Flaherty
Updated on
October 28, 2019

In 2019, Illinois has enacted the Government Severance Pay Act, a law  limiting the severance payments available for government employees, especially those who are fired because of misconduct.  This new law is designed to avoid “golden parachutes” for fired employees.  In this article, we will cover “What is the Government Severance Pay Act?”, “What Constitutes Misconduct for Termination of a State Employee?” and "What is a Golden Parachute Fired Government Employees?"

What is the Government Severance Pay Act?

In 2019, Illinois began enforcing a new law titled the Government Severance Pay Act to address the issue of government employees who are fired for misconduct but still receive severance payment.  This new law places a limit on the severance packages for state employees to avoid spending taxpayer money on the payouts for fired employees.  The new law limits all severance packages for fired employees of the state of Illinois to being no greater than 20 weeks of employment compensation.  This can still be a significant amount of money for employees with high salaries, but it does limit the payouts to avoid overpaying.  The Government Severance Pay Act also indicates that all government employment agreements should have provisions in place specifically regarding workplace misconduct, including ineligibility for severance if an employee is fired for misconduct.  So, under the new law, employees who have severance agreements in their contracts can lose their severance if they are fired because of misconduct as their misconduct breaches their original contract.  

The Government Severance Pay Act only covers state employees and does not extend to private companies.  However these new practices should cause significant changes in the severance process for state employees and may inspire private business owners to re-evaluate their agreements and severance packages.  

What Constitutes Misconduct for Termination of a State Employee?

 As explained above, it is now required that all Illinois state employment agreements address misconduct. Misconduct is a fireable offense for state employees as it creates a hostile or unproductive working environment due to the loss of trust and security between an employee and their employer.  Misconduct is legally defined as any behavior that shows intentional and/or substantial disregard for the interests of the employer.  This type of behavior includes fairly simple and common rule-breaking such as tardiness, rudeness to customers or employees, or insubordination. However, misconduct can also extend to more extreme behavior such as violence in the workplace, stealing or abusing company property, or threatening behavior towards employees or customers. Of course, not all levels of misconduct will always lead to termination and may be met with warnings ahead of more serious consequences.  However, now that the new Illinois law is in affect, anyone fired for misconduct may be denied their severance, regardless of the level of misconduct perpetrated.

For more on workplace misconduct, see our article “Are Workplace Sexual Harassment Protections Required in Illinois?”

What is a Golden Parachute for Fired Government Employees?

Many employees accused of misconduct still end up receiving their severance payment after they leave their positions - especially if their behavior is not strictly forbidden in their contract or if their behavior is still under investigation and unproven at the time of their exit.  This can often result in the infamous “Golden Parachutes” where high-level employees who leave due to misconduct receive significantly large severance payments after they are fired.  Many employers decide to pay severance to their fired employees rather than avoid an expensive lawsuit that may cost more than the severance itself.  This practice can result in employees fired for misconduct receiving thousands of dollars or more in severance from the company they wronged. “Golden parachutes” have gotten increased attention in recent years with the rising awareness of workplace harassment and through awareness campaigns such as the Me Too Movement as well as the continued investigations into corruption at various Illinois state positions. This can be especially significant if the employee worked for the government as these large paychecks will be written with taxpayer money, which is why Illinois has enacted the The Government Severance Pay Act.

This article explained the Illinois Government Severance Pay Act and why this law was new enacted in 2019. For related reading, see Changes to Illinois Employment Laws in 2019

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What Constitutes Misconduct for Termination of a State Employee in Illinois?

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