Illinois Equal Pay Act Amendments: Mitigating Risks

The dos and don'ts

Illinois’s Governor J.B. Pritzker recently signed Senate Bill 1480 into law, establishing new employer certification and reporting requirements, making sweeping changes to Illinois’s anti-retaliation law, and curtailing employers’ uses of criminal convictions in employment decisions. Effective immediately upon signing on March 23, 2021, the law impacts all employers doing business in Illinois. A summary of the amendments to the Illinois Equal Pay Act, Illinois Business Corporation Act, and Illinois Human Rights Act are detailed below:

Amendments to the Illinois Equal Pay Act

First, the law amends the Illinois Equal Pay Act by mandating that all employers with 100 or more employees in Illinois obtain an “equal pay registration certificate.”  The certificate must verify:

(A) the business is in compliance with Title VII, the federal Equal Pay Acts of 1963 and 2003, the Illinois Human Rights Act, and the Illinois Equal Wage Act;

(B) the average compensation for its female and minority employees is not consistently below the average compensation for its male and non-minority employees, taking into account factors such as length of service, requirements of specific jobs, experience, skill, effort, responsibility, working conditions of the job, or other mitigating factors;

(C) the business does not restrict employees of one sex to certain job classifications and the business makes retention and promotion decisions without regard to sex;

(D) wage and benefit disparities are corrected when identified to ensure compliance with the above-mentioned employment laws; and

(E) how often wages and benefits are evaluated to ensure compliance with applicable employment laws.

Additionally, employers must also indicate in their compliance statement whether the business, in setting compensation, utilizes a market pricing approach, a state prevailing wage or union contract, a performance pay system, an internal analysis, or an alternative approach.  If the employer utilizes an “alternative” approach, then the employer must describe the approach taken.

Employers have some time to submit the first certificate to the Illinois Department of Labor. The deadline for initial submissions, including the filing fee and a copy of the employer’s most recent EEO-1 report, is March 24, 2024.  Recertification is required every two years thereafter.  Failure to comply with the law’s mandates may result in a penalty equal to 1% of the employer’s total gross profits.

Second, the law amends the Illinois Equal Pay Act by prohibiting employers from taking retaliatory action against an employee for engaging in certain “whistleblower” activity.  Specifically, it prohibits retaliation where an employee: (i) discloses or threatens to disclose to a supervisor or to a public body an activity, inaction, policy, or practice implemented by the corporation that the employee reasonably believes is in violation of a law, rule, or regulation; (ii) provides information to or testifies before any public body conducting an investigation, hearing, or inquiry into the violation of a law, rule or regulation by a nursing home administrator; or (iii) assists in a proceeding to enforce any provisions of the Illinois Equal Pay Act.  

An employee who prevails on his or her whistleblower retaliation claim may be awarded reinstatement, double back-pay with interest, and reasonable attorneys’ fees and costs.  An employer may avoid liability by demonstrating, through clear and convincing evidence, that it would have taken the same personnel action in the absence of the alleged retaliatory conduct.

We encourage employers to familiarize themselves with these new amendments. Further, though the initial compliance certificate is not due until March 24, 2024, employers should consider mitigating risks of pay disparities by performing an earlier streamlined and targeted pay equity audit.

This article originally appeared here.

	Kevin Cloutier is a Partner in the Labor and Employment and Business Trials Practice Groups and Leader of the Sheppard, Mullin, Richter & Hampton LLP’s Non-Compete and Trade Secrets Team. He acts as the hiring partner for the firm's Chicago office and is a member of the Diversity and Inclusion and Compensation Committees. Visit www.sheppardmullin.com Connect Kevin Cloutier Follow @SheppardMullin
	Shawn Fabian is an Associate in the Labor and Employment Practice Group in the Sheppard, Mullin, Richter & Hampton LLP. Shawn represents management-side clients before federal and state courts across the country and before administrative agencies, including the DOL, EEOC, NLRB and various state and municipal human rights commissions and labor agencies. He also regularly represents clients in arbitrations and other avenues of alternative dispute resolution. Visit www.sheppardmullin.com Connect Shawn Fabian Follow @SheppardMullin
	Umar Sattar is an Associate in the Labor and Employment Practice Group in the Sheppard, Mullin, Richter & Hampton LLP. Visit www.sheppardmullin.com Follow @SheppardMullin