A Comprehensive Guide for Illinois Employees
If you have been fired, laid off, or told your position is being eliminated, your employer may present you with a severance agreement and tell you that it is “standard,” “routine,” or “not negotiable.”
In reality, severance agreements are legal contracts drafted almost entirely to protect the employer, not the employee. They are designed to limit legal exposure, cap financial risk, and secure a release of claims before an employee has the opportunity to understand what rights they may be giving up.
For employees in Chicago and throughout Illinois, signing a severance agreement without legal review can permanently affect future employment opportunities, financial recovery, and statutory rights.
This guide explains the most important issues employees should understand before signing a severance agreement.
Why Employers Offer Severance
Employers rarely offer severance out of generosity. Severance is offered because the employer believes there is potential legal risk. That risk may include:
- discrimination or harassment exposure
- retaliation liability
- whistleblower complaints
- wage-and-hour violations
- medical leave or accommodation issues
- wrongful termination claims
The severance agreement is intended to close the door on those claims as cheaply and quietly as possible.
The Release of Claims
Nearly every severance agreement requires the employee to sign a general release of claims. These releases are typically written extremely broadly and often include:
- all known and unknown claims
- all federal, state, and local laws
- all claims arising prior to the signing date
- claims whether known or suspected
Once signed, most released claims are permanently waived even if new evidence later emerges. This is one of the most consequential legal documents an employee will ever sign.
Claims That Cannot Be Waived Under Illinois Law
Despite broad language, Illinois law imposes important limits on what can be legally waived.
Illinois Whistleblower Act
Under the Illinois Whistleblower Act (740 ILCS 174), employees are protected from retaliation for:
- reporting violations of law
- refusing to participate in illegal conduct
- cooperating with law enforcement or investigations
These statutory protections cannot be waived by contract. Any provision attempting to restrict whistleblowing or cooperation with authorities is void as against public policy.
Illinois Wage Payment and Collection Act
Under the Illinois Wage Payment and Collection Act (820 ILCS 115):
- earned wages must be paid
- earned commissions must be paid
- vested bonuses must be paid
A severance agreement cannot lawfully waive unpaid compensation. Severance pay is not a substitute for wages already earned.
EEOC and IDHR Rights
Employees cannot waive the right to:
- file a charge with the EEOC
- file a charge with the Illinois Department of Human Rights
- participate in investigations
- provide truthful testimony
Agreements may attempt to limit monetary recovery, but participation rights cannot be waived.
One-Sided Attorney Fee Provisions
Some severance agreements require only the employee to pay attorneys’ fees if the agreement is challenged. It is silent on the employee’s ability to recover attorneys’ fees if they are required to enforce the agreement.
These provisions are designed to hinder employees from asserting statutory rights and are can be unenforceable under Illinois law. They are frequently negotiable and should never be accepted without review.
Confidentiality and Non-Disparagement Clauses
Many agreements prohibit employees from making “negative” or “critical” statements, even if true. Improper clauses which should be removed or negotiated include:
- prohibit truthful statements
- restrict communication with coworkers
- bar communications with regulators
- impose lifetime silence
Proper agreements must include clear carve-outs allowing:
- EEOC and IDHR charges
- whistleblower disclosures
- law enforcement cooperation
- subpoena testimony
Absence of these carve-outs is a major red flag.
Non-Compete and Non-Solicitation Restrictions
Employers sometimes attempt to impose new post-employment restrictions through severance agreements. Illinois law strictly limits non-competes and non-solicitation agreements. New restrictions introduced at termination are often unenforceable unless supported by lawful consideration.
Arbitration and Jury Trial Waivers
Many agreements require arbitration and waive jury trials.
Arbitration can limit discovery, remedies, transparency, and appeal rights. These clauses deserve close scrutiny. Carefully discuss these issues with an attorney.
Why Legal Review Matters
Severance agreements are often the employer’s final attempt to limit liability.
An experienced Illinois employment attorney can:
- identify discrimination, retaliation, and whistleblower claims
- evaluate EEOC and IDHR exposure
- negotiate increased severance pay
- extend benefits coverage
- remove unlawful language
- protect non-waivable statutory rights
If you have been terminated or expect termination in Chicago or anywhere in Illinois, do not assume the severance agreement is final or non-negotiable.
These agreements are not routine paperwork, and you should find an attorney to give you the guidance you need.
Before signing, ensure you understand exactly what rights you are giving up and which rights the law does not allow employers to take away.
