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Illinois Amends Equal Pay Act Again

As previously reported, Illinois amended the Illinois Equal Pay Act (IEPA) to require Illinois employers who must file an annual Employer Information Report (EEO-1) with the Equal Employment Opportunity Commission (EEOC) to submit pay data to the state using the Illinois EEO-1 report and to obtain an equal pay registration certificate from the Illinois Department of Labor (IDOL).

On June 25, 2021, the state further amended the Illinois Equal Pay Act with significant changes, including expanding certain reporting requirements and potentially accelerating “equal pay registration certification” deadlines by up to two years (to a date between March 24, 2022 and March 23, 2024). The amendments also clarify several ambiguities in the March 2021 enactment and remove a penalty for certification-related non-compliance.

Below is a summary of the key changes based on the most recent amendments.

Certification Deadline. Under SB 1480, initial certification was required “within three years after the effective date of this amendatory Act” for existing covered employers (i.e., by March 23, 2024 or, for employers commencing business operations in Illinois after March 23, 2021), within three years thereafter, with recertification required every two years. The amended law requires the IDOL to “collect contact information” from existing and new covered businesses (businesses that become newly covered must submit their contact information to the IDOL by January 1 of the following year), after which the IDOL will assign each business a deadline by which it must apply for the equal pay registration certificate. For existing covered businesses, that deadline may be as early as March 24, 2022, or as late as March 23, 2024, potentially moving the initial certification deadline two years sooner than anticipated and fewer than nine months from the passage of the amended law.

Certification Application Requirements. Covered employers must also submit a “wage records” list of all employees in the past calendar year, categorized by the county in which the employee works, gender and race/ethnicity, corresponding wages paid to each employee over that period, the employee’s start date with the business, and “any other information the IDOL deems necessary to determine if pay equity exists.” Employers with fewer than 100 employees must certify that they are exempt from this requirement.

Compensation Approach. The original legislative text required employers to provide the IDOL with the “system” used to set compensation and required employers to select from certain options (e.g., market-based, performance pay, internal analysis, etc.). Under the amendments, the employer is required to describe the “approach” used to determine wages, but is not required to select from any specific system. Instead, the statute states that “acceptable approaches include, but are not limited to, a wage and salary survey.”

Penalties. The March amendments provided that employers who fail to comply with the certification requirements or provide false information to the IDOL would result in a non-discretionary fine of one percent (1%) of their annual gross profits. The new amendments authorize a penalty of $10,000 for violation of the equal pay certificate requirements.

Grace Period. There is now a 30-day grace period for an employer to correct an inadvertent failure to timely file an application or cure deficiencies in the application for certification.

Next Steps for Employers

Employers should review and, if necessary, modify equal pay policies to demonstrate compliance including, but not limited to, auditing equal pay compliance annually; updating job descriptions annually, focusing on the actual duties, responsibilities, and qualifications of the position; evaluating performance reviews; and considering partnering with credible third parties to help develop and implement compensation plans.

HR Works, headquartered in Upstate New York, is a human resource management outsourcing and consulting firm serving clients throughout the United States for over thirty years. HR Works provides scalable strategic human resource management and consulting services, including: affirmative action programs; benefits administration outsourcing; HRIS self-service technology; full-time, part-time and interim on-site HR managers; HR audits; legally reviewed employee handbooks and supervisor manuals; talent management and recruiting services; and training of managers and HR professionals.