Illinois recently enacted SB 1480 (or “Law”) which, among other measures, effective immediately, places significant restrictions on the ability of Illinois employers to refuse to hire a job applicant or take adverse action against a current employee based on the individual’s criminal conviction record. As of January 1, 2023, the Law also will obligate certain Illinois employers to file substantial information regarding the racial, ethnic, and gender composition of their workforce with the Illinois Secretary of State. 
Expansion of the “Ban the Box” Law
SB 1480 (officially titled “The Employee Background Fairness Act”) imposes the most significant restrictions on an Illinois employer’s reliance on criminal background checks since 2015, when the state amended the Illinois Human Rights Act (“IHRA”) by enacting a “ban the box” law. That statute, with limited exceptions, prohibits employers from inquiring about or considering a job applicant’s criminal background until after the applicant is notified that he or she will be interviewed or, if there is no interview, after the applicant receives a conditional offer of employment.  Whereas the ban-the-box law limits when an employer can conduct a criminal background check, SB 1480 (which further amends the IHRA) restricts how an employer may rely on criminal history when deciding whether to hire an applicant, deny a promotion, or take other adverse action against a current employee.
SB 1480’s Restrictions on Use of Criminal Records
Specifically, SB 1480 makes it a civil rights violation for any private employer to use a job applicant or current employee’s conviction record  as a basis to refuse to hire the applicant, deny a promotion to the current employee, or take any other adverse employment action against the individual, unless the employer is expressly authorized by law to do so (e.g., some laws prohibit employers from hiring individuals with specific conviction records, such as registered representatives and associated persons for certain financial services employers governed by the Financial Industry Regulatory Authority or the Securities and Exchange Commission) or it fully complies with the multi-step process set forth in the Law. This process includes the following steps:
Step #1: Establish a nexus between the conviction and the job or demonstrate risk
As a preliminary step, unless legally authorized to take into account an individual’s criminal history, an employer may only consider an applicant or employee’s criminal convictions record if either of the following conditions are met:
- a “substantial relationship” exists between one or more of the applicant or employee’s “previous criminal offenses and the employment sought or held,” or
- hiring the applicant or continuing the current employee’s employment “would involve an unreasonable risk to property or to the safety or welfare of specific individuals or the general public.”
Under SB 1480, a “substantial relationship” means “a consideration of whether the employment position offers the opportunity for the same or a similar offense to occur and whether the circumstances leading to the conduct for which the person was convicted will recur in the employment position.” In determining whether such a “substantial relationship” does in fact exist, SB 1480 directs employers to consider the following factors:
- how long ago the conviction(s) occurred;
- how many times the individual has been convicted of a crime;
- “the nature and severity” of the conviction(s) and their “relationship to the safety and security of others”;
- the “facts or circumstances” surrounding the conviction, including the individual’s age at the time of the conviction; and
- rehabilitation efforts undertaken by the applicant or employee.
If, after conducting this analysis, the employer makes a “preliminary decision” that the individual’s conviction record disqualifies the job candidate or employee, the employer then moves on to the second step in the process.
Step #2: Send notification of an adverse preliminary decision
This step requires the employer to notify the applicant or employee of its “preliminary decision” in writing.  The notification must contain all of the following information:
- identification of the disqualifying conviction(s) relied on by the employer in reaching its preliminary decision and “the employer’s reasoning for the disqualification”;
- a copy of any conviction history report (if any); and
- notice of the applicant or employee’s right to respond to the employer’s preliminary decision before it becomes final, and of the individual’s right to include in their response “evidence challenging the accuracy of the conviction record that is the basis for the disqualification, or evidence in mitigation, such as rehabilitation.”
Step #3: Provide an opportunity for the applicant/employee to respond
The employer must allow the individual a minimum of five business days to respond to the notification of its preliminary decision before it may make a final decision.
Step #4: Make the final decision
The employer must consider any information the applicant or employee submits in response to the preliminary decision notification before reaching a final decision. If, after such consideration, the employer makes a final decision “to disqualify or take an adverse action solely or in part because of the [applicant or] employee’s conviction record,” the employer must then move on to the next step.
Step #5: Provide notification of a final adverse decision
The employer must provide written notification to the applicant or employee of the following:
- the specific disqualifying conviction(s) informing the employer’s final decision and “the employer’s reasoning for the disqualification,”
- any existing company procedures that would allow the applicant or employee “to challenge the decision or request reconsideration,” and
- the individual’s right to file a charge with the Illinois Department of Human Rights.
What Is SB 1480’s Broader Significance?
Notably, New York City also recently enacted a similar, though even more stringent, measure limiting employer reliance on criminal history in making employment decisions, suggesting that such expansion of ban-the-box laws may be part of a larger trend. SB 1480 also is similar to “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions under Title VII of the Civil Rights Act,” guidance from the U.S. Equal Employment Opportunity Commission (“EEOC”) that the U.S. Court of Appeals for the Fifth Circuit ruled in 2019 the EEOC lacked authority to promulgate or enforce, but which may garner renewed attention under the Biden administration.
Reporting of Workforce Composition Under the Business Corporation Act
Another provision of SB 1480 amends the Illinois Business Corporation Act (“IBCA”) to impose a reporting requirement on certain employers. Starting on January 1, 2023, an Illinois corporation, which files a yearly report with the Illinois Secretary of State in accordance with the IBCA and an annual EEO-1 report with the EEOC, pursuant to Title VII of the Civil Rights Act, must file an additional annual report with the Illinois Secretary of State.
The newly required report must include a detailed statistical breakdown of the corporation’s employees who work in Illinois by race, ethnicity, and gender, as well as any other information that is reported in Section D of the EEO-1 report. Though the report will be substantially similar to Section D of the EEOC’s EEO-1 report, there is one big exception—it will be made public.  Within 90 days after receipt of the report, the Illinois Secretary of State will post the demographic snapshot of the employer’s workforce on its website.
The IBCA tasks the Secretary of State with providing employers a sample report form, so employers should expect to see an updated report form in the near future.
What Illinois Employers Should Do Now
- Promptly review and consider whether and what revisions to current criminal background check policies may be needed to ensure compliance with SB 1480, as the Law is now in effect.
- Ensure that recruiters and other staff involved in the hiring process, as well as human resources personnel who handle promotions, lateral transfers, and the like, are trained on SB 1480 and any revised company policies adopted pursuant to the new Law.
- For employers that use third parties to conduct background checks pursuant to the federal Fair Credit Reporting Act (“FCRA”), be aware that SB 1480’s notification requirements and other mandates ostensibly are in addition to those contained in the FCRA.
- With respect to the new reporting requirement amending the IBCA, covered employers should discuss with counsel the benefits and risks of conducting an EEO audit, bearing in mind that the newly required Illinois report will be made public.
For more information about this Advisory, please contact:
 Another provision of SB 1480, which amends the State’s Equal Pay Act to require certain employers to report on their pay practices, is discussed in a separate Act Now Advisory, available here.
 The IHRA also bars an employer from taking an adverse employment action against an applicant or employee based solely on the fact that the individual has been arrested for a crime.
 A “conviction record” is defined as “information indicating that a person has been convicted of a felony, misdemeanor or other criminal offense, placed on probation, fined, imprisoned, or paroled pursuant to any law enforcement or military authority.”
 This notice requirement is in addition to the requirements for employers under the federal Fair Credit Reporting Act relating to notices of adverse action.
 Private employers with 100 or more employees (or with 50 or more employees and a government contract or subcontract equal to or exceeding $50,000) must file an EEO-1 report annually, which provides, among other information, a demographic analysis of the employer’s workforce by race and gender. That report is kept confidential by the EEOC.