Illinois Employers Will Be Required to Report on Their Equal Pay Practices to Obtain Mandated Certification; Significant Penalties for Failure to Comply

Act Now Advisory

On March 23, 2021, Illinois enacted SB 1480 (or “Law”), which, among other measures, amends the Illinois Equal Pay Act (“IEPA”) to require covered Illinois employers to file a detailed application concerning their equal pay practices with the Illinois Department of Labor (“IDOL” or “Department”) for an Equal Pay Registration Certificate (“Certificate”).[1] Unless an employer is exempt from the Law, failure to file for or obtain the Certificate could be costly.[2]

The Employer’s Compliance Requirements Under the Amended IEPA

By March 23, 2024, every private business that employs more than 100 workers in Illinois must, unless exempt, file an application with the IDOL for the Certificate, signed by a corporate officer, legal counsel, or an authorized agent of the business, and accompanied by a $150 filing fee. The business must then recertify every two years thereafter. The application must attest to the following:

  • the employer is in compliance with Title VII of the Civil Rights Act of 1964 and the federal Equal Pay Act, as well as the IEPA, the Illinois Human Rights Act, and the Illinois Equal Wage Act; 
  • the average compensation of the employer’s minority and female employees is “not consistently below” the average compensation of its non-minority and male employees, allowing for factors such as length of service, experience, skill set, responsibilities, etc.;
  • the employer does not make employment decisions on the basis of sex and does not restrict employees of one sex to certain positions;
  • the employer corrects wage and benefit disparities when identified to comply with applicable laws; and
  • how often the employer reviews the wages and benefits of its employees.

In addition, the employer must describe how it sets wages and benefits, e.g., a market-based system, a union contract basis, a performance pay approach, or an alternative method. The employer must also submit a copy of its most recent EEO-1 report(s) for each county in Illinois where the business has a facility or employees, compile a list of all employees during the past calendar year (separated by gender and race and ethnicity categories as reported in the business’s EEO-1 report), and disclose the total wages paid to each employee in the past calendar year.

A business that has employees in multiple locations or facilities in Illinois need only submit one application to the IDOL regarding all of its operations in Illinois.

IDOL Administrative Proceedings and Penalties    

If the IDOL determines that the employer is in compliance with the IEPA, the Department will issue the Certificate. In contrast, if the Department initially finds otherwise, it may conduct an investigation and audit, conduct interviews and depositions, issue subpoenas to witnesses and for the production of documents, and withhold, suspend, or revoke a Certificate.

If an audit is conducted, the employer, upon request, must provide the IDOL with the following information with respect to employees expected to perform work “in each of the major job categories in the Employer Information Report EEO-1”:

  • the number of male employees;
  • the number of female employees;
  • the “average annualized salaries paid to male employees and to female employees, in the manner most consistent with the employer's compensation system, within each major job category”;
  • information on performance payments, benefits, or other kinds of compensation, “in the manner most consistent with the employer's compensation system”;
  • the average length of service for male and female employees in each major job category; and
  • other information identified by the business or the IDOL, “as needed, to determine compliance with” the prohibition on restricting employees of one sex to certain types of jobs and the mandate that decisions about retention and promotions be made without regard to the employee’s sex.

Information provided to the IDOL in connection with an application for a Certificate or an audit is to be kept confidential by the Department. However, the IDOL’s “decision to issue, not issue, revoke, or suspend” a Certificate “is public data.”

If the Certificate is withheld, suspended, or revoked, the employer may file a written request for an administrative hearing within 20 days after notice of noncompliance is served. Significantly, if the Department decides not to issue a Certificate, the employer can be fined in an amount equal to 1 percent of its gross profits. Additionally, an employer that falsifies or misrepresents information on an application for a Certificate commits a violation of the Law.

Retaliation Against a “Whistleblower” Is Forbidden        

The Law also prohibits an employer from taking any adverse action against an employee for reasonably complaining or threatening to complain about an IEPA violation, filing a complaint with the IDOL, cooperating with the Department, testifying at a Department administrative hearing, or otherwise participating in a proceeding to enforce the IEPA. An employee who has been retaliated against may be awarded reinstatement, double back pay and benefits, interest, and reasonable attorneys’ fees and costs.    

What Illinois Employers Should Do Now      

  • Although an employer’s application for the Certificate is not due for three years, i.e., on March 23, 2024, promptly start to review compensation practices with an eye on the IEPA requirements. Beginning an analysis now will permit ample time to correct any problems before the application for the Certificate must be filed.
  • Discuss with counsel whether conducting a formal EEO audit and a pay equity analysis is warranted and the potential legal risks involved in such an endeavor.
  • Prior to embarking on any audit, make sure the company is prepared to rectify any problems uncovered by the review that could lead to the denial of a Certificate or other legal consequences.

****

For more information about this Advisory, please contact:

Robert J. O’Hara
New York
212-351-3708
[email protected]

Kellie Y. Chen
Chicago
312-499-1444
[email protected]

ENDNOTES

[1] SB 1480 also substantially restricts an employer’s ability to use an applicant’s or current employee’s conviction record as the basis to refuse to hire or promote, or take other adverse action against, the individual. Additionally, the Law imposes an EEO reporting requirement on certain employers. These provisions of SB 1480 are addressed in a separate Act Now Advisory, available here.

[2] The Law does not specify the circumstances under which a company may be exempt from its mandates. Hopefully, the State will provide guidance on this matter.