Keefe, Campbell & Associates, LLC

Synopsis: Appellate Court remands case to the Circuit Court and directs a temporary restraining order (TRO) against the Illinois Dep’t of Labor until the Circuit Court conducts a full hearing on Plaintiff’s request for a preliminary injunction.

Editor’s Comments: Plaintiff Construction Company is in a fight for its life under this new and anti-business law. The company name is “Jack’s Roofing” and they were investigated by the Illinois Department of Labor (the Department) pursuant to the two-year-old Illinois Employee Classification Act. Despite production by Plaintiff of subcontractor agreements and proof of subcontractor liability insurance, the Department of Labor conducted an informal “telephone interview” and concluded Plaintiff failed to properly classify 10 subcontractors in violation of the Act. Further, Plaintiffs were notified they may be assessed fines up to $1.6 million!

Trust us; fines at that level are a death knell for most small to medium construction companies. If you look up tiny “Jack’s Roofing” they are based in Royalton, IL and have been a family run business since 1977. They have been listed with the Better Business Bureau since October 2002. You may also note the population of Royalton, IL was 1,130 during the 2000 census.

Rhonda and Jack Bartlow, doing business as Jack’s Roofing, may have set the wheels in motion for the Illinois Employee Classification Act to be declared unconstitutional by the Illinois courts. Plaintiff filed a complaint in the Circuit Court of Franklin County, Illinois, for declaratory judgment and for injunctive relief against the Dep’t of Labor. Plaintiffs alleged in their complaint the Department was attempting to enforce the Act despite the fact the Act violates the Illinois Constitution and the United States Constitution. The specific focus of the alleged constitutional violations was interference with their procedural due process rights. The Circuit Court denied Plaintiffs’ request for a temporary restraining order or TRO. They rapidly filed a timely notice of an interlocutory appeal to allow consideration by the reviewing court.

Please note of the five appellate districts in this state, the Fifth Appellate District in Illinois is, in the view of most business observers, by far the most liberal and pro-labor district. We feel they might be coming around to possibly protect small businesses in little towns who are struggling in this awful economy. In an opinion delivered by Justice Stewart, the Appellate Court, 5th District ruled the Circuit Court abused its discretion in denying Plaintiff’s TRO request. The Appellate Court went on to find Plaintiff’s raised a “fair question” concerning whether the Act violates procedural due process, because the Act “does not appear to provide the accused with a meaningful opportunity to be heard.”

The Appellate Court majority was openly critical of the cursory investigation and evidence of a mere telephone conference held by the Department before a hefty seven-figure fine was assessed. The Court noted the need for a more formal administrative hearing process, concluding “[w]e believe that the plaintiffs have raised a fair question concerning whether due process requires the Department to provide an administrative hearing when there exists a dispute concerning material facts before it can assess fines and penalties or seek other sanctions or remedies against Jack’s Roofing. The Supreme Court has stated that there is “no doubt” that administrative proceedings are governed by the fundamental principles and requirements of due process. Balmoral Racing Club, Inc. v. Illinois Racing Board, 151 Ill.2d 367, 405, 177 Ill.Dec. 419, 603 N.E.2d 489 (1992)”.

We understand the purpose behind the Employee Classification Act is to determine whether an individual performing services for a construction contractor is truly an employee versus an independent contractor. It appears from this case the Illinois Department of Labor is aggressively pursuing massive and business-crushing fines and penalties, even against relatively small family-operated businesses. As we indicate above, we feel the Department of Labor’s goal is to rapidly bring home trophies to warn others not to go down that path. Maybe the courts are noting they can’t do so after a quick review and a telephone call.

What is alarming is the fact Plaintiffs in this case produced substantial documented proof of subcontractor bids, written contracts with subs, and also demonstrated there were certificates of insurance by the subcontractors! Despite all of this, the Department chose to pursue the claim and was poised to assess fines of over one million dollars on a family business. All of this was possible without a formal hearing and/or ruling by an objective ruling body! We applaud the Appellate Court for permitting Plaintiff their day in Court to properly defend against such a claim, which would surely put this small family company out of business. We will work to track progress of this case and the development of the body of law in this area.

At the federal level, please note this effort isn’t going to stop any time soon. Businesses that utilize independent contractors should be ready for increased federal scrutiny. As part of President Obama’s federal budget for the upcoming fiscal year, $25 million was requested by the U.S. Department of Labor (DOL) to enforce wage and hour laws and pursue employers who misclassify employees as independent contractors.

Another $12 million and 90 new investigators were requested by the Wage and Hour Division to expand its efforts to ensure compliance with the law. The “Misclassification Initiative” also supports new targeted efforts to recoup unpaid payroll taxes due to misclassification through state audits of problem industries supported by federal audits. These industries include construction, manufacturing, restaurants and home health care. Additionally, the initiative includes a $10.9 million pilot program that would reward states most successful or improved at detecting and prosecuting employers that fail to pay the appropriate taxes due to worker misclassification.

In addition to the U.S. DOL, the Internal Revenue Service will be scrutinizing independent contractor arrangements. As part of a National Research Project on employment taxes, the IRS is due to audit 6,000 randomly selected companies over the next three years. The audit will focus on, among other things, worker classification. Given the potential liability for penalties, taxes and interest, businesses must pay close attention to this issue. We are confident at the federal level, stricter adherence to due process protocols will occur. We feel employers across the U.S. should engage in proactive self-audits, reviewing, among other things, payroll records and IRS Form 1099s to identify those they have been paying as independent contractors and assess whether these individuals meet the requirements established by federal, state and local laws.

This article was researched and written by John P. Campbell, Jr. Please do not hesitate to reply or send inquiries to John at jcampbell@keefe-law.com or post them on our award-winning blog.

Editor’s comment: In less than ninety days, our former Governor is going on trial for various counts of bribery and extortion while in public office. There is no indication he will cop a plea and quietly accept his medicine. Illinois voters are going to watch what we feel is a crooked politician do everything he possibly can to wriggle off the hook—the tawdry and embarrassing legal battle will lead right up to the November state-wide election. We don’t feel voters will be amused by the spectacle.

At the same time, this Wednesday, our current Governor is going to tell Illinois voters he is facing a budget deficit of well over $13 billion dollars! He is going to face the situation head-on and demand the legislature dramatically raise our taxes once again. We don’t feel he has the guts or drive to make the changes needed to dramatically cut costs now or in the future. Trust us, Illinois voters apparently don’t mind their money being squandered on our hilariously poorly run state government in Illinois unless and until they find out more taxes are inescapably due. When that happens, history tells us they generally rise up and knock out any politician who supports new taxes. One way or the other, this current administration may be called to task for about a decade of waste and corruption and shown the door.

All of this is pointing toward a Republican rebirth at the state level this fall. Those Republicans are already asking tough questions. We are certain to want to provide guidance and answers that are in the best interests of our clients and the broad base of Illinois employers struggling to compete in a very competitive national and international economy.

Numerous sources indicate workers’ compensation costs in Illinois have steadily risen to be among the highest in the nation. All of our readers and everyone who writes an email reply about workers’ comp costs routinely advises our fair state is out-of-whack with our sister states and the rest of the country. The collective angst of Illinois business is being heard more than ever before. There are various bills now proposed by our state legislators to change the Act and even the Illinois Workers’ Compensation Commission’s system of dispute resolution itself. We also point out administrative change will be inescapable.

This all begs the main question that keeps coming back; what should be changed and how?

The claim the “lawyers have caused the problems” is a flippant, easy answer but it does not address any of the real problems from the perspective of Illinois business. In fact, the Illinois Workers’ Compensation Commission digests over 50,000 cases per year. The attorneys who work within the system are, on the whole, professional and well-versed in the law and practice. Attorneys on both sides represent their clients well. We feel the main cost associated with workers’ compensation claims in Illinois do not stem from litigation; in fact, litigation costs are a very small fraction of the overall cost of claims.

For this reason, the promulgation of an alternative dispute resolution system (ADR) would again do nothing to address some of the real changes that would benefit Illinois business while still protecting injured workers’ rights. Point in fact, the Commission structure already is “alternative dispute resolution” as it is an alternative to the much more ungainly and slow civil court system. The IWCC is comparatively streamlined and works remarkably well when veteran attorneys for both parties are working a case.

As an example, our firm was recently assigned a file on July 14, 2009 with a serious medical and accident dispute. The parties obtained expert opinions, took depositions, tried the case and received a decision on a 19(b) hearing by October 20th. Following that model, this established system can and does work well, regardless of what the critics say. Does litigation always proceed with such economy? Of course not,but when there are delays, it is most often due to the need for further information/fact gathering, which the arbitrator requires to make an informed decision.

If another version of ADR is inserted under the current Workers’ Compensation Act, what changes? Assuming the same statutory rights are protected and the body of case-law that has developed over the past decade or so is still followed, it is our impression that nothing is accomplished by the creation of ADR. Implementation of any such binding arbitration is similarly duplicative, as Section 19(p) of the act has the equivalent of binding ADR with an option for the parties to conduct a one-time binding arbitration which is not appealable to the Commission or any Court. Therefore, if the parties desire such finality without recourse to review an opinion, they are already free to do so under the current Act.

All right then; we save the Commission itself, but what do we change to save Illinois business and bring our WC costs into line?

We offer three proposed changes to the Act which would make Illinois competitive again with our sister States while still protecting workers’ rights (at least in the workers’ comp arena).

Insert a new legal standard for compensability of an “aggravation of a pre-existing condition”.

One of the most frustrating aspects of our system from the employer’s perspective is when an individual has a simple twisted knee claim without blunt trauma or tears, yet due to an advanced degenerative joint, is a candidate for a knee replacement. When the doctors testify the sprained knee is “a cause” of the symptoms, the floodgates open and the employer, through no fault and without ability to prevent such an injury, must pay hundreds of thousands of dollars for joint replacement, TTD and wage differential benefits when such workers are deemed unable to return to work.

We propose a statutory requirement as follows: “in the event a work accident reveals pre-existing degenerative medical conditions, the work accident must be the primary aggravating factor which creates the need for treatment and any subsequent disability for the continuation of benefits under the Act.”

Cap wage differential and permanent total disability claims at 10 years of benefits or 520 weeks.

Again, Illinois is the most expensive State in the Union due to such lifetime claims that almost no state provides. We will never be competitive as a state in terms of attracting and keeping business unless such costs are reined in. Workers’ compensation is a no-fault system of benefits that provides 100% medical cost coverage and wage replacement while disabled. Most cases settle based on the traditional “scheduled” loss of the respective body part. For more severe claims, a reasonable “safety net” for employees is to provide a decade of wage replacement benefits. At our high benefit rates, this would still be relatively high compared to other States, but nonetheless better than the current windfall of lifetime benefits. As part of this change, we propose that vocational assistance must continue to be offered to candidates for placement. However, vocational assistance should be suspended after 6 months, with any wage differential based on the median income earning potential pursuant a labor market survey. In other words, claimants don’t get to allege they are “odd-lot” permanent total disability candidates simply because they cannot get hired within their restrictions.

Pay medical bills in workers’ comp at what is paid in the group health-care arena.

Finally, this one is a no-brainer of the highest level. Why have non-parallel systems for Illinois business where doctors and other health care givers are reined in by Blue Cross/Blue Shield or Aetna on the group health side but on the workers’ comp side, medical bills run completely batty? No one has any idea how to rein the abusers and overbillers in on WC—we recommend mandatory UR as a path. In our view, the Commission provides nothing but confusion and consternation when they implement it. Let’s make it mandatory or simplify it but start to come in with true guidelines to the benefit of injured workers and their employers alike.

We can’t tell you we have all the answers but we are sure we know the right questions. Please let us know your thoughts and ideas. This article was written by John P. Campbell, J.D. and Eugene F. Keefe, J.D.

Editor’s Comment: Illinois employers should be aware of this important decision and adjust your HR/workers’ compensation policies accordingly. When mired in a fight between a treating doctor’s work restriction and an IME work release, an employer may suspend TTD benefits in good faith based on the IME opinion. However, employers should not go so far as to terminate the employee for refusing to follow the IME recommendation. This can be viewed as an adverse employment action and expose your company to liability for retaliatory discharge.

In Grabs and Francek v. Safeway, Inc. and Dominick’s Finer Foods, LLC, (No. 1-08-3007 June 17, 2009), our Appellate Court addressed a certified question on an interlocutory appeal on this narrow issue of alleged retaliatory discharge. Plaintiffs Fred W. Grabs and Rudolph Francek filed a joint complaint alleging Defendant Dominick’s Finer Foods terminated them in retaliation for filing workers’ compensation claims. Defendant responded to aver Plaintiffs had been terminated for violating a neutral attendance policy when they missed three consecutive days of work subsequent to being advised to return to work pursuant the opinions given by Defendant’s IME.

By way of background, Grabs’ claim was initially accepted and all medical bills and TTD were paid by Defendant. Pursuant to Section 12 of the Illinois Workers Compensation Act, Plaintiff presented for an IME with Dr. Bernstein, a physician chosen by Defendant. Dr. Bernstein determined Plaintiff Grabs could return to work and further Grabs’ injury was not work-related. Accordingly, Grabs was advised to return to work. He refused, citing treating doctor’s orders, and was terminated after missing three days without calling in.

Similarly, Francek’s claim was disputed from the outset and he presented for an IME with Dr. Papierski who determined his injury was not work-related and he could return to work without restrictions. Francek also chose to follow the advice of his treating physician and was terminated after the third “no call/no show”. Both claims came before the IWCC on 19(b) Motions and in both cases, the Arbitrator sided with Plaintiffs’ personal physicians finding both injuries arose out of and in the course of their employment with Defendant. Further, the Arbitrator found Plaintiffs were exercising their rights pursuant section 8(a) of the Illinois Workers’ Compensation Act when they did not return to work at their treating physicians’ advice.

With regard to the civil action for retaliatory discharge, the Circuit Court granted Plaintiff’s motion for summary judgment. The Circuit Court then granted Defendant’s motion for interlocutory appeal on the following question:

Does the Workers’ Compensation Act give the IWCC the exclusive authority to determine whether an injured employee may return to work, such that when an employer is faced with conflicting medical opinions from the employee’s doctor and the employer’s IME, the employer may not rely upon the IME opinion to terminate the employee under the employer’s attendance policy for failing to return to work, before the Commission has adjudicated the pending dispute over the conflicting medical opinions?

In a well-reasoned decision, the Appellate Court held when an employer is faced with conflicting medical opinions from the employee’s doctor and the employer’s IME, an employer may not rely solely on an IME in terminating an employee for failing to return to work. However, the Appellate Court stopped short of finding that any such fact pattern was per se retaliatory discharge, as was argued by Plaintiff. Rather, the Court was careful to explain an employee must meet his burden of proof to show his discharge was causally related to the exercise of his rights under the Act. The Circuit Court went too far by applying a per se rule of retaliatory discharge, rather than affording Defendants the opportunity to outline a valid, non-pretextual basis for termination.

In other words, the mere coincidence of a termination in the midst of a workers’ compensation dispute will not trigger any presumption of wrongful discharge; the terminated worker must still meet his standard of proof for all elements of a retaliatory discharge claim. The Court explained an employee who elects benefits under the Act may be terminated, however, the decision to terminate must be wholly unrelated to the employee’s claim for benefits under the Act, citing the 1998 decision of Clark v. Owens-Brockway Glass Container, Inc., 297 Ill.App.3d 694.

From the perspective of Illinois employers, this is a liberal decision that focuses on the Workers’ Compensation Commission as the source of implicitly determining when and how an employee can be terminated. We consider that judicial legislation of the worst sort. We don’t feel the Commission has or should be provided such power—it isn’t in the enabling legislation that created the Commission. The legislature could have addressed the matter and didn’t. We also feel this ruling would allow an injured worker to remain off work indefinitely by stalling the hearing at the IWCC to maintain their right to continued health care, pension and other employee benefits. Again, the Act and Rules don’t provide such rights.

This article was drafted and researched by John P. Campbell, Jr., J.D. Please feel free to reply with your thoughts and comments.

Editor’s Comment: In the wake of this decision, employers looking to recover workers’ compensation costs pursuant Section 5(b) of the Act are cautioned to spend the money and perfect filing of their own complaint prior to the running of the statute of limitations, or at minimum, ensuring the complaint filed by their employee/Plaintiff has named the proper parties and is timely filed. Failure to do so may cause the employer to lose your lien completely or accept a nominal lien recovery where the employee accepts a far lower settlement than the amount sought by the employer or his/her case is dismissed.

In Pederson v. Mi-Jack Products, Inc., No. 1-07-2327 & 1-07-3228 Cons. (March 10, 2009) 2nd div. (Hall), Plaintiff was injured while at work when a boom from a crane fell upon him. Substantial workers’ compensation benefits were paid and not in dispute. Plaintiff’s civil complaint for product liability, however, named the wrong defendant as the manufacturer of the crane. Further, the statute of limitations had already run.

Plaintiff’s counsel withdrew, citing an impending malpractice suit. Plaintiff proceeded to settle on a pro se basis with the remaining defendants after firing counsel for alleged malpractice. The employer, seeking to recover far more on their lien, then filed their own complaint against the defendants. Defendants motioned for dismissal of the employer’s obviously untimely complaint.

Please note in Eastman v. Messner, Illinois courts ruled an employer of an injured worker had no workers’ compensation lien in a legal malpractice suit brought by an injured worker against their lawyer who committed malpractice, as claimant’s counsel arguably did in this matter. With respect to our courts, we strongly disagree with the Eastman v. Messner ruling and consider it to guarantee double recovery by the injured worker which is precisely what numerous cases outline is what the legal concept of subrogation recovery as defined in Section 5 of the Illinois Workers’ Compensation Act is designed to prevent.

In Pederson, the Appellate Court affirmed the dismissal of the employer’s complaint in the products liability action, since their filing was clearly beyond the statute of limitations. The Court also approved the proposed settlement between Plaintiff and Defendant for an amount less than employer’s workers’ compensation lien, subject to payment of lien. The Court reasoned that, Plaintiff’s incentive to settle with Defendant in order to pursue his legal malpractice claim against his attorneys for suing the wrong company did not give the employer the right to control litigation or settlement of the present claim.

The Court went on to rule that, pursuant to Section 5(b) of Workers’ Compensation Act, the employer has surrendered the right to participate in the litigation after it failed to file suit within three months of expiration of statute of limitations. We find this aspect of the ruling too far-reaching, as it implies the employer cannot “participate” in the civil litigation at all, except as a third party defendant. We feel the Courts should appreciate employers/insurance companies may have workers’ compensation liens approaching $1 million or more in some instances of catastrophic injury. To suggest they have no right to actively participate in the related civil litigation process is unsettling, especially when it leaves the fate of the litigation in the hands of a sometimes unpredictable Plaintiff or their counsel. It is our reasoned impression that, once an employer files their petition to intervene, they should have the option to pursue and protect their lien to the fullest extent, regardless of the agreement reached by Plaintiff in the case.

This case stands for the legal principle that employers should not ever rely on Plaintiff’s counsel to protect their lien interests, particularly when you have clear liability and a substantial workers’ compensation lien. To do so, puts you at risk for what happened in this claim—a bumbling lawyer sues the wrong party or misses the statute of limitations and your rights are lost. The higher your lien rises, the stronger your need to reach out to competent defense counsel who understands the nuances of lien recovery.

This article was drafted by John P. Campbell, Jr., Esq. If you have thoughts or comments on these concepts or need the actual ruling, please send a reply to John at jcampbell@keefe-law.com.

Editor’s Comment: Employers who contract with temporary employment agencies to meet their staffing needs should make note of this significant ruling impacting your human resources decisions from the Illinois Appellate Court. In Hester v. Gilster-Mary Lee Corp. (WL 5342114 Dec. 18, 2008), our Appellate Court reversed and remanded a trial court dismissal, thereby extending retaliatory discharge protection to temporary employees against “borrowing” employers in a claim arising out of a workers’ compensation case.

This case involves an employee of Manpower, Inc., a staffing agency which placed Plaintiff Hester at Gilster-Mary Lee Corp. Hester worked side-by-side with Gilster-Mary Lee employees, but was paid by Manpower directly. Gilster-Mary Lee maintained no payroll records or personnel file on Hester. However, Hester alleged she was under the direct supervision and control of Gilster-Mary Lee management. Hester testified (under what she later claimed was pursuant to subpoena—see below) in a workers’ compensation hearing of a direct Gilster-Mary Lee employee on September 13, 2006. The following day, Gilster-Mary Lee management informed Hester her services were no longer needed and she was to return to Manpower (the staffing agency) for further assignments. Hester brought an action for retaliatory discharge against Gilster-Mary Lee, alleging she was effectively terminated for her cooperation in a workers’ compensation matter against Gilster-Mary Lee.

As an aside, we note the workers’ compensation claim Plaintiff Hester testified in was denied by the Arbitrator and the Commission unanimously affirmed. The decision is published and appears to be very validly disputed. We are certain the top-notch risk management team at Gilster-Mary Lee fully and aggressively disputed the claim. We are also certain they had to be very upset to see this person step up in support of a dubious and doubtful claim. It appears Plaintiff Hester testified because Petitioner in the underlying matter was her roommate. We note the same lawyer who lost the underlying matter then took up this claim. We always laugh to read Plaintiff claimed in the complaint she “had to testify” because her roommate’s lawyer who is also representing her was nice enough to draft and hand her a subpoena to allow her to allege she was “forced” to testify, thereby justifying her participation in the dubious WC claim.

As a second aside, we also note the claim for damages for lost pay is eight weeks of pay or something in the range of about $2,500! While we salute the tenacity of the folks at Gilster-Mary Lee, our vote is to tender judgment in the amount claimed and seek to close this silly file. As this is admittedly a case of first impression, it is hard to imagine a trial court will find it a claim appropriate for hearing on punitive damages. If punitive damages are not at issue, we cannot imagine it is worth preparing for a jury trial on such minimal damages, particularly when the matter has already been litigated in the trial and appellate courts at a cost that already has to be exponentially more than the amount in controversy. Even if they “win” this second round of litigation, Gilster-Mary Lee may still have lost the war.

At the trial level, Gilster-Mary Lee argued in their Motion to Dismiss they were not the employer of Hester and didn’t “discharge” her–they simply sent Hester back to Manpower for re-assignment. Gilster-Mary Lee was successful with their Motion to Dismiss, as the trial Judge deemed Hester to be an employee of Manpower and not Gilster-Mary Lee. Therefore, according to the trial judge, Hester failed to state a claim for which relief could be granted. On appeal, the Appellate Court addressed two issues:

(1) Whether Illinois public policy protects workers from discharge for testifying in a co-worker’s claim hearing and

(2) Whether an action for retaliatory discharge exists for a borrowed employee, which the Court acknowledged as an issue of first impression in Illinois.

Retaliatory discharge for pursuit of workers’ compensation benefits was first outlined by our Supreme Court in their 1978 ruling in Kelsay v. Motorola, Inc., where our State’s highest court concluded a “corporation’s policy to terminate the employment of employees who pursued workmen’s (sic) compensation claims against it” was actionable. Following this precedent, the Appellate Court in Hester noted subsequent rulings which have since concluded such protections also apply to employees who testify in their co-workers’ workers’ compensation hearings. See Pietruszynski v. McClier Corp., Architects & Engineers, Inc., where the Court concluded “protecting participation in workers’ compensation hearings is consistent with public policy and promotes the purpose of the Act as recognized in Kelsay.” The Court also determined extension of the retaliatory discharge cause of action to plaintiffs who had not filed their own workers’ compensation claims but who had participated in another worker’s claim was “consistent with the supreme court’s narrow definition of the tort and the plain language of the Act.” The Court in Hester acknowledged this precedent in concluding such a protection is recognized in Illinois for the co-workers of claimants and therefore, would apply to Plaintiff in this case.

Turning to the second issue, whether retaliatory discharge exists for the borrowed employees, the Court noted borrowing employers enjoy all the protections of the Workers’ Compensation Act in the form of the exclusive remedy provision, citing Chaney v. Yetter Mfg. Co. In Chaney, Plaintiff was assigned to work for Defendant by an employment agency and filed a tort action seeking damages for an injury she sustained working for Defendant. The court examined the relationship between Defendant and Plaintiff and concluded Defendant controlled her work to an extent she was a borrowed employee of Defendant. As a result, the Appellate Court affirmed the trial court’s grant of summary judgment to Defendant on the ground Plaintiffs were limited to the exclusive remedies of the Workers’ Compensation Act and could not sue her borrowing employer in tort.

The Court in Hester pointed out workers’ compensation liability is joint and several for both the lending and borrowing employer. Such responsibility for workers’ compensation benefits affords protection for employers against related tort actions under the Act. Therefore, the Court reasoned since Gilster-Mary Lee would be entitled to the protections of the Act as a statutory employer (i.e., enjoy exclusive remedy protection), it should similarly be liable for any adverse employment action which may arise from a borrowed employee’s pursuit of benefits under the Act or in this case, supporting a co-worker’s pursuit of such benefits. Upon this basis, the Court reversed and remanded the matter for further proceedings.

The obvious problem with the ruling by the Fifth District in Hester is the employee was never actually “hired” nor was she “fired” by Gilster-Mary Lee. That is one of the purposes of temporary employment for staffing agencies and PEO’s. She wasn’t “hired” to the extent she was simply sent there to work as an employee of Manpower. When her temporary assignment ended for any reason, she would return to Manpower for other assignments. As we indicate above, she was back to work in about two months, albeit at a different location. We consider this expansive ruling by the Fifth District Appellate Court to demonstrate how liberal and anti-business that district continues to be.

In the wake of this decision, we recommend any businesses utilizing temporary employment agencies for their staffing needs set clear guidelines for the duration of expected “temporary” employment. Further, in the event the temporary assignment is ended prematurely, the borrowing employer should be careful to document their non-discriminatory business reason for the termination of the temporary job assignment. Such documentation will greatly assist your defense in the event a retaliatory discharge claim is made by a borrowed employee.

Human resource directors and risk managers should also note, in addition to retaliatory discharge for workers’ compensation claims, borrowed employees are protected from other forms of unlawful discrimination (for example, discrimination based upon race, sex, age, etc.), so long as they meet the common law definition of “employee.”  Common law factors to consider include the amount of control and supervision, the right of discharge, the method of payment, the sources of equipment or materials, and the work schedule.  If these factors do not establish an employee-employer relationship, then the borrowed “employee” is considered an independent contractor and is not entitled to Title VII or Illinois Human Rights Act protection.  See Generally, Mitchell v. Dept. of Corrections. Again, documenting your legitimate basis for termination of employees (whether direct employees or borrowed) may prove critical in the defense of potential claims by disgruntled former employees.

If you have questions or comments about defending HR issues relating to temporary employees, please do not hesitate to forward them. This article was drafted by John P. Campbell, Jr., J.D. Please send your thoughts and comments to John at jcampbell@keefe-law.com.

Editor’s comment: Plaintiff in a Title VII retaliatory discharge action cannot avoid motion for summary judgment where Plaintiff secretly tape-recorded meetings with superiors in the workplace in an effort to prove her sexual harassment claim. Summary judgment was affirmed by the Seventh Circuit Court of Appeals because the protections afforded to employees under Title VII do not license “espionage” or other self-help tactics to build one’s case against the employer. Plaintiff clearly out-smarted herself in a way that ultimately led to the demise of her potentially viable claims.

In Christina A. Argyropoulos v. City of Alton, Plaintiff was employed for ten months as a prison guard, having received mixed reviews on performance during her tenure. Of note, Plaintiff was documented as having difficulty with completing tasks in a timely manner, insufficient prisoner searches and booking procedures and general difficulties with “multi-tasking”. During this period however, Plaintiff had a tumultuous work relationship with a fellow prison guard, Steven Duty. It is not disputed Duty engaged in improper conduct and harassing speech toward Plaintiff. The City took appropriate steps to investigate and ensure further harassment did not occur, changing work shifts and compelling “escorts” to be present during shift changes. Despite these steps, Plaintiff met with an attorney in late March, 2003 to discuss her claims of harassment.

Plaintiff’s work performance continued to be the subject of stronger criticism and on April 28, 2003 Plaintiff was called into a meeting with her superiors. Plaintiff assumed the meeting was called to address progress on her harassment claim; she was upset to learn otherwise. Plaintiff was indignant to the charges of poor performance and, in an effort to obtain evidence of further harassment; Plaintiff began recording the conversation of the meeting with a hidden recorder. Feeling the urge to brag of her Nancy Drew-like skills, another co-worker was confided with, who ultimately informed the City of the recording.

Representatives of the City of Alton were upset, to say the least, and executed a search warrant leading to the discovery of the recording device in Plaintiff’s car. Plaintiff was arrested and charged with felony eavesdropping in violation of 720 ILCS 5/14-2 and was promptly fired the same day. The chief provided three written reasons for termination in his letter of April 30, 2003. (1) poor job performance (2) alleged criminal conduct while on duty and (3) untruthful statements given to officers during the search of her home, whereupon she first denied possession of the recording.

Plaintiff decided to pursue her claim in the courts and in her initial complaint, she alleged several violations for sexual harassment, discrimination, wrongful termination, defamation, denial of due process under Section 1983, and for good measure, a claim for intentional infliction of emotional distress. Most claims were dismissed and/or dropped by Plaintiff. However, Plaintiff maintained an appeal of the Title VII harassment claim and the Section 1983 claim, the latter of which was summarily disputed of by the Court.

Our U.S Court of Appeals for the Seventh Circuit affirmed the summary dismissal of Plaintiff’s Title VII retaliatory discharge claim. In doing so, the Appellate Court noted that only two of the three elements of a retaliatory discharge claim had been met.

Retaliation can be proven by either the direct or indirect method. Under the direct method, a plaintiff must present evidence, either direct or circumstantial, showing:

(1) She engaged in statutorily protected activity;

(2) She suffered a materially adverse action; and

(3) A causal connection existed between the two.

Alternatively, a plaintiff may establish a prima facie case of retaliation under the indirect method by showing that (1) she engaged in statutorily protected activity; (2) she suffered a materially adverse action; (3) she met her employer’s legitimate expectations; and (4) she was treated less favorably than some similarly situated employee who did not engage in the statutorily protected activity.

In this case, it was undisputed (1) the sexual harassment complaint was a statutorily protected activity and (2) the termination qualifies as a materially adverse action. However, the Court found insufficient evidence of any causal relationship between Plaintiff’s harassment complaint and her termination. In so ruling, the Court noted the mere sequential timing of the two events (Plaintiff was fired seven weeks after her harassment complaint was made) was not sufficient to satisfy the causal connection requirement. Simply stated, suspicious timing alone will not carry the day.

Plaintiff similarly failed under the indirect method, in so far as her poor work performance was documented both before and after her charge of harassment. Finally, there were no other similarly situated employees by which a fair comparison could be made (the Court noted that Plaintiff would never be able to find another similarly situated employee who engaged in similar eavesdropping misconduct). The Court’s decision resonated the theme that Plaintiff was engaged in a “dubious” practice of “work-place espionage” and therefore, Plaintiff could not cast sufficient doubt on the City’s non-retaliatory basis for her termination.

Although it may appear the Court’s decision was an easy one based on the antics of Plaintiff with her hidden recorder, it is worth noting the City was wise to have “built their defense case in chief” during the entire process. The City documented poor work performance throughout Plaintiff’s tenure and clearly stated the legitimate basis for termination in written correspondence. The City also took proper steps to address the charge of discrimination in a timely manner. It is often the failure of employers to properly document such occurrences which leads to viable claims that survive summary judgment, even where the termination may be proper.

This article was researched and drafted by John P. Campbell, Jr., JD. Please direct any thoughts or comments on employment law defense issues to John at jcampbell@keefe-law.com.