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11/23/94 LINDA ZIMMERMAN v. BUCHHEIT SPARTA

November 23, 1994

LINDA ZIMMERMAN, APPELLEE,
v.
BUCHHEIT OF SPARTA, INC., APPELLANT.



McMORROW, Bilandic, Heiple, Harrison, Nickels

The opinion of the court was delivered by: Mcmorrow

JUSTICE McMORROW delivered the judgment of the court:

In this appeal we are called upon to determine whether a cause of action should be recognized which is predicated on an employer's alleged retaliation against an employee who is not discharged from employment but rather is allegedly demoted or discriminated against for asserting employee rights under the Workers' Compensation Act.

Plaintiff, Linda Zimmerman, an at-will employee, filed a two-count complaint against defendant, Buchheit of Sparta, Inc., plaintiff's employer, claiming that defendant "demoted and discriminated against" her "by reason of her assertion of her rights under the Illinois Worker's Compensation Act." The circuit court granted defendant's motion to dismiss for failure to state a cause of action; the appellate court reversed and remanded the cause for further proceedings. (245 Ill. App. 3d 679.) On appeal to this court, defendant contends that Illinois law does not recognize a cause of action based on retaliatory discrimination or demotion and that plaintiff's complaint was both legally and factually insufficient.

The operative portions of plaintiff's first amended complaint state as follows:

"2. That on or about December 30, 1990, [plaintiff] was an employee of [defendant] and then and there sustained injuries arising out of and in the course of her employment with [defendant].

3. That thereafter, [plaintiff] * * * notified [defendant] of her intention to assert her rights pursuant to the Illinois Worker's Compensation Act.

4. That [defendant], on or about April 19, 1991, demoted and discriminated against [plaintiff], by reason of her assertion of her rights under the Illinois Worker's Compensation Act.

5. That as a direct and proximate result of the wrongful acts of [defendant], [plaintiff] has sustained injuries by her loss of income and benefits, she has sustained injuries to her reputation, and has sustained mental anguish, all to her damage in a substantial amount."

The other count of plaintiff's complaint is virtually identical to the first, except for the addition of the following paragraph:

"That the demotion and discrimination by [defendant] was wrongful and oppressive, and wilful and wanton, and in retaliation for the exercise by [plaintiff] of her legal rights pursuant to the Illinois Worker's Compensation Act, and was in violation of Section 4(h)."

Defendant argues primarily that the appellate court erred in expanding the tort of retaliatory discharge beyond its clear boundaries. Plaintiff, although conceding she does not state a cause of action for retaliatory discharge, nonetheless argues that "if the essential doctrine of Kelsay v. Motorola [(1978), 74 Ill. 2d 172, 23 Ill. Dec. 559, 384 N.E.2d 353] is to be implemented, there must be some comparable doctrine, to protect employees from other distinct measures of retaliation, short of an actual discharge." According to plaintiff such a comparable doctrine in the instant case would preclude an employer's "retaliatory demotion" or "retaliatory discrimination" against an employee for asserting rights under the Workers' Compensation Act (the Act) (Ill. Rev. Stat. 1991, ch. 48, par. 138.1 et seq.).

At common law and in Illinois today, a noncontracted employee is one who serves at the employer's will, and the employer may discharge such an employee for any reason or no reason. (E.g., Hartlein v. Illinois Power Co. (1992), 151 Ill. 2d 142, 176 Ill. Dec. 22, 601 N.E.2d 720.) In Kelsay v. Motorola, Inc. (1978), 74 Ill. 2d 172, 23 Ill. Dec. 559, 384 N.E.2d 353, for reasons of public policy, a limitation on the employer's ability to freely discharge an at-will employee was created. In Kelsay, 74 Ill. 2d at 180, this court considered the "new system of rights, remedies, and procedure" created by the Workers' Compensation Act, and observed that in exchange for the rights and benefits conferred on employees in the Act's statutory scheme of no-fault liability, employees gave up their common law rights to sue their employer in tort for their work-related injuries and employers gave up common law defenses. The court found that "this tradeoff between employer and employee promoted the fundamental purpose of the Act, which was to afford protection to employees by providing them with prompt and equitable compensation for their injuries." Kelsay, 74 Ill. 2d at 180-81.

The plaintiff in Kelsay filed suit upon being discharged for pursuing her claim for workers' compensation, after being warned that it was corporate policy to discharge employees who brought such claims against the company. The employer argued that plaintiff's action for retaliatory discharge was barred by the exclusivity provision of the Act, section 11, which provides that the compensation and other provisions of the Act "'shall be the measure of the responsibility'" of the employer. ( Kelsay, 74 Ill. 2d at 184, quoting Ill. Rev. Stat. 1973, ch. 48, par. 138.11.) The court held that section 11 did not preclude the plaintiff from maintaining an independent tort action for retaliatory discharge because the exclusivity provision was designed to "limit recovery by employees to the extent provided by the Act in regard to work-related injuries." ( Kelsay, 74 Ill. 2d at 184.) Without a remedy for retaliatory discharge, employees would be placed in the position of "choosing between their jobs and seeking their remedies under the Act." ( Kelsay, 74 Ill. 2d at 184.) Therefore, to uphold and implement the fundamental purpose and public policy behind the Act, the Kelsay court determined it was necessary to recognize a cause of action for retaliatory discharge. Kelsay, 74 Ill. 2d at 181.

The Kelsay court rejected the employer's argument that the legislature did not intend for a civil remedy for retaliatory discharge to be available because the Act did not provide for such remedy. The court cited to section 4(h) of the Act and stated that "where a statute is enacted for the benefit of a particular class of individuals a violation of its terms may result in civil as well as criminal liability, even though the former remedy is not specifically mentioned." Kelsay, 74 Ill. 2d at 185.

Section 4(h) of the Act, in its entirety, states as follows:

"It shall be unlawful for any employer, insurance company or service or adjustment company to interfere with, restrain or coerce an employee in any manner whatsoever in the exercise of the rights or remedies granted to him or her by this Act or to discriminate, attempt to discriminate, or threaten to discriminate against an employee in any way because of his or her exercise of the rights or remedies granted to him or her by this Act.

It shall be unlawful for any employer, individually or through any insurance company or service or adjustment company, to discharge or to threaten to discharge, or to refuse to rehire or recall to active service in a suitable capacity an employee because of the exercise of his or her rights or remedies granted to him or her by this Act." Ill. Rev. Stat. 1991, ch. 48, par. 138.4(h).

In recognizing an independent tort action for retaliatory discharge, the court in Kelsay relied in part on the second paragraph of section 4(h), which makes unlawful an employer's discharge of an employee for asserting his or her rights under the Act. In contrast, the appellate court in the case at bar relied on language contained in the first paragraph of section 4(h), which prohibits an employer from discriminating against an employee who exercises his or her rights under the Act. It should be noted that nothing in section 4(h) expressly provides a remedy for an employee or imposes a sanctionupon an employer in the event that the terms of section 4(h) are violated. *fn1

Both parties to this appeal focus on the principles underlying the well-developed theory of retaliatory discharge. Accordingly, we first examine the doctrine of retaliatory discharge, and we then consider whether section 4(h) supports the implication of a cause of action for employees who allege that they have been demoted in retaliation for asserting their rights under the Act.

Following recognition of the tort of retaliatory discharge in Kelsay, this court has held that "[a] plaintiff states a valid claim for retaliatory discharge only if she alleges that she was (1) discharged; (2) in retaliation for her activities; and (3) that the discharge violates a clear mandate of public policy." ( Hinthorn v. Roland's of Bloomington, Inc. (1988), 119 Ill. 2d 526, 529, 116 Ill. Dec. 694, 519 N.E.2d 909, citing Barr v. Kelso-Burnett Co. (1985), 106 Ill. 2d 520, 88 Ill. Dec. 628, 478 N.E.2d 1354.) In the instant case, plaintiff fails to satisfy the first element and she concedes in her brief that "obviously plaintiff does not have a claim of retaliatory discharge." Plaintiff asserts, nonetheless, that this court should implement a "comparable doctrine" of retaliatory discrimination or demotion, to protect employees from employer retaliation that falls short of actual discharge. Plaintiff admits that the case law has not extended the existing doctrineto include actions based on an employer's constructive discharge of an employee.

In Hinthorn, the injured plaintiff was forced to sign a "voluntary resignation" form after she sought medical attention for a back injury she received on the job, the third injury she had sustained at work. Plaintiff had filed workers' compensation claims for the other two injuries. The defendant's vice-president met with plaintiff the day she sought medical attention for her back injury and told her she was costing the company too much money. She was told to sign the resignation form, which would let her leave "under her own free will." She understood she would lose her job if she did not sign. In holding that plaintiff stated a cause of action for retaliatory discharge, this court stated:

"We agree that plaintiff has sufficiently alleged that she was discharged, but wish to make abundantly clear that we are not now endorsing the constructive discharge concept rejected by the appellate court in Scheller [v. Health Care Service Corp. (1985), 138 Ill. App. 3d 219, ...


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