United States: Illinois Employers May Be Subject To New Equal Pay Act Reporting And Certification Obligations

A strong push continues for states to adopt stricter pay equity laws and enforce efforts to combat pay inequities for certain protected classes, including women and individuals of color. Many states, including Illinois, have prioritized pay equity by passing laws designed to reduce wage gaps.

The Illinois Equal Pay Act ("IEPA") was amended in 2021 to require certain private businesses to obtain an Illinois Equal Pay Registration Certificate, and recertify every two years thereafter. Covered businesses are those that have 100 or more employees in Illinois and are required to file an EEO-1 Report with the Equal Employment Opportunity Commission. Importantly, the Illinois Department of Labor ("IDOL") has instructed that employees working remotely in states outside of Illinois, but who report directly to an employer's facility in Illinois, should be counted in calculating whether an employer meets the 100 or more employee threshold that would render it a covered business.

IDOL sets first application deadlines

On January 24, 2022, IDOL announced it would communicate directly with covered businesses when it is time for them to apply for the certificate. According to IDOL, each covered business will receive no less than 120 days' advance notice of their deadline. The first group of Illinois covered businesses was notified that their deadline to apply is May 25, 2022. The second group was subsequently notified that their deadline is June 22, 2022. Because IDOL is randomly selecting covered businesses to which it sends notices, some may not receive their notice of their assigned registration date until late 2023 to meet the final deadline of March 23, 2024.

Any employer that is a covered business should, if it hasn't already, register with IDOL by providing the contact information of key personnel members to ensure that future communications and notices will be received. IDOL is requesting the names and email addresses of three key business personnel from every covered business. Importantly, IDOL's failure to assign a registration date does not exempt a covered business from compliance.

If a business does not currently employ 100 or more employees in Illinois (which includes out-of-state remote workers who directly report to an Illinois facility), registration with IDOL is not required. However, any business that subsequently employs 100 or more employees in Illinois is required to submit to IDOL the requested contact information by January 1 of the following year. It will then be assigned a deadline to apply for the certificate. If an employer receives a notice from IDOL to recertify for its certificate, and at that time the employer has fewer than 100 employees in Illinois, the employer must certify in writing to IDOL that it is exempt from the IEPA certification and reporting requirements.

What can employers do to prepare for application?

It is strongly recommended that in advance of receiving notice from IDOL with the deadline to submit your application for the certificate, covered employers should begin reviewing and gathering the relevant data and documents needed to complete and submit the application. This includes "wage records" and an "Equal Pay Compliance Statement." Employers also are strongly encouraged to identify and correct any pay equity concerns.

Regarding "wage records," the IEPA requires all covered businesses to submit to IDOL a copy of their most recently filed EEO-1 report. Additionally, all covered businesses must compile a list of data for all their Illinois-based employees during the past calendar year. IDOL released a template covered businesses may use for this purpose. It requires them to provide information on their Illinois-based employees, separated by gender and the race and ethnicity categories as reported in their most recently filed EEO-1 report. It also requires the county in which the employee works, the date the employee started working for the covered business, and any other information IDOL deems necessary to determine whether pay equity exists among employees, and to report the total wages paid to each employee during the past calendar year, rounded to the nearest $100.

Regarding the Equal Pay Compliance Statement, a covered business must submit a filing fee of $150 and a statement signed by a corporate officer, legal counsel, or authorized agent certifying the following:

• That the business complies with the IEPA and "other relevant laws," including Title VII of the Civil Rights Act of 1964, the federal Equal Pay Act of 1963, the Illinois Human Rights Act and the Illinois Equal Wage Act;
• That the average compensation for female and minority employees is not consistently below the average compensation (as determined by the U.S. Department of Labor) for its male and nonminority employees within each of the major job categories in the EEO-1 report for which an employee is expected to perform work, taking into account such factors as length of service, requirements of specific jobs, experience, skill, effort, responsibility, working conditions of the job, education or training, job location, use of a collective bargaining agreement, or other "mitigating" factors;
• That the business does not restrict employees of one sex to certain job classifications, and makes retention and promotion decisions without regard to sex;
• That wage and benefit disparities are corrected when identified to ensure compliance with the equal pay and discrimination laws;
• How often wages and benefits are evaluated; and
• The approach the business takes in determining the level of wages and benefits to pay its employees.

The post-application process

Within 45 calendar days after receipt of the application, IDOL must provide the covered business with a compliance certificate, or a statement explaining why an application was rejected. A covered business will have 30 days after receiving a rejection notice from IDOL to cure any deficiencies in the application. A covered business that fails to make a good-faith effort to comply or engages in multiple violations of the laws identified in the compliance certification may result in suspension or revocation of a certification, as well civil penalties of up to $10,000.

IDOL's receipt of an application or issuance of a certificate does not establish that a covered business is in full compliance with the IEPA. Nor is IDOL's issuance of a certificate a defense against an IPEA violation found by IDOL, or a basis for mitigation of damages.

Per the IEPA, any individually identifiable information submitted to IDOL within or related to an equal pay registration application, or otherwise provided by a covered business as part of its equal pay compliance statement, will be considered confidential information and exempt from disclosure under the Illinois Freedom of Information Act (FOIA). However, the job category and the average hourly wage by county for each covered business's Illinois-based employees' gender, race and ethnicity category on the registration certificate are not confidential information and subject to disclosure under FOIA. A covered business's current employees may request data regarding their job classification or title and the pay for that classification; however, no individually identifiable information may be provided to an employee making this request. IDOL also may share data and identifiable information with the Illinois Department of Human Rights or the Illinois Attorney General's office. Finally, IDOL's decision to issue, deny, revoke or suspend an Equal Pay Registration Certificate is considered public information.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.