On March 23, 2021, Illinois amended the state’s Equal Pay Act of 2003 to include additional reporting requirements targeted at identifying gender and racial pay disparities.
Under the newly enacted Section 11 of the Equal Pay Act, any private employer with more than 100 employees in Illinois must obtain an “equal pay registration certificate” from the Illinois Department of Labor. Employers must obtain this certificate within three years of the amendment’s effective date—i.e., by March 23, 2024—and then every two years thereafter.
To apply for this certificate, the employer must submit a $150 filing fee, the employer’s most recent EEO-1 report, and a report of all employees from the past calendar year “separated by gender and the race and ethnicity categories as reported in the business’s most recently filed Employer Information Report EEO-1, and report the total wages . . . paid to each employee during the past calendar year.”
The employer must also submit an “equal wage compliance statement,” signed by a corporate officer, legal counsel, or authorized agent, stating:
- The employer is in compliance with Title VII of the Civil Rights Act of 1964, the Equal Pay Act of 1963, the Illinois Human Rights Act, the Illinois Equal Wage Act, and the Illinois Equal Pay Act of 2003;
- Average compensation for female and minority employees “is not consistently below the average compensation, as determined by rule by the United States Department of Labor, for its male and non-minority employees within each of the major job categories” in the employer’s EEO-1 report, after taking into account “factors such as length of service, requirements of specific jobs, experience, skill, effort, responsibility, working conditions of the job, or other mitigating factors”;
- Employees are not restricted to particular job classifications on the basis of sex, nor are retention and promotion decisions made with regard to sex;
- The employer corrects any wage and benefit disparities as they are identified;
- How often the employer evaluates wages and benefits to ensure compliance with Title VII of the Civil Rights Act of 1964, the Equal Pay Act of 1963, the Illinois Human Rights Act, the Illinois Equal Wage Act, and the Illinois Equal Pay Act of 2003; and
- The method used by the employer in setting compensation and benefits: market pricing, prevailing wage or union contract requirements, performance pay, internal analysis, or an alternative approach that the employer must then describe.
After the application is submitted, the employer will receive the certificate, or an explanation for the rejection of the application, within 45 days.
An application may only be rejected for failing to submit the required information and compliance statement, but that does not mean the new amendment is toothless. The amendment gives the Director of Labor the authority to audit an employer’s compliance with the reporting requirements, including the accuracy of the information disclosed, and to revoke a certificate upon a finding that the employer has failed to make a good faith effort to comply with Title VII of the Civil Rights Act of 1964, the Equal Pay Act of 1963, the Illinois Human Rights Act, the Illinois Equal Wage Act, or the Illinois Equal Pay Act of 2003, or has multiple violations of those acts. In making those determinations, the Director may interview workers, depose witnesses and subpoena books, records, or other evidence. If an employer’s certificate is revoked, or the employer fails to obtain one, a civil penalty of one percent of the employer’s gross profits will be imposed.
Illinois is not the first state to require employers to compile and review their wage data. As we’ve previously covered, California recently enacted similar—but more onerous—requirements beginning March 31, 2021. And, as more and more sources identify pay audits as a first step towards closing the pay gap, it is unlikely that Illinois will be the last. Therefore, employers across the country would be wise to monitor these requirements and consider conducting a preemptive review and audit of their own pay data to protect their pay practices and reduce the legal risk, not only of compliance with laws such as this Illinois amendment but of pay equity lawsuits.
If you have any questions about your pay practices or these new reporting requirements, please contact a member of our Labor & Employment team.