New IL Law Creates Reporting Requirements for Employers and Expands Protections for Convicted Employees

On March 23, 2021, Illinois Governor Pritzker signed Public Act 101-656 (Act) into law, amending the Illinois Human Rights Act (IHRA), the Equal Pay Act of 2003 and the Business Corporations Act of 1983. These new amendments create payroll-reporting requirements on employers, expand protections for individuals previously convicted of a crime, and provide additional avenues for public access to company specific EEO-1 reports.

The new law will provide both state government and the public significantly greater access to information around the demographics of compensation for many Illinois employers, opening them up to greater scrutiny and accountability from both state government and the public.

Equal Pay Registration Certificates

The most significant change out of the new law is the amendments to the Illinois Equal Pay Act of 2003. Employers with more than 100 employees in the state of Illinois will now be required to obtain an "Equal Pay Registration Certificate" from the Illinois Department of Labor (IDOL). In order to receive the certificate, employers must certify:

1. They are in compliance with Title VII of the Civil Rights Act of 1964, the Equal Pay Act of 1963, the Illinois Human Rights Act, the Equal Wage Act, and the Equal Pay Act of 2003;
2. Average compensation of their female and minority employees is not consistently below the average compensation for their male and non-minority employees within each major job category provided in the existing EEO-1 form;
3. The business does not restrict employees of one sex to certain job classifications or make retention or promotion decisions with regard to sex;
4. Wage and benefit disparities are corrected when identified; and
5. How often wages and benefits are evaluated to ensure compliance with the Act.

Employers also have to state whether the business, in setting compensation and benefits, utilizes: (a) a market pricing approach; (b) State prevailing wage or union contract wage requirements; (c) a performance pay system; (d) an internal analysis of wages; or (e) an alternative approach to determine what level of wages and benefits to pay its employees. Employers must obtain this certificate within three years and recertify every two years thereafter.

To receive their certificates, businesses currently required to submit EEO-1 reports to the EEOC have the additional burden of submitting a copy of that report to the Illinois Department of Labor along with "a list of all employees during 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, rounded to the nearest hundred dollar..."

Issuance of the Equal Pay Registration Certificate

The IDOL Director must issue an equal pay registration certificate, or a statement of why the application was rejected, within 45 calendar days of receipt of the application. An application may be rejected if it does not comply with the requirements described above. There are also procedures for suspension and revocation of the certificate, including investigative and subpoena powers for the DOL along with a process for challenging these types of decisions. The Act also grants audit powers for compliance with this section.

The Act also provides whistle blower protections prohibiting retaliation of any kind for reporting a violation or participating in an investigation. The first certificates must be obtained three years from the date of the laws enactment. They will need to be renewed every two years thereafter.

Convictions as a Protected Class under the IHRA

The new law also expands the protected categories under the Illinois Human Rights Act to include a record of conviction. This expansion pertains to existing prohibitions already in place regarding pre-employment inquiries into convictions and is similar in nature to existing EEOC guidance on the use of such convictions in hiring decisions, providing exclusions for situations where there is "a substantial relationship" between the offense and employment sought, or where there would be a risk to property or the safety or welfare of the public.

The Act defines "substantial relationship" as "whether the employment position offers the opportunity for the same or a similar offense to occur and whether the circumstances leading to the conduct for which the person was convicted will recur in the employment position." The Act provides specific factors to consider in this determination, including (1) the length of time since the conviction; (2) the number of convictions that appear on the conviction record; (3) the nature and severity of the conviction and its relationship to the safety and security of others; (4) the facts or circumstances surrounding the conviction; (5) the age of the employee at the time of the conviction; and (6) evidence of rehabilitation efforts.

Requirements for Disqualifying Convictions

The Act also imposes a requirement for an interactive assessment required for disqualifying a conviction, which it refers to as a preliminary determination and a notice requirement if a determination is made to disqualify an individual based on those factors. The written notification is specifically required to contain (a) notice of the disqualifying conviction or convictions that are the basis for the preliminary decision and the employer's reasoning for the disqualification; (b) a copy of the conviction history report, if any; and (c) an explanation of the employee's right to respond to the notice of the employer's preliminary decision before that decision becomes final. The explanation shall inform the employee that the response may include, but is not limited to, submission of evidence challenging the accuracy of the conviction record that is the basis for the disqualification, or evidence in mitigation, such as rehabilitation. The individual is then entitled to at least 5 business days to respond to the notification provided to the employee before the employer may make a final decision. Once that response is considered, and an employer makes a final decision to disqualify or take an adverse action based wholly or in part because of the employee's conviction record, the employer has to provide a second notice containing (1) the disqualifying conviction or convictions that are the basis for the decision; (2) the employer's reasoning for the disqualification; (3) any existing procedure the employer has for the employee to challenge the decision or request reconsideration; and (4) the right to file a charge with the Illinois Department of Human Rights.

The Business Corporation Act

Finally, the new law will provide easy public access to all Illinois Company's EEO-1's. The law amends the Business Corporations Act and requires that corporations who are already required to file an EEO-1 with the EEOC must file substantially similar information in Section D of the EEO-1 in its annual report to the Illinois Secretary of State. The law goes on to request that the Secretary of State publish the data received from each company on gender, race and ethnicity on their website for public viewing.

For more information on how the new amendments to the Equal Pay Act and IHRA may impact your HR procedures, please contact your local Quarles & Brady attorney or:

• Brian Hartstein : (312) 715-5211 / brian.hartstein@quarles.com