by Michael Castaldo III
2021 has been quite the year for the Illinois Equal Pay Act (820 ILCS 112/1 et seq.). Generally speaking, the Act prohibits employers with four or more employees from paying unequal wages to men and women for doing the same or substantially similar work, except if the wage difference is based upon a seniority system, a merit system, a system measuring earnings by quantity or quality of production, or factors other than gender or race. This year, the Act was modified twice in a series of overlapping amendments. This article summarizes these changes to aid employers in navigating their equal pay obligations.
The March Amendments
The first round of amendments to the Equal Pay Act came in March 2021 when Illinois Governor J.B. Pritzker signed Senate Bill 1480 into law. This Bill requires private employers with more than 100 employees in Illinois to obtain an “equal pay registration certificate” from the Illinois Department of Labor (“IDOL”). To obtain the certificate, private employers must pay a fee and file an application with IDOL with several comprehensive disclosures and certifications to demonstrate compliance with equal pay laws. Specifically, the disclosures and certification requirements call for private employers to disclose demographic and pay data regarding “the gender, race, and ethnicity” of each of the corporation’s employees to the nearest $100.
To enforce the amendments, the IDOL was empowered to deny, suspend, or revoke an employer’s certificate under various circumstances. More concerningly for employers, however, this amendment requires IDOL by law to issue a civil penalty equal to 1% of the businesses “gross profits” if the company’s certification was revoked or suspended, of if it flat out failed to obtain said equal pay certification. Notably, the term “gross profits” was left undefined by the legislators and is up for interpretation.
The June Amendments
On June 25, 2021, Illinois legislators further amended the Illinois Equal Pay Act via Senate Bill 1847 (the “June Amendments”). These included an expansion of certain reporting requirements and removal of the controversial and ambiguous penalty of 1% of gross profits. Instead, the Act provides that a business may be subject to a penalty of $10,000.00 per violation after the employer is given a 30-day grace period to cure any violations of the Act.
Furthermore, the June Amendments clarify the definition of “business” to mean: (1) any private employer who has more than 100 employees in the State of Illinois, and (2) is required to file an Annual Employer Information Report EEO-1 with the Equal Employment Opportunity Commission. Although this clears up some confusion that existed after the March Amendments as to who is subject to the Act, it still leaves some questions unanswered (e.g., whether a business is required to submit a consolidated report to include employees outside of Illinois). In addition to the March Amendments requiring the employee demographic data submission, the June Amendments now also require employers to identify “the county in which the employee works, the date the employee started working for the business, [and] any other information the Department deems necessary to determine if pay equity exists among employees…” This modification will require employers to follow up with further guidance provided by IDOL on a case-by-case basis.
Additionally, the June Amendments provide further clarification regarding access to the data submitted by businesses in an application. Most notably, any “individually identifiable information” submitted as part of the application is considered confidential and is not subject to requests under the Illinois Freedom of Information Act (“FOIA”). Aggregate data, though, is not considered confidential and is non-exempt under FOIA.
The June Amendments also replaces the previous “compensation approach to certification.” The March Amendments required employers to indicate specifically what systems and methodologies that business used in setting the compensation and benefit structure to compensate its employees. The June Amendments delete this language and instead provide a more general method to require disclosure of “the approach the business takes in determining what level of wages and benefits to pay its employees; acceptable approaches include, but are not limited to, a wage and salary survey.”
Lastly, the March Amendments required existing employers to obtain their initial certification by March 23, 2024, and certain new employers to obtain initial certification within three years after commencing business operations, both situations to then refile for recertification every two years thereafter. The June Amendments now provide that IDOL will actively collect information from existing business and then assign a deadline no later than March 23, 2024, for each. Businesses that commence operations after March 23, 2021, will be assigned a deadline no earlier than January 1, 2024. It remains unclear what factors might dictate a given application deadline such as company size, location, etc. However, the requirement for recertification every two years survived the round of June Amendments.
If you have any questions about the impact of the March and June Amendments to the Equal Pay Act, we recommend you contact one of the firm’s attorneys.