UPDATED 5/16/22: The Illinois Department of Labor recently updated its FAQs for the Equal Pay Registration Certificate requirement. The FAQs provide additional detail on which employers are subject to the registration requirement, how employers can apply for the certificate, and potential penalties for non-compliance. This blog has been updated with the new guidance.
The Illinois legislature amended the state’s Equal Pay Act of 2003 (EPA) requiring employers to regularly seek and obtain an equal pay registration certificate from the Illinois Department of Labor (IDOL). The IDOL will issue equal pay registration certificates to employers that submit detailed pay data and state that they have satisfied their obligations under the Illinois EPA.
As a reminder, the EPA prohibits employers from paying unequal wages to men and women for doing the same or substantially similar work, requiring equal skill, effort, and responsibility, under similar working conditions for the same employer in the same county, except if the wage difference is based upon a seniority system, a merit system, a system measuring earnings by quantity or quality of production, or factors other than gender. The EPA also prohibits employers from paying African American employees less than other employees who are not African American for the same or substantially the same work.
Covered Employers
The new registration requirements pursuant to the EPA are applicable to employers (1) that have more than 100 employees in Illinois and (2) are required to file an EEO-1 Report with the Equal Employment Opportunity Commission. For more information about EEO-1 reporting please visit our blog article Tentative Deadlines Announced for Federal EEO-1 Reporting in 2022.
The 100-employee threshold includes the total number of people employed who worked in or were based out of Illinois (including those working remotely) on the December 31st of the 12-month calendar year immediately prior to the year the employer is required to submit an equal pay registration certificate application.
- IDOL provides the following example: If an employer is required to submit a certificate application in 2022, the employer’s wage data should be based on the total number of people they employed on December 31, 2021. The employer would be required to re-certify in 2024 if they had 100 or more employees on December 31, 2023.
Obtaining an Equal Pay Registration Certificate
Employers that are authorized to do business in Illinois as of March 23, 2021 will be required to seek and obtain an equal pay registration certificate from the IDOL between March 24, 2022 and March 23, 2024, and then recertify with the IDOL every two years thereafter.
Application to the IDOL
Covered employers will have to provide (1) demographic and wage data (see the next section for content requirements), including a copy of their most recently filed EEO-1 report; (2) a statement certifying the employer’s compliance with various equal pay and discrimination laws; and (3) a $150 filing fee.
Within 45 days of receiving an application, the IDOL is required to issue an equal pay registration certificate or issue a statement explaining why it has rejected the employer’s application. After an application is rejected, the applicant has 30 days to cure the deficiencies and resubmit the revised application and may appeal a rejection.
Contents of Data Submission
When applying or recertifying for an equal pay registration certificate, employers must compile a list of all employees during the past calendar year separated by gender, race and ethnicity as it appears in the employer’s most recently filed EEO-1 report, and in the list include the following:
- the county in which the employee works;
- the date the employee started working for the business;
- “any other information the IDOL deems necessary to determine if pay equity exists among employees” (presumably, the IDOL will provide additional guidance on this requirement); and
- the total wages paid to each employee over the course of the past calendar year, rounded to the nearest $100 (“wages” means any compensation paid to an employee by an employer pursuant to an employment contract or agreement between two parties, including wages, salaries, earned commissions, earned bonuses, stocks and ownership shares; “wages” do not include the value of retirement benefits, or other fringe benefits).
Covered employers must also submit a copy of the business’ most recently filed EEO-1 to the IDOL.
Certification Statement
In the certification statement portion of the employer’s application the employer must attest to the following:
- That the business complies with the EPA and other relevant laws such as Title VII of the Civil Rights Act of 1964, the federal Equal Pay Act of 1963, the Illinois Human Rights Act and the Illinois Equal Wage Act;
- That the company’s average compensation for female and minority employees is not consistently below the average compensation for its male and non-minority employees within each of the major job categories in the EEO-1 for which an employee is expected to perform work (considering factors such as length of service, requirements of specific jobs, experience, skill, effort, responsibility, working conditions, education or training, job location, use of a collective bargaining agreement or “other mitigating factors”);
- That the business does not restrict employees of one sex to certain job classifications, and makes retention decisions without regard to sex;
- That the company addresses wage and benefit disparities when they are identified to ensure compliance with the equal pay and discrimination laws;
- How often the business evaluates benefits and wages; and
- The approach the business takes in determining the level of wages and benefits to pay its employees.
IDOL provides a template Equal Pay Compliance Statement.
Applicable Deadline
The IDOL will assign each employer a deadline for application between March 24, 2022 and March 23, 2024. Overall deadlines are as follows:
- Employers authorized to do business in Illinois as of March 23, 2021 must apply between March 24, 2022 and March 23, 2024.
- Employers authorized to do business in Illinois after March 23, 2021 must apply within 3 years of commencing business operations, but not before January 1, 2024.
Even if an applicable employer does not receive a notice, a business subject to the Illinois pay data reporting requirement must nonetheless apply for an equal pay registration certificate from the IDOL. This means that if a business does not receive a notice, it should file an application by no later than March 23, 2024.
Penalties
Violations of the EPA’s reporting and certification requirements carry penalties of up to $10,000. Before a penalty is imposed, IDOL will notify the employer of their failure to file a registration application or recertification and provide 30 days for the employer to cure the failure.
Further, if an employer’s application for an equal pay registration certificate shows that the employer is paying unequal wages to female employees or to African American employees, the IDOL can initiate an investigation.
Employer Considerations
Covered Illinois employers are encouraged begin gathering data to report in anticipation of these new reporting requirements. These employers should audit their payroll records to identify issues and consult with counsel, as necessary during the process.
Additional Resources
Disclaimer: This content is intended for informational purposes only and should not be construed as legal, medical or tax advice. It provides general information and is not intended to encompass all compliance and legal obligations that may be applicable. This information and any questions as to your specific circumstances should be reviewed with your respective legal counsel and/or tax advisor as we do not provide legal or tax advice. Please note that this information may be subject to change based on legislative changes. © 2022 Sequoia Benefits & Insurance Services, LLC. All Rights Reserved
