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.

Amendment to the Illinois Business Corporation Act

Additionally, the law amends the Illinois Business Corporation Act by requiring corporations organized under Illinois law to provide the Illinois Secretary of State with information substantially similar to the employment data reported under section D of an EEO-1 report.  The Secretary of State may publish aggregate data as to the ethnicity, gender, and race of the corporation’s employees on its website.

Amendments to the Illinois Human Rights Act

Lastly, the law amends the Illinois Human Rights Act by barring employers from making adverse employment decisions based on a conviction record.  Employers may not use a conviction record as a basis to refuse to hire or to otherwise act in an adverse way unless there is a substantial relationship between the conviction and the position sought or the granting of employment would involve an unreasonable risk to property or to the safety or welfare of specific individuals or the general public.

In assessing whether there is a “substantial relationship” between a conviction and the position sought, employers must consider whether the 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.  For example, if an applicant has a theft conviction, placing that applicant in a position where he or she would be handling cash transactions may put the applicant in a similar situation as his or her conviction and potentially lead to reoccurring conduct.  Such a scenario may create a “substantial relationship” between the conviction and the position sought.  Moreover, employers need to consider the amount of time that has passed since the conviction, the number of convictions, the nature and severity of the conviction and its relationship to the safety and security of others, the facts or circumstances surrounding the conviction, the age of the employee at the time of the conviction, and evidence of rehabilitation efforts.

In the event an employer disqualifies an applicant or takes other adverse action based on a conviction, the employer must engage in an “interactive assessment.”  First, the employer must notify the employee of its preliminary decision in writing.  Similar to the Fair Credit Reporting Act, this written notice must include the conviction(s) that serve as the basis for the adverse action and the employer’s reasoning for the disqualification, along with a copy of the employee’s conviction report and an explanation of the employee’s right to respond to the employer’s preliminary decision before a final decision is rendered.  An employer must also inform the employee that the employee’s response may include submission of evidence challenging the accuracy of the conviction or mitigating evidence such as rehabilitation.  Employees have at least five days to respond to the notice before the employer is permitted to render a final decision.  Employers must consider any information submitted by the employee before making a final decision.  If an employer ultimately disqualifies or otherwise takes any adverse action based upon a conviction, then the employer must notify the employee in writing of: (i) the disqualifying conviction(s), (ii) the employer’s reasoning, (iii) any existing procedure the employer has for the employee to challenge the decision or request reconsideration, and (iv) the right to file a charge with the Illinois Department of Human Rights.  Notably, this amendment is quite similar to the mandates under Article 23-A of New York’s Correction Law.

Employers failing to comply with these mandates may be subject to a civil rights violation and/or investigation by the Illinois Department of Human Rights following a complaint.

These new amendments may potentially result in substantial changes to employers’ onboarding protocols.  It is important for employers to understand these mandates, to handle convictions on a case-by-case basis, and to ensure forms and notices are up-to-date and compliant with the law.

How Can Sheppard Mullin Help?

As the legal landscape around employment laws and regulations continues to shift and evolve, our team is up-to-date on best practices for maintaining compliance.  Whether it is an efficient internal audit on pay practices to ensure pay equity, or a forensic review of onboarding policies and protocols to ensure compliance with applicable laws, the attorneys at Sheppard Mullin are skilled, experienced, and effective at carrying out these tasks.