Good article covering a whole lot of territory. Yes, the firing was justified and righteous, IMHO, because she was adamant in her admitted refusal to abide by the company rules. Those authorized worktime rules were both legally required and designed to assure total compliance with both FLSA and IL labor law. The firm would have been threatened with great hazards if others had imitated her behaviors. If every clerk decided to work extra time at their own option and even in opposition to management prohibitions, the company would still face back pay charges, overtime violation fines and other penalties. The consequences would have been especially bad if the offenders kept their "off the clock" work hours secret from management but still submitted them to DOL WHD per the new app, thus "proving" they were denied righteously earned overtime.
Although the discharge was termed "for cause" by the company, the IL admistrative law judges and other courts have the authority to accept or reject that claim. No one (not even the victim) denied the company's right to fire her for her intransigence. The single issue was the UC aspect. The only effect from that dispute should have been the timing of the initial start of the claimant's Unemployment Compensation benefits and whether that employer's UC account should be charged for the claim, if I remember IL UC law right. It appears that the IL UC Division completely rejected her claim for UC benefits, at every level, due to her admitted "misconduct" (I guess IL DES got tighter and nastier as their UC funds have been drained like others). The IL circuit courts, not typically involved in labor or employment matters and with no budgetary issues involved, decided otherwise. Perhaps the courts felt that the misconduct was well-intended and the employee should have the personal legal right to do whatever she wanted with her lunch time.
I personally agree with that latter sentiment as logical, you know, but neither Federal nor State labor law permit it: on the contrary, the governing laws hold the employer accountable for the time they permit their employee to work. Yes, it is antiquated, obsolete thinking completely destructive of the ROWE philosophy, but it does remain the law of the land. If you don't expel your hourly workers from your premises at quitting time and keep such records, you are exposed to risk. Ask any labor attorney.
From the FLSA standpoint, my guess is that the company would have been obliged to pay her for unused lunch time spent on actual work; and IL overtime laws tend to be even more generous, as I recall. Smartest way out would have been to send her home a half-hour early, so as to avoid the entire confrontation.