Disagreeing with recent rulings from at least two federal district courts, the Illinois Court of Appeals recently ruled that Illinois' Whistleblower Act did not repeal by implication the state's long-recognized common law retaliatory discharge tort action for whistleblowing activities — at least in situations where employees allege that they were discharged in retaliation for reporting illegal activities to their supervisors, as opposed to outside law enforcement or government agencies.

In Callahan v. Edgewater Care & Rehabilitation Center, Inc., an admissions clerk at a nursing home alleged that she was terminated from her position for reporting to her superior and the home's administrator that a resident of the home was being kept in the facility against her will — a situation that the clerk believed constituted a violation of the state's Nursing Home Act. She brought an action against her former employer claiming a common-law "retaliatory discharge" in violation of public policy, alleging she was discharged for engaging in "whistleblowing" activities. The nursing home sought to dismiss the action on the grounds that the retaliatory discharge claim for "whistleblowers" was preempted by the state's Whistleblower Act, which became effective January 1, 2004, and thus the complaint failed to state a cause of action. The circuit court agreed and dismissed the action.

The Court of Appeals disagreed, focusing on the language and intent of the Whistleblower Act. The Act, effective January 1, 2004, provides a statutory remedy for employees who suffer retaliation by their employers for "whistleblowing activities" — i.e., disclosing illegal activity to law enforcement agencies or government agencies, or refusing to participate in illegal activities. Remedies under the Act include traditional tort damages as well as attorneys' fees and reinstatement to the employee's former position with full seniority. The common law retaliatory discharge tort claim, since first being recognized by the Illinois Supreme Court in 1978, has evolved to afford damages to employees discharged for disclosing illegal activity to law enforcement agencies or government agencies or to their supervisors, for refusing to work under illegal or hazardous conditions, or for their activities where the discharge constitutes a violation of a clear public policy, such as in retaliation for filing a workers' compensation claim.

The Court noted that since the Whistleblower Act's passage, at least two federal district courts have ruled that the Whistleblower Act repealed by implication the retaliatory discharge action where an employee alleges discharge in retaliation for "whistleblowing" activities, even though the Act only provides relief to employees who report illegal activities to enforcement agencies, and not to those reporting such information to their supervisor or superiors. Noting this distinction, and noting that nothing in the statute suggested that the legislature intended to repeal or preempt the common law rights of individuals who choose to report internally instead of to outside agencies, the Court held that the Whistleblower Act did not repeal the common law cause of action in that situation, and reversed and remanded the case back to the circuit court for further proceedings.

This case serves as an important reminder that employers should take caution against employment actions that, however legal in intent, could be construed as retaliatory against employees who engage in whistleblowing-type activities, whether internally or externally. Because there is a split between at least some of the federal district courts and the state appellate court regarding employees who choose to complain of unlawful activity internally, this decision could impact plaintiff-employees' choice of forum in actions against former employers. We will be monitoring the application of this decision and will keep you apprised of future developments on this topic.