Equal Pay Registration Certificate Proposed Regulations Have Arrived -- Just Days Before First Applications Are Due For Some Illinois Employers

Seyfarth Synopsis: Today, the Illinois Department of Labor issued the long-awaited proposed administrative rules that accompany the expansive amendment to the Illinois Equal Pay Act of 2003. The amendment was enacted in June 2021. The law will require employers to apply for an “Equal Pay Registration Certificate” (“EPRC”) on a biennial basis by submitting wage and demographic data for Illinois workforces.  

The EPRC law applies to businesses with more than 100 employees in Illinois. It requires the submission of year-end W-2 wage and demographic data for employees who work in the state, in addition to several certifications concerning compliance with certain state and federal equal pay and antidiscrimination laws and information regarding the company’s compensation practices.  You can read more about the law and the EPRC application process in our past coverage here and here.

Notably, these regulations are still only “proposed” regulations subject to a notice and comment period, as well as other subsequent reviews, hearings, and potential revisions.  While IDOL has issued FAQs and template materials regarding the required submissions, there is a large group of employers with upcoming deadlines (in May and June 2022) who are being required to file their submissions, including detailed compensation data regarding their Illinois workforce, without the benefit of understanding what may end up in the “final” regulations.  

While we are still evaluating the full impact of the proposed regulations, we highlight several noteworthy issues: 

• Enrollment Period: The proposed regulations provide that a business is required to complete an “enrollment” form along with requisite contact information to inform IDOL that the business is subject to the EPRC requirements. While that information has been generally known, the proposed regulations now provide that the enrollment form was required to be submitted by March 31, 2022 for those businesses that were authorized to transact business in the State of Illinois on or before March 23, 2021.
• “Employees” Under the EPRC: Borrowing from the Illinois Income Tax Act, the proposed rules provide that for purposes of the EPRC, an “employee” means “any person performing a service for a business under the Act 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.” We are unpacking the impact of that specific language in light of the complexities of remote working arrangements and corporate structures. 
• Authorized Agent: In connection with the certification statement, employers have been considering who is the most appropriate person in the business to sign the statement. The proposed regulations provide clarity into that issue by defining an “authorized agent” as an employee of a business “with knowledge” of pay practices and who has been designated by the corporate officers of the business to submit information to IDOL.  Third party consultants and vendors are expressly excluded from the definition. 
• Employee Request for Data: The proposed regulations provide additional information regarding the ability of a business’s current employees to obtain anonymized data regarding the pay for their job classification or job title.  Requesting employees will be required to submit their request in writing to IDOL along with the employee’s name, date of hire, job title or classification, the dates for which the data is being requested, and a signed affidavit, as well as other evidence that employee currently holds the specified job title at the company (e.g., pay stubs, work schedules, hire letters, work IDs, business cards, company website listings).

Notably (and surprisingly), the proposed regulations also provide that employees will have access not only to current pay data (from the previous payroll year), but also to historical pay data for the job classification in the county they are requesting dating back 10 years prior to the date of the request.

• BFOQ: As part of the application, employers must certify that the business does not restrict employees of one sex to certain jobs, nor does it make promotion or retention decisions based on sex. The proposed rules clarify that the federal bona fide occupational qualification exception (29 CFR 1604.2) -- which allows businesses to base employment decisions for a job on such factors as sex if they are able to demonstrate sex is essential qualification for performing that particular job -- may apply to the EPRC certification. The proposed rules require that the business identify the list of such positions, along with a short explanation for why sex is a BFOQ for any designated position.
• Incorrect or Incomplete Information: The proposed rules require that businesses affirmatively revise their applications if they discover that incorrect or incomplete information was originally provided. Businesses who do so will not be subject to penalties for providing incorrect or incomplete information in their EPRC application as long as such information was provided (or omitted) in good faith and the Company submits a revised application with an accompanying letter identifying any mistakes in its original application.

Illinois law requires a 45-day notice and comment period for proposed rules, followed by public hearings, and other subsequent reviews before proposed rules can become final. The process usually takes a minimum of 90 days to complete, so we may see several changes and additions to these rules before all is said and done. Employers are encouraged to watch this space for our continued monitoring of these proposed rules in the coming months.

As always, Seyfarth’s Pay Equity Group is 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.