Employment Contract and Termination for Cause

A properly drafted offer of employment or employment contract can make all the difference if the employment relationship does not work out as planned.  It was clearly illustrated in a recent appellate case, David Eakins v Hanna Cylinders LLC, 2015 IL. App. (2d) 140944. In this case, a former Hanna Cylinders’ employee and plant manager, David Eakins, sued his former employer for breach of employment contract and failure to pay wages.

Facts of the Case – Contracted Employee or At-will

In Eakins’ case, plaintiff was hired by Hanna Cylinders on February 15, 2010, as an “at-will employee.”  After being offered a position with another company, Eakins decided to quit and gave his resignation to Hanna Cylinders in July 2010.   To entice Eakins to stay, Hanna gave Eakins a revised “offer letter,” stating the following terms:

1. Base salary of $130,000
2. Automatic bonuses:

2010 – $10,000

2011 – $20,000

3. Minimum employment term of 24-months from July 15, 2010.

Eakins accepted the revised offer of employment, thereby creating an employment contract.  In September of 2011, however, prior to the expiration of the 24-month period, the Hanna Cylinders terminated Eakins’ employment for poor performance.

Eakins filed a two-part complaint against his former employee on August 22, 2012.  In count I, Eakins alleged a violation of the Illinois Wage Payment and Collection Act, 820 ILCS 115 et al. (the “Wage Collection Act”) for failure to pay pages, seeking statutory damages, costs, and interest.  In Count II, Eakins alleged a breach of contract and sought unpaid wages, prejudgment interest, and attorney fees.

The trial court’s analyses centered on whether Eakins was an at-will employee or whether his employment contract changed that presumption.  Eakins argued that his employment contract provided for a minimum employment term of 24 months, and, therefore, he could not be terminated prior to the end of the specified period without compensation.

Hanna Cylinders asserted that Eakins was an at-will employee and was terminated for ’just cause,’ citing Eakins’ poor work performance as the reason justifying the termination of his employment. The defendant went on to claim that Eakins admitted his poor performance, thereby providing the ‘just cause’ for termination.

On a motion for summary judgment, the trial court found against Eakins for his claim of breach of contract, stating that his admission of poor job performance provided just cause for the defendant to fire him.  Furthermore, the trial court rejected Eakins’ claim for unpaid wages under the Wage Collection Act , determining that the act did not apply to employees when it was in question if they were fired for just cause.  Eakins appealed this ruling.

On, June 2, 2015, the appellate court ruled on this case and found the following:

1. Reversed the breach of contract claim denial by the trial court.
2. Upheld the dismissal of the violation of the Wage Collection Act count.

The appellate court reversed the breach of contract claim, finding against the employer’s argument that it could fire an employee at any time for “just cause,” regardless of the specific duration of employment described in the employment contract. The appellate court agreed with Eakins’s argument that since there was no performance criteria in the employment contract, he could not be fired for “cause” based on such criteria.  In other words, based upon the plain language of the contract, Eakins couldn’t be fired for failure to meet performance criteria which did not exist in the employment contract.

The court made an important note – if the plaintiff’s poor work performance had been preceded by a failure to perform work duties such as sitting at his desk all day or not showing up for work, then the length of the employment contract would be negated.