New Illinois Law Sets Default Deadlines For Defendants To Tender Settlement Agreements And Make Settlement Payments

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Effective January 1, 2014, a new Illinois law amending the Illinois Code of Civil Procedure will, unless otherwise agreed by the parties, require defendants settling certain claims to provide plaintiffs with a draft settlement agreement within 14 days of written confirmation of the settlement and make the settlement payment within 30 days of receiving a signed settlement agreement from the plaintiff.  The types of employment law claims that may be covered by this new law include common law retaliatory discharge, defamation, negligent hiring and retention, assault and battery, interference with contractual or prospective business relationships and other torts where money damages are sought. Although the statute requires "the settlement payment" to be made within 30 days of receipt of a signed settlement agreement, a more reasonable interpretation of this provision is that the initial payment required under the settlement agreement would be due to the extent the settlement agreement requires payment over a longer period of time as opposed to a lump sum payment. If the settlement payment is not made within 30 days of receiving a signed settlement agreement, a court may enter a judgment against a defendant in the amount of the settlement plus costs and interest, which would have the effect of making the settlement amount a matter of public record. The new law, however, allows the parties to effectively opt out of its requirements.  Therefore, employers should consider including language opting out of this law's default requirements into their settlement communications and the final settlement agreement. The new law does not apply to class action lawsuits, the State of Illinois, state agencies or officers, entities represented by the Attorney General, municipalities and other units of local government.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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