Illinois Equal Pay Reporting Obligations Are Here for Many Illinois Employers

Seyfarth Synopsis:  On January 25, 2022, IDOL sent out additional communications regarding the upcoming Illinois Equal Pay Registration Certificate obligations.  Some 625 employers received notice they were selected to be in the group with the first deadline: May 25, 2022.  Employers that did not receive a second communication will have additional time to submit their registration application.  The Illinois Equal Pay Registration Certificate will require that covered employers provide employee-level compensation data as well as certify compliance with equal pay principles and certain federal and state equal pay laws.

Overview of the Illinois Equal Pay Registration Certificate

In March 2021, Illinois became the second state to require that private employers produce workforce demographic and pay data.  However, Illinois is the first state to seek employee-level pay information and the first to require that employers receive an equal pay registration certificate. 

Section 11 of the Equal Pay Act of 2003 (820 ILCS 112/11) is directed at “covered businesses” — private employers with more than 100 employees in the state of Illinois, who are also required to file an EEO-1 with the U.S. Equal Employment Opportunity Commission. Covered businesses must submit an application to the Illinois Department of Labor (“IDOL”) for an Equal Pay Registration Certification (“EPRC”). 

The application for an EPRC primarily includes the submission of wage records covering an employer’s Illinois-based employee population, and a signed verification that the business complies with certain state and federal anti-discrimination laws. IDOL has been collecting contact information from businesses with operations in Illinois since late last year, and has started assigning specific deadlines to employers for their first applications.

IDOL sent out notices on January 25^th to 625 employers, notifying them that they will be required to submit their applications by May 25, 2022.  If a covered business already provided contact information to IDOL but did not receive a notice with an upcoming deadline, then a deadline for that business has not yet been set, and IDOL will send notification regarding a specific due date at some point in the future.  Such employers will have at least 120 days from the deadline notification date to submit its EPRC application.

The deadline employers receive will remain the same for subsequent filings that will be required every other year.

We expect that IDOL will issue proposed rules and potentially guidance materials to assist employers with the submission process.  IDOL will be providing webinar training sessions regarding the upcoming submission process.  The employers with May 25^th deadlines will receive additional information regarding the upcoming webinars.

First Steps For Employers

Unless it has already done so, a covered business should provide contact information to IDOL via the following link: https://forms.office.com/g/VQweNsryxx.  IDOL is requesting three email contacts to ensure that future communications will reach someone within the business. 

It is our understanding that employers who have not yet submitted their contact information to IDOL will likely receive submission deadlines in 2023.

Preparing for the EPRC Application

Employers should analyze relevant employee rosters, wage data, and pay related policies and practices to compile the information needed for the EPRC application. The application consists of three components:

• Wage Records
  • EEO-1 Report: The business’ most recently filed EEO-1 Report. It is currently unclear whether the requested EEO-1 report will be limited to the employer’s Illinois locations or if company-wide report will be required.  
  • Employee List: A listing providing employee-level data for all Illinois-based employees. The template that was just released by IDOL seeks the following data: employee name, gender; race and ethnicity categories (consistent with EEO-1 report); county where employee works; total wages rounded to the nearest $100; hire date; termination date; job title; last four of the employee’s SSN; and EEO-1 job classification.
• Equal Pay Compliance Statement: A statement signed by a corporate officer, legal counsel, or authorized agent certifying the following:
  • Statutory Compliance: Employers must certify compliance with the Illinois Equal Pay Act and other federal and state anti-discrimination laws such as Title VII of the Civil Rights Act of 1964, the federal Equal Pay Act of 1963, and the Illinois Human Rights Act.
  • Lack of Wage Disparity: Employers must certify that the average compensation for female and minority employees is not below the average compensation of that of the business’ male and non-minority employees (accounting for factors such as length of service, requirements of specific jobs, experience, skill, effort, responsibility, working conditions of the job, education or training, job location, use of a collective bargaining agreement, or other mitigating factors).
  • No Sex-Based Personnel Decisions: Employers must certify that the business does not restrict employees of one sex to certain job classifications and that it makes retention decisions without regard to sex.
  • Wage Disparities Addressed: Employers must certify that the business corrects wage and benefit disparities when identified.
  • Frequency of Wage Determinations: While there is no affirmative requirement to analyze or evaluate compensation, employers will be required to provide information regarding how often wages and benefits are evaluated.
  • Analysis of Wage Determinations: Employers will be required to provide information regarding the approach it takes to determining appropriate wages for its employees. An explicitly acceptable approach will include relying on wage and salary surveys, although other approaches may be deemed to be acceptable as well.
• Filing Fee: There will be a filing fee of $150.

IDOL’s Response to an EPRC Application

Under the Act, once an employer submits its application, IDOL must issue a compliance certificate or a statement as to why an application was rejected within 45 days after receipt of the application. Importantly, receipt of an Equal Pay Registration Certificate does not establish compliance with the Illinois Equal Pay Act.  In the event an employer’s EPRC is rejected, an employer will have 30 days to cure any deficiencies in the application. 

IDOL’s decision to issue, deny, revoke or suspend an EPRC is considered public information.

Is EPRC Data and Information Publicly Accessible?

Due to the inherently sensitive nature of the EPRC application data, one issue employers have been watching with a close eye relates to the confidentiality of the information provided to IDOL.  While the specific security measures that IDOL will implement to protect employee level compensation data are unclear, the Act exempts from disclosure all individually identifiable information under the Illinois Freedom of Information Act.  This includes information that is associated with a specific individual or a business. 

On the other hand, aggregate data—that is, data derived from EPRC applications that would not reasonably identify individual employees or businesses—is deemed not confidential.  IDOL may compile and publish such aggregate data, including job category and average hourly wages by county for each gender, race and ethnicity category.  The Act also allows IDOL to share individually identifiable information or aggregate data with Illinois Department of Human Rights and Office of the Attorney General.

A unique requirement under the law is that current employees of the employer may request and will receive anonymized data regarding their job classification or title, and the pay for that classification.  While the Act provides that no individually identifiable information will be shared with an individual employee, it is unclear how the Department intends to comply with that requirement, particularly when the request covers titles or job classifications for a small group of incumbents.  

This will be a cause of significant concern for employers given the inherent privacy rights and confidentiality concerns.  Accordingly, we anticipate that IDOL will provide further information in the rulemaking process or as part of additional guidance for employers.

Administrative Processes and Penalties

Falsification or misrepresentation of information on an application may result in: (1) suspension or revocation of Equal Pay Registration Certificate or (2) civil penalties of up to $10,000.

The Act also allows IDOL to suspend or revoke the EPRC of an employer who fails to make good faith efforts to comply with the Act or if the employer has multiple violations of the anti-discrimination statutes with which it certifies compliance as  part of the EPRC application.  Before revocation, IDOL is obligated to conciliate with the business concerning wages and benefits it contends are “due” to employees.  It is unclear how IDOL will make such determinations, so we expect that additional guidance on this point will be forthcoming.  The Act permits IDOL to interview workers, take depositions, and subpoena witnesses testimony, personnel records, and compensation records in connection with a potential suspension or revocation of an EPRC.

If an employer wishes to challenge IDOL’s decision to suspend or revoke its EPRC, or to impose a fine, it may request an administrative hearing.  Businesses requesting an administrative hearing must file a written request within 20 calendar days of receiving notice of IDOL’s decision concerning the penalty.

Proposed Rule and IDOL Training

We anticipate that IDOL will release a proposed rule followed by a notice and comment period.  We are also hopeful that IDOL will provide additional guidance or FAQs regarding the many open questions that remain.

As noted above, IDOL has indicated that it will offer training sessions via webinar to describe the EPRC process and answer employer questions.  IDOL will email covered businesses times and dates of the training sessions, as well as a process to sign up.  

Employer Takeaways

As a first step, covered employers should submit contact information to IDOL if they have not already done so to ensure they receive timely communications from the Department.  To be clear, the Act requires that covered employers comply with the Equal Pay Registration requirements as a matter of law—even if the Department fails to notify the employer of a registration date or of a recertification deadline.  Accordingly, it is important to submit contact information to IDOL.  In addition, consider implementing a process to ensure that information provided to the Department is updated if key contacts change positions or leave the organization.

Once contact information has been provided to IDOL, employers should diligently monitor email for their assigned due date and begin developing a process to comply with the main components of the EPRC application highlighted above.   

Employers should also keep an eye out for developments surrounding the proposed rule and additional guidance in the coming weeks, which will likely inform the best approach to compliance with the law.

In light of the upcoming requirements, employers are encouraged to proactively evaluate their compensation to identify and correct any pay equity concerns. Evaluating compensation for the Illinois workforce specifically would be advisable. 

As always, Seyfarth’s Global Pay Equity Group’s attorneys are available to assist employers in navigating these new requirements and ensuring that they are ready for the ongoing trend toward greater pay transparency generally.