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SB 1480 Creates New Requirements for Employers under Illinois’ Equal Pay and Anti-Discrimination Laws

The Illinois Equal Pay Act (IEPA) and Illinois Human Rights Act (IHRA) have been amended to create new requirements for Illinois employers as a result of Senate Bill 1480 (SB 1480 or “the Bill”) being signed into law by Governor J.B. Pritzker on March 23, 2021. The components of the Bill are effective immediately. The amendments to the IEPA will impact private Illinois businesses that are required to file an annual Employer Information Report EEO-1 with the EEOC. The amendments to the IHRA will impact employers with one or more employees working in Illinois except for businesses considered places of worship.

Equal Pay Act Amendments (Certificate and Pay Data Reporting Requirements)

The IEPA prohibits employers from paying unequal wages to men and women who perform the same or substantially similar jobs, except if the wage differential is based on a seniority system, a merit system, a system measuring earnings by quantity or quality of production, or factors other than an employee’s gender. The IEPA also prohibits unequal wages for African American employees on the same basis.

Registration Certificate

Now that SB 1480 is law, covered businesses are required to obtain from the Illinois Department of Labor (IDOL) an equal pay registration certificate by March 23, 2024 and recertify every two years thereafter. To obtain the certificate, an employer must pay a filing fee of $150 and provide information including a list of everyone employed during the last year, separated by gender and race, and report the total wages paid to each employee. It also must affirm compliance with various federal and state laws, including 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 the Equal Pay Act of 2003 and that it evaluates and corrects wage disparities, among other requirements. Employers must also include in the statement an explanation of its compensation determinations and policies, such as whether it uses a market pricing approach; prevailing wage; a performance pay system; internal analysis; or other approaches to determine compensation. The statement must be signed by a corporate officer, legal counsel or an authorized agent of the business.

After the application is submitted, the employer will receive the certificate, or an explanation for the rejection of the application, within 45 days.

The IDOL has also been authorized to impose a penalty equal to 1% of a business’ gross profits if the business does not obtain the equal pay registration certificate or if it is suspended or revoked. There is no safe harbor provision; the fact that an employer has received an equal pay registration certificate from the IDOL does not constitute a defense against an IEPA violation.

Pay Data Reporting

As most employers are aware, all private employers with 100 or more employees, and those with 50 or more employees and a government contract or subcontract that equals or exceeds $50,000, are required to file annually an EEO-1 report, which includes a demographic breakdown of the employer’s workforce by race and gender (Section D of the EEO-1 report).

Based on SB 1480, Illinois employers currently required to file an EEO-1 report will now be required to submit a similar report to the state of Illinois that includes “information that is substantially similar to the employment data reported under Section D of the federal EEO-1 form; including, a breakdown of employees by race, ethnicity and gender within the EEO-1 job categories.

The Illinois EEO-1 report will be significantly different from the federal EEO-1 report in one major way; the Illinois EEO-1 report will be made public. The Secretary of State is required to publish these reports on the state’s website. This obligation applies to corporate reports filed on or after January 1, 2023.

The SB 1480 amendments to the IEPA also include broad whistleblower protections. It significantly expands the interpretation of “adverse employment action” to include reprimand, discharge, suspension, demotion, denial of promotion or transfer, or change in the terms and conditions of employment. Moreover, a claim for IEPA retaliation is subject to a less stringent “contributing factor” standard, and employers can only refute an allegation of IEPA retaliation by providing “clear and convincing evidence.”

Further guidance in the form of regulations, forms and instructions are expected to be published by the state.

IHRA Amendments (Criminal Background Checks)

SB 1480 also amends the IHRA to generally prohibit the use of criminal convictions in employment actions and deems an employer’s use of an individual’s criminal conviction record in employment decisions to be a civil rights violation, unless there is a “substantial relationship” between the offense and the individual’s employment or that employing the individual would pose an unreasonable risk to property or the safety of others.

The Bill provides detailed qualifications for the “substantial relationship” test to be met, including six mitigating factors that must be considered. In the event an employer makes a preliminary decision that the conviction record is disqualifying, the employer must: (1) provide notice to the affected individual; (2) engage in interactive communication with the individual and consider information provided about why the conviction should not be dispositive in making an employment decision; and (3) provide notice in writing regarding any final decision to disqualify the individual, which notice shall reference the individual’s right to file a charge with the Department of Human Rights (IDHR). The employer must provide five business days for individuals to respond. There are significant penalties for non-compliance with the Act.

The IDHR has also issued frequently asked questions (FAQs) for compliance assistance.

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