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Monday, April 21, 2014

Bill Would Ban Confidentiality Provisions in Severance Agreements

The Illinois House recently passed HB 3664 that would amend the Freedom of Information Act to prohibit public bodies from including confidentiality provisions in severance agreements with public employees.  The bill is, in part, a response to the recent controversy surrounding the more than $700,000 severance package provided to outgoing Metra CEO.  The bill passed the House by a vote of 106-0 and is now awaiting a vote in the Senate.

The bill would amend Section 2.20 of FOIA, the settlement agreement provision, as follows (text that is underlined is proposed new language):
Sec. 2.20. Settlement and severance agreements 
(a) All settlement agreements entered into by or on behalf of a public body are public records subject to inspection and copying by the public, provided that information exempt from disclosure under Section 7 of this Act may be redacted. 
(b) A severance agreement that is funded in whole or part by public moneys or that releases a claim against a public body shall not require or impose any condition on any party to keep allegations, evidence, settlement amounts, or any other information confidential, except that which is necessary to protect a trade secret, proprietary information, or information otherwise exempt from disclosure under Section 7 of this Act. 
(c) The changes made by this amendatory Act of the 98th General Assembly do not apply to severance agreements signed before the effective date of this amendatory Act of the 98th General Assembly.
The bill would also amend FOIA to add a definition of "severance agreement, as follows:

(h) "Severance agreement" means a mutual agreement between any public body and its employee for the employee's resignation in exchange for payment by the public body.
The bill raises a few questions in my mind.

First, it is not entirely clear why the legislature included this language in the FOIA statute, since it really has nothing to do with the release of public records upon request and instead is a limit on a public body's power to contract with its employees.  

Second, although the new contractual limitation applies only to contracts entered into after the law becomes effective, there is still an open question as to the ability to enforce existing confidentiality provisions in severance and settlement agreements since the current language of section 2.20 makes these agreements public records subject to release. This issue comes up frequently when a FOIA request is submitted for an employment agreement that has confidentiality provision.  Many public bodies are left to wonder whether they should risk a FOIA lawsuit or a breach of contract lawsuit in deciding how to respond to one of these FOIA requests.  This bill doesn't answer that question, since it applies only to prospective agreements.   

Third, the bill seems to leave open the ability to still redact information in a severance agreement that would be exempt under Section 7 of FOIA. That would still leave public bodies with the ability to redact information that might fall under the "privacy" or other exemption listed in Section 7, but not those exemptions listed under Section 7.5 (including information protected by the Personnel Records Review Act, HIPAA and other statutory exemptions).  That is probably an oversight by the drafter of the bill , but could prove problematic in administering this law if it passes.

Post Authored by Julie Tappendorf, Ancel Glink


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