Amendments to the Illinois Unemployment Insurance Act Make It Easier to Contest an Unemployment Compensation Claim

unemployment, employee termination, employee misconductNew amendments to the Illinois Unemployment Insurance Act that make it easier for employers to contest a claim for unemployment compensation went into effect on January 3, 2016.

Under the Act, an employee may be denied unemployment benefits if he or she is fired for misconduct.

The Act’s definition of misconduct, however, generally requires an employer to show that the employee’s violation of company policy was “deliberate and willful ” and that the employee’s actions harmed the employer, harmed other employees, or were repeated by the employee despite an explicit warning.   When employers are unable to meet this hefty burden of proof, employees fired for bad behavior are still able to collect unemployment.

The amendments to the Act help employers by adding eight specific actions that constitute employee misconduct notwithstanding the Act’s general definition:

  • Falsification of an employment application or related documents
  • Failure to maintain required licenses, registrations, and certifications unless the failure is not within the control of the employee
  • Repeated violations of a reasonable attendance police without a sufficient excuse
  • Damaging the employer’s property through gross negligence
  • Refusal to obey reasonable, lawful instructions unless the refusal is due to lack of ability, skills, or training or would result in an unsafe act
  • Consumption of alcohol or non-prescribed drugs, or abuse of prescription drugs, at work
  • Reporting to work under the influence of alcohol or drugs unless compelled to report outside of scheduled or on-call work hours
  • Endangering the safety of the employee or co-workers through grossly negligent conduct

It is important to note that while these eight acts do not require “deliberate and willful” behavior on the part of the employee, many of them do require the employee’s knowledge of relevant employment policies.  So, it’s important to make sure your employment and attendance policies are up-to-date, in compliance with state and federal law, and are distributed to all employees.   You should also obtain signed forms from employees stating that they read and understood your policies and carefully document all employee misconduct to ensure that you have the evidence you need in the event of an unemployment challenge.

If you have any questions regarding the amendments to the Act and how they impact your business, contact us at (312) 216-2720 or info@marcusboxerman.com.

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U.S. Attorney’s Office to Review City and Suburban Restaurants for Compliance with Americans with Disabilities Act

americans with disabilities act, ada compliance, chicago restaurant ownersThe United States Attorney’s office for the Northern District of Illinois recently announced it is reviewing restaurants in Chicago and the suburbs to ensure the facilities comply with the Americans with Disabilities Act (ADA).  Public accommodations such as restaurants must comply with ADA requirements so that they are handicap accessible.

If you are unsure whether your restaurant is fully compliant with the ADA, now is the time to check.  According to the U.S. Attorney’s office, restaurant owners found non-compliant will have the opportunity to voluntarily upgrade their facilities to meet ADA requirements and, if they do so, they will not be penalized. Owners and operators who are found to engage in a pattern of discrimination or who refuse to voluntarily upgrade may face civil lawsuits and be subject to fines and penalties.

Importantly, several Chicago attorneys are also filing private actions alleging violations of the ADA. We urge you to give this matter your immediate attention – ADA lawsuits are costly to defend or settle.  If you have questions about your restaurant’s ADA compliance, contact us at (312) 216-2720 or info@marcusboxerman.com.

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Review This Before Terminating an Employee

Terminating an employee is never pleasant, especially if you’re worried about a potential lawsuit. Be sure to review this checklist to best avoid unnecessary litigation and to help ensure you are prepared to defend against a claim for unlawful termination or unemployment compensation.

  Review Any Applicable Employment Contracts. Under Illinois law, absent an agreement to the contrary, all employees are “at will,” meaning you are free to terminate an employee for any non-discriminatory reason. The at-will status, however, may be altered by a written or oral agreement. If you have an employment agreement with an employee, make sure your termination does not violate that agreement.

  employee termination, employee misconduct, employment lawReview Your Employee Handbook. Your employee handbook may restrict your
ability to terminate. Many employee handbooks set out an employer’s discipline practices. If your handbook sets forth a progressive disciplinary policy, make sure you’ve followed the policy. Also, check to see whether your handbook provides that certain offenses are not grounds for immediate termination.

  Investigate Charges of Employee Misconduct. Don’t fire an employee before you find out what really happened. Make sure you or your manager perform a reasonable investigation. Obtain signed statements from all witnesses and listen to all sides of the story – including the employee’s – before you make a decision. To ensure fairness, make your decision to terminate calmly, not in the heat of the moment.

  Document the File. Keep careful, detailed records of all employee misconduct, disciplinary actions and performance issues and reviews. Before you terminate, make sure the employee file has enough information to support termination, or make sure you can explain any lack of documentation.

  Determine Whether the Employee Received Sufficient Warning. Before terminating, ask yourself the following questions: Is the employee familiar with company expectations and disciplinary policies? Has the employee received previous warnings based on the same or similar behavior? Should a reasonable employee know that this behavior would result in termination? If you answer “yes” to these questions, your employee should not be surprised about your decision to terminate, and your decision looks objectively reasonable. If you answer “no” to any of these questions, consider suspension instead of termination.

  Get a Release. Gain peace of mind with a severance agreement and general release. A severance agreement provides an employee with a severance package (i.e. additional payment and/or benefits) in exchange for a release of claims, protecting you from a lawsuit. Severance agreements must be entered voluntarily, and the employee should be given a chance to review the agreement with an attorney before signing.

If you’ve got any employment questions, contact us at (312) 216-2720 or info@marcusboxerman.com.

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California Franchise Law Update: The New Franchisee-Friendly Regime

franchise agreement, franchise law, franchise relationshipRecent amendments to the California Franchise Relations Act (CFRA) drastically shift the balance of power between franchisees and franchisors.  The amendments to the CFRA greatly expand franchisee protections in the event of termination, nonrenewal, and transfer.

The amendments take effect January 1, 2016.

Under the amendments, franchisors must satisfy a tougher standard to terminate a franchise agreement. Franchisors are usually required to show “good cause,” which currently requires a showing that a franchisee failed to comply with a material provision of the agreement. Starting in January, franchisors must show a failure to “substantially comply” with the franchise agreement, a more difficult standard to meet. The amended CFRA also enhances the remedy for wrongful termination, requiring franchisors to pay the fair market value of the franchise business plus damages.

The amendments also eliminate franchisors’ ability to contract for strict transfer refusal rights, instead requiring franchisors to accept any candidate for transfer or sale as long as the candidate meets the franchisors’ pre-existing standards for new franchisees.

The most surprising change is the repurchase obligation imposed after lawful terminations. Effective January 1st, if a franchisor retains control of the franchisee’s property after lawful termination, it must pay the former franchisee the original cost less depreciation of all inventory, supplies, equipment, fixtures and furnishings unless the franchisee fails to transfer clear title or the termination was agreed to. This forces franchisors either to pay a high premium for termination or permit a former franchisee to maintain control of the formerly franchised premises, thereby becoming potential competitors.

How franchisors in California will react to these changes and how transactions will absorb the increased costs is yet to be seen. Check back with us in the new year for more details.  If you have immediate concerns, contact our office at (312) 216-2720 or info@marcusboxerman.com to discuss them today.

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Withholding or Reducing Discretionary Bonuses May Lead to Discrimination Claims

In October 2015, the Second Circuit Court of Appeals ruled that an employer’s reduction of an employee’s discretionary bonus constitutes an adverse employment action and may support an employee’s discrimination claim. Davis v. New York City Dep’t of Educ., 2015 U.S. App. LEXIS 18115 (2d Cir. 2015).

employee discrimination, discretionary bonuses, adverse employment actionsIn Davis, a teacher, took an extended leave of absence after injuries suffered in a car accident. As a result of her leave of absence, Davis’ employer reduced her bonus from $3,000 to $1,000. The Second Circuit held that the reduction of Davis’ bonus constituted a materially adverse action even though Davis’ discrimination claim ultimately failed.

The Second Circuit found that the “fact that the employer has discretion whether to grant bonuses or raises does not support the conclusion that an employer may freely allocate them on the basis of racial or religious bias, or disability discrimination.” It noted that most business decisions are discretionary. Employers have discretion in deciding who to hire, fire, and promote, but the fact that those decisions are discretionary does not protect them from discrimination statutes. The Second Circuit sees no reason to analyze bonuses differently.

The Second Circuit’s Davis expressly refused to follow the law of the Seventh Circuit, which treats employers’ decisions about discretionary bonuses as “beyond the reach of discrimination statutes” because bonuses tend to be “sporadic, irregular, unpredictable, and wholly discretionary,” as opposed to raises, which are the normal, expected reward for satisfactory work. Hunt v. City of Markham, 219 F.3d 649 (7th Cir. 2000).

After this ruling, the state of the law governing reductions in discretionary bonuses and raises is unclear. Both the Second Circuit and D.C. Circuit hold that the denial or reduction of a discretionary bonus is materially adverse. On the other hand, the Seventh Circuit treats decisions about bonuses as “wholly discretionary.” To be on the safe side, employers should ensure that they have documented reasons explaining all decisions regarding bonuses to avoid legal problems while the law on this issue continues to develop.

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Negotiating Commercial Leases – Part 4 – Eliminating Financial Obstacles

During the last few weeks, Marcus & Boxerman published a series of blog posts about red flag provisions in commercial leases. This installment explains how to control the state of your finances by eliminating obstacles from your next commercial lease. Check out the information below to find out how to protect your personal assets and prevent roadblocks for future secured financing to avoid problems down the line.

landlord's liens, personal guarantees, commercial leasesPersonal Guaranty. Protect your personal assets by placing a limit on personal guarantees. Personal guarantees are required by most landlords, but the scope of those guarantees is often negotiable. You can reduce your personal exposure by limiting the guarantee to a set number of years or by decreasing the extent of the guarantee by a percentage each year.

Landlord’s Liens. Put your financial interests first. Commercial leases often include a provision granting landlords a first lien in all of the personal property located on the premises. Do not agree to such a provision, because if your landlord has a lien on all of your assets, your bank cannot, thereby causing you trouble if you attempt to finance or refinance a project.

To learn more about limiting your personal obligations and preventing obstructions to future financing, contact us at (312) 216-2720 or info@marcusboxerman.com.

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Negotiating Commercial Leases – Part 3 – Hidden & Unnecessary Costs

Last week, Marcus & Boxerman posted the second installment of a four-part series on clauses to watch out for in commercial leases. This installment discusses making sure you get what you pay for by avoiding hidden and unnecessary costs in your next commercial lease.

Many tenants pay more than they bargained for because of costs associated with poorly measured rental spaces and inappropriate items landlords insert as common area maintenance or administrative costs and fees. Take a close look these clauses in your next lease to ensure that you aren’t losing money over time.


commercial leases, phantom space, commercial real estateSquare Footage.
Only pay for the space you get. Commercial tenants often overpay for their spaces because of the inaccurate measuring of the premises. “Phantom space,” the extra space listed on lease agreements that does not actually exist, costs you extra money in base rent and CAM, and quickly adds up over a 10-year term. Before you sign, ensure you’re getting what you pay for by measuring the space and recalculating the rent.

Common Area Maintenance (CAM). Don’t let your landlord pass the buck to you with inappropriate common area maintenance (CAM) costs. Certain CAM costs make sense for tenants, but your landlord’s capital expenditures and tacked-on administrative fees may cause greater costs than you should bear. Try to get a cap to CAM costs, increases, and reasonable administrative fees that are tied to the services your landlord provides.

Cut unnecessary and hidden costs out of your commercial leases by contacting us at (312) 216-2720 or info@marcusboxerman.com to speak to one of our experienced attorneys today.

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Negotiating Commercial Leases – Part 2 – Exclusivity, Permitted Use & Continuous Operation Requirements

commercial leases, phantom space, commercial real estateEarlier this month, Marcus & Boxerman published the first of a four-part series discussing red flags in commercial leases. This installment discusses the importance of keeping overly restrictive permitted use and continuous operation provisions out of your lease while insisting that an exclusivity clause stays in to stop your landlord from renting to competitors.

Exclusivity & Permitted Use Clauses. Make sure that keeping the competition out doesn’t cost your business in the end, by carefully tailoring exclusivity and permitted use clauses. Exclusivity clauses help your business by preventing your landlord from leasing spaces in the shopping center to competing businesses, but permitted use clauses may keep your business from expanding. When negotiating an exclusivity clause, you should aim for the broadest protection the landlord will allow. Conversely, if your landlord insists on a permitted use clause, make sure it does not cut off a valuable avenue of growth or expansion for your business.

Continuous Operation Requirement. Don’t contractually bind yourself to operate 24/7. A continuous operation provision requires you to continuously operate your business during the days and hours set forth in the lease. If you were not to continuously operate your business during those times, the landlord could terminate the lease. A more even-handed lease should remove any continuous operation requirement or at least provide exceptions to continuous operation, permitting you to close for repair, remodel, refurbishment or in the event of a casualty.

Find out more about which clauses to insist upon, negotiate, or eliminate in your next lease by contacting us at (312) 216-2720 or info@marcusboxerman.com.

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Negotiating Commercial Leases – Part 1 – Preventing Sublease & Assignment Restrictions, Relocation & Demolition

During the month of October, Marcus & Boxerman will publish a four-part series discussing red flag provisions that you should look out for in commercial leases. Part One focuses on clauses that restrict your options or undercut the stability of your business premises. Part Two will highlight clauses that control your use and business operations at the premises. Part Three will discuss ways to stop overpaying and get the most for your money. Part Four will show you how to prevent financial roadblocks by limiting your personal obligations and making sure landlord’s liens don’t interfere with your business.

commercial leases, commercial real estateSigning a commercial lease always involves some degree of predicting the future. You know what’s good for your business now, but you can’t be certain what it will need down the line. So, it is important to keep your options as open as possible without sacrificing stability in the process.  Sublease and assignment, relocation, and demolition clauses determine who controls your location during your lease—you or your landlord.

Check out the terms below to make sure you know who controls whether you stay or go.

Sublease & Assignment Restrictions. As a business owner who might sell your operation in the future, you must have the right to sublease the premises or assign your lease. Overly restrictive sublease and assignment provisions severely restrict your ability to sell your business. A lease must provide that the landlord will not unreasonably withhold, condition or delay consent to a proposed subtenant or assignee. And, a lease must not contain a provision permitting the landlord to terminate the lease, or recapture the premises, rather than consent to a proposed sublease or assignment.

Relocation Provision. Stay put so customers can find you by removing the relocation clause from your lease. A relocation provision permits a landlord to move your business to another location in the same building or shopping center to make room for another tenant. Even if the landlord covers the entire cost of relocation, a relocation will still cost you a great deal in lost business during the move, returning customers unable or unwilling to find your new location and other costs of moving such as website, advertising and other costs associated with a changed address. If a landlord insists on a relocation provision, be sure to carefully delineate which rental spaces are acceptable (for example, make sure you get an endcap), that the landlord will pay for all direct and incidental costs of the move and reserve the right to terminate your lease if the new space is unacceptable.

Demolition Clause. Don’t sink funds into building-out your business just to have it demolished a few years later. Demolition clauses allow a landlord to terminate your lease to redevelop or demolish a property, and are often found in leases for older properties. If a landlord insists on such a provision and you want the location, limit your potential losses by insisting that the demolition right remains inactive for a certain period of time to ensure that demolition does not occur near the beginning of your lease term and make sure the landlord pays you for your business upon termination.

Check back soon to see Part Two of our series and learn how to keep the use and operation of your rental property under your control. In the meantime, contact us at (312) 216-2720 or info@marcusboxerman.com for any questions about the provisions discussed above.

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NLRB’s Controversial Decision Will Impact Classic Franchise Relationship

In a recent ruling, the National Labor Relations Board (the “Board”) replaced a decades-old standard for determining whether a joint employer relationship exists between two or more employers that retain some degree of control over the same set of employees. This change will likely significantly alter the traditional franchisor-franchisee business relationship.

joint employer, employment law, franchise relationshipThe decision in Browning-Ferris Industries (“BFI”) dealt with the relationship between a waste management company, BFI, and a staffing company, Leadpoint Business Services, which supplied workers to BFI. BFI retained the power to set the operating hours of the facility and to tell Leadpoint to fire a worker when necessary, even though Leadpoint was the employer who actually set the schedules and did the firing. According to the Board, these and other factors gave BFI power to “indirectly control” the workers and made BFI a joint employer.

Under the new, relaxed standard the “totality of the circumstances” and one’s “right to control” employees will be used to determine joint employer status. In other words, even where one does not directly exercise control over employees, one may be found to be a joint employer. The Board looks to whether an entity has the right to “share or codetermine those matters governing the essential terms and conditions of employment,” including activities such as hiring, firing, discipline, supervision, and direction.

The Board’s decision creates much uncertainty for the future of the franchise industry in particular. For example, franchisors typically retain certain rights that, if exercised, could affect the wages and working conditions of franchisees’ employees. Simply retaining such rights, even if unexercised, could require franchisors to be a necessary party to unionization and collective bargaining requirements under the National Labor Relations Act.

With this in mind, and in the wake of another recent decision by the Board to hold McDonald’s as a joint employer with its franchisees, it is important for franchisors and franchisees alike to keep in mind that current agreements, policies and practices may create a joint employer relationship where, until recently, one did not exist.

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