ILLINOIS EMPLOYERS FACE NEW EQUAL PAY ACT REPORTING REQUIREMENTS BEGINNING MARCH 24, 2022
In recent years, Illinois has enacted a number of laws intended to address historical pay inequities among genders, races and other protected categories. Among these laws, is the Illinois Equal Pay Act (the “IEPA”), which provides that employees of a different sex or race who perform substantially similar work on jobs that require substantially similar skill, effort, and responsibility (and which are performed under similar working conditions) may not receive a lower wage rate.
In 2021, Illinois updated the IEPA by enhancing reporting and compliance requirements for private businesses that have at least 100 employees in Illinois (including employees who work remotely in states outside of Illinois, but who report directly to an employer’s facility in Illinois) and are required to file an Annual Employer Information Report EEO-1 (“EEO-1”) with the Equal Employment Opportunity Commission. For many employers, these enhanced reporting requirements may be effective as early as March 24, 2022.
Employers Must Apply for Equal Pay Registration Certificates
The most significant changes to the IEPA pertain to a covered employer’s duty to obtain an Equal Pay Registration Certificate (“EPR Certificate”) from the Illinois Department of Labor (“IDOL”).
Covered employers approved to do business in Illinois on or before March 23, 2021, must apply for a EPR Certificate from the IDOL between March 24, 2022 and March 23, 2024, and must recertify every two years thereafter. Covered employers that became authorized to do business in Illinois after March 23, 2021 must apply for an EPR Certificate within three years of beginning business operations, but not before January 1, 2024, and must recertify every two years thereafter.
On January 25, 2022, the IDOL announced it would communicate directly with covered businesses when it is time for them to apply for their EPR Certificates. Businesses shall receive no less than 120 days advance notice of their registration deadlines. That being said, the IEPA requires covered employers comply with the Equal Pay Registration requirements as a matter of law— in other words, even if the IDOL fails to notify an employer of a registration date or of a recertification deadline, the employer is still required to fulfill their obligations under the IEPA. As such, employers should be proactive in obtaining a deadline from the IDOL if they do not receive one.
To apply for an EPR Certificate, employers must pay a $150 filing fee and submit wage records and an equal pay compliance statement to the IDOL.
The required wage records must include the employer’s most recent EEO-1 Report and a list of all of its employees during the past calendar year. The employee list must be separated by gender, race and ethnicity (as reported in the EEO-1 Report) and include the county in which each employee works, total wages paid in the past year and “any other information the [IDOL] deems necessary to determine if pay equity exists among employees”. A template of an employee list containing what the IDOL considers “necessary information” can be found on the IDOL website.
It is currently unclear whether the requested EEO-1 report is limited to an employer’s Illinois locations or if a company-wide report is required.
Employers will also need to submit an equal pay compliance statement signed by a corporate officer, legal counsel, or authorized agent of the business certifying:
- The employer is in compliance with the IEPA, Title VII of the Civil Rights Act of 1964, the Equal Pay Act of 1963, the Illinois Human Rights Act, the Equal Wage Act, and other applicable antidiscrimination laws;
- The average compensation for the employer’s female and minority workers is not consistently below the average compensation for male and non-minority workers within each job category in the EEO-1 Report, considering factors such as length of service, requirements of specific jobs, experience, skill, responsibility, education or training, job location, or other mitigating factors;
- The employer does not restrict employees of one sex to certain job classifications, and makes retention and promotion decisions without regard to sex;
- The employer corrects wage and benefit disparities when identified to ensure statutory compliance;
- How often the employer evaluates its employees’ compensation and benefits; and
- The approach the employer takes in determining what level of compensation and benefits to pay its employees.
Within 45 days of receiving an employer’s equal pay registration application, the IDOL will issue an EPR Certificate or a statement as to why an application was rejected. In the event an employer’s application is rejected, the employer will have 30 days to cure any deficiencies in the application. A covered business that fails to make a good-faith effort to comply or otherwise violates the IEPA’s reporting and certification requirements may face suspension or revocation of their certification, as well civil penalties of up to $10,000.
Employers should also note, the IDOL’s receipt of an application or issuance of an EPR Certificate does not establish a covered business is in full compliance with the IEPA. Nor is the IDOL’s issuance of an EPR Certificate a defense against an IEPA violation found by the IDOL or a basis for mitigation of damages.
Per the amended IEPA, any individually identifiable information submitted to the IDOL through an equal pay registration application, will be considered confidential information and exempt from disclosure under the Illinois Freedom of Information Act (“FOIA”). However, individually identifiable information may still be shared between state agencies — including the Department of Human Rights and the Office of the Attorney General — for enforcement purposes.
Aggregate information, information that would not reasonably identify an individual employee, submitted to the IDOL through an equal pay registration application, such as 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, is not confidential and is therefore subject to disclosure under FOIA. Additionally, the IDOL’s decision to issue, deny, revoke, or suspend an EPR Certificate is also considered public information.
As the amended IEPA opens an avenue for potential collective or class actions brought by employees for systemic pay disparities, Employers should seriously consider the practical consequences of having their EEO-1 employee aggregate data being publicly available and take necessary steps to address compensation inequity among employees prior to submitting their applications to the IDOL.
Unless they have already done so, employers should provide contact information to the IDOL via the following link: https://forms.office.com/g/VQweNsryxx. Once an employer provides their contact information to the IDOL, employers should monitor their email for their assigned application due date and begin developing a process to comply with the reporting requirements highlighted above.
Because certification will require a large compilation of data, it is strongly recommended that prior to receiving a deadline from the IDOL, covered employers should begin reviewing and gathering the relevant data and documents to fulfill their IEPA obligations. Employers should also consider proactively conducting a pay equity audit to identify any pay equity concerns and gather relevant information to devise strategies for making any necessary changes.
While the IEPA contains very strict terms and specific obligations, it also contains a great deal of ambiguity. As such, it is likely the IDOL will provide additional guidance or FAQs in the coming weeks regarding the many open questions that remain. Employers should keep an eye out for developments surrounding the IEPA and additional guidance to inform the best approach for compliance with the law.