Review IL State Law Changes Impacting Employers for a Happy 2022

When the clock strikes midnight and 2022 arrives, Illinois employers should remain mindful of updates to the state's employment laws taking effect. Changes include a rise in the minimum wage, changes to non-compete law and new reporting requirements on compensation.

State Minimum Wage Rising to $12/hour

A reminder to all Illinois employers that pursuant to Public Act 101-0001 passed in 2019, the state’s minimum wage will continue to rise, moving to $12 an hour for most employees, $7.20 an hour for tipped employees, and $9.25 for employees under 18 (working less than 650 hours per calendar year). Hourly wages will continue to rise each year through 2025 when the state minimum wage reaches the level currently set in Chicago of $15 per hour. The Chicago minimum wage is also likely to rise in line with the consumer price index on July 1, 2022. If current inflationary trends continue, wages in Chicago will likely rise to the statutory maximum of 2.5% ($15.37). Employers should plan accordingly.

Limitations on the Use of Restrictive Covenants

Effective January 1, 2022, Illinois law will limit the use of restrictive covenants under the Illinois Freedom to Work Act. Highlights of these changes include:

• An absolute bar of non-compete agreements with any employee whose earnings do not exceed $75,000 per year (rising steadily to $90,000 by 2037);
• An absolute bar of non-solicitation agreements with any employee whose earnings do not exceed $45,000 per year (rising steadily to $52,500 by 2037);
• A requirement that employees are informed of their right to consult with an attorney and have at least 14 days to consider the agreement;

• The elimination of one-sided fee shifting provisions and/or fees shifting to the employee when enforcement actions fail;

• Codification of many of the existing common-law standards regarding elements of claim, consideration, and blue penciling; and
• Enforcement mechanisms for the Illinois Attorney General's office.

Equal Pay Registration Certificates

Under changes 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). While the original changes to this Act did not have any 2022 deadlines, subsequent amendments to the Act may require an employer take action as early as March 2022.

As a reminder, in order to receive the certificate, employers must certify to the Illinois Department of Labor that:

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. Wages and benefits are evaluated with a frequency that ensures compliance with the Act.

Employers also have to state the approach the business uses in setting compensation and benefits. To receive their certificates, covered employers have the additional burden of submitting a copy of their existing EEO-1 report to the Illinois Department of Labor along with a variety of additional demographic information specified by the Act.

Since our original article on the subject, the law has been amended to add some additional requirements. Most critically, while the original date for certifications to be filed was March 2024, that compliance date will be moved up for some employers. The new submission dates for these applications are now set to fall between March 24, 2022 and March 23, 2024, with due dates for submission of the certificate to be assigned by the Illinois Department of Labor within that window for some employers. As such, some Illinois employers may start to receive notification of their need to submit registration as early as the first quarter of 2022.

Other significant reporting changes related to the certification process include:

• A requirement that businesses with less than 100 employees certify they are not subject to the requirements of the Act.
• Informing the IDOL of the county in which work is performed, employee start date and other information the department "deems necessary".
• Alterations which change the way reporting for factors utilized for setting compensation and benefits should be described and set new procedures to cure any deficiencies when an application has been rejected.

For more information on how the new laws impact your business, please contact your local Quarles & Brady attorney or:

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