Illinois has new equal pay employment certification requirements for companies with over 100 employees. Effective January 1, 2023, companies with more than 100 employees are required to apply for and obtain a certificate of compliance from the Illinois Department of Labor (IDOL) certifying compliance with various employment laws and equal pay requirements. Part of the certification application includes the requirement, if a company is already required to submit an EEO-1 report to the EEOC, it must also submit the same information to IDOL, along with a list of employees from the previous year, their gender, race and ethnicity, and the total wages paid to each employee. The certification application requires that applicant businesses submit a statement signed by an officer or legal counsel that the company:
- Is in compliance with Title VII of the Civil Rights Act, the Equal Pay Act of 1963, the Illinois Human Rights Act, the Equal Wage Act, and the Equal Pay Act of 2003.
- that the average compensation for female and minority employees is not consistently below compensation for male and non-minority employees when adjusted for lawful differentiating factors such as length of service, job requirements, experience, skill, and effort
- that the business does not restrict certain genders to specific roles and makes employment decisions without regard to sex;
- explains how often the business reviews wages and benefits for disparities among protected and non-protected classes and certifies that wage and benefit disparities are corrected when identified; and
- identifies the approach the business uses to determine employee compensation (e.g., market pricing, prevailing wage or union contract, performance-based pay, alternative, etc.).
The due date for obtaining this certificate for existing companies is March 23, 2024, with renewal every two years. The certification can be revoked if IDOL determines that the business has not made good faith attempts to comply with the Act or has had multiple violations of the various laws listed above. There is a significant penalty of up to 1% of the company’s gross profits for failing to obtain a certificate.
The Department of Labor has also issued regulations regarding these requirements on a variety of issues. However, we anticipate the IDOL will need to fine-tune these regulations to make them less ambiguous.
Clarification on Enrollment Requirements
The regulations clarify that any company authorized to transact business in Illinois on or before March 23, 2021, must submit an online enrollment form notifying the IDOL that the business is subject to the equal pay registration certificate requirement and provide contact information for the business. A business that became authorized to transact business in Illinois on or after March 24, 2021, is required thereafter to submit an enrollment form to the IDOL by January 1 of the calendar year following the year the business became authorized to transact business in Illinois.
Definition of “Employee”
Understanding who meets the definition of an Illinois employee is important in determining whether a company meets the 100-Illinois-employee threshold requiring it to certify. The regulations borrow from the Illinois Income Tax Act and define “employee” as any person performing a service for a business: whose base of operations, or if there is no base of operations, the place from which the service is directed or controlled, is located within the State of Illinois; or whose base of operations or the place from which the service is directed or controlled is not in any state in which some part of the service is performed, but the individual’s residence is in the state of Illinois.
With many employees still working remotely, employers will have to closely examine work assignments to determine whether an employee should be counted and included in the determination of whether they employ the requisite number of employees in the state of Illinois.
Requirements for “Wage Records”
The regulations require that “wage records” included in the application consist of a list of all employees during the payroll year (January 1 through December 31) immediately preceding the application due date, separated by gender, race, and ethnicity categories in a text-searchable, sortable Microsoft Excel file or comma-separated values file format, as well as any other information required by the IDOL on the application form.
For purposes of this report, wages “shall be reported by either the mean hourly wage (for employees paid hourly wages) or annual mean wage (for salaried employees).” This departs from the language of the IEPA, which requires the “wage records” list also include information regarding the county in which each employee works, the date each employee started working for the business, and the “total wages as defined by Section 2 of the Illinois Wage Payment and Collection Act paid to each employee during the past calendar year, rounded to the nearest $100” (i.e., not the mean hourly or annual mean wage for each employee).
Definition of “Average Compensation”
As part of the compliance statement, businesses must certify that the average compensation for its female and minority employees is not consistently below the average compensation for its male and nonminority employees within each of the major EEO-1 categories. The regulations define “average compensation” as the average wages for a specific occupation in the State of Illinois as determined by the most recent U.S. Bureau of Labor Statistics State Occupational Employment and Wage Estimates publication.
Definition of “Compliance”
As part of the process to obtain an equal pay registration certificate from the IDOL, a business must submit a statement signed by an officer of the business certifying compliance with several equal pay statutes. The regulations define “compliance” to mean, as of the date of application or recertification, the business:
- Has not had any final non-appealable adverse judgment or administrative ruling entered against it in the previous two years under Title VII of the Civil Rights Act of 1964, the Illinois Human Rights Act, the Equal Wage Act, or the Equal Pay Act of 2003; or
- Has corrected any final and non-appealable adverse judgment or administrative ruling entered against it under Title VII of the Civil Rights Acts of 1964, the Illinois Human Rights Act, the Equal Wage Act, or the Equal Pay Act of 2003.
If a business has had a qualifying civil judgment or administrative finding and has since corrected such adverse finding, the business must submit a copy of the adverse civil judgment or administrative finding with the corrective measures that were undertaken by the employer.
Timing of IDOL Decision
The regulations establish that within 45 calendar days after receipt of an application, the IDOL will issue to the business its equal pay registration certificate or a Statement of Rejection notifying the business of the reasons the application was rejected. The regulations also reconfirm that a business will have 30 calendar days from the date it receives the Statement of Rejection to cure application deficiencies. They also outline an appeals process that may be initiated by a business within 14 calendar days of receiving a Statement of Rejection.
Assignment of Filing Dates
The IDOL will assign every business a date by which it must submit its application for the certificate. Each business will receive at least 120 calendar days’ notice of the filing date. Thereafter, the business must obtain a new certificate every two years after the initial due date, unless the business has fewer than 100 employees on December 31 of the year immediately preceding the filing year.
Duty to Revise Erroneous, Incomplete Application
The regulations require businesses to submit revised applications if it is later discovered that incorrect or incomplete information was submitted in an application. The revised application should include the correct or complete information, along with a letter identifying the information that was amended. A business that makes a correction will not be subject to penalties if the incorrect or incomplete information was provided in good faith and without knowledge that such information was incorrect or incomplete.
Employee Requests for Data
The regulations detail the process by which current employees of a business may request anonymized data regarding that employee’s own job classification or title and the pay for that title or classification. A request for data must be submitted in writing to the IDOL. It must include the employee’s name, date of hire, job title or classification, the dates for which the data is being requested, a signed affidavit swearing that the employee holds the specified job title at that business, and evidence that the employee currently holds the specified job title at that business. Upon request, and if in the possession of the IDOL, the IDOL will provide current and historical data from no more than 10 years prior to the date of the request to a requesting employee, based on the data timeframe specified in the request for employees working in the same county as the requestor.
For information regarding these new compliance requirements, compensation reporting and providing explanations of how your company determines compensation, contact Johnson & Bell’s Employment co-chairs, Christopher J. Carlos or Caroline K. Vickrey.
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