In June 2021, the Illinois Equal Pay Act (IEPA) was amended to add a requirement for certain Illinois businesses to obtain an equal pay registration certificate (EPRC). The Illinois Department of Labor (IDOL) issued its long awaited proposed rules regarding the EPRC requirements on May 20, 2022. The proposed rules are subject to a 45-day comment period, which has now passed, followed by an internal review, and a public hearing on August 9, which may result in additional changes before they become final.

However, some Illinois employers have already received notice of a deadline to file their Application for Certification before the rules are finalized. Therefore, a careful review of the proposed rules is helpful as we anticipate issuance of the final rules. While the proposed rules largely mirror statutory requirements (the basics which were laid out in prior posts here and here), IDOL has clarified or provided additional information on a number of topics.

Who is a covered “business”? A covered business includes any private employer with 100 or more employees and that is required to file an EEO-1 report with the Equal Employment Opportunity Commission. It was previously unclear whether employers with exactly 100 employees were required to certify.

Who counts as an “employee”? The proposed regulations define “employee” for purposes of counting (for a covered business) and reporting as “any person performing a service for a business under the act whose base of operations, or if there is no base of operations, the place from which the service is directed or controlled, is located with the state of Illinois; or whose base of operations or the place from which the service is directed or controlled is not in any state in which some part of the service is performed, but the individual’s residence is in the state of Illinois.” This definition appears to require employers to include remote employees working outside of Illinois if the remote individual’s work is directed or controlled within Illinois. The definition also appears to cover remote workers sitting in Illinois – even if their work is not controlled or based out of Illinois – providing that none of their work is done in the state that is directing or controlling their remote work.

Is an employer required to enroll with the IDOL? The statute states that the IDOL “shall collect contact information from each business” that is required to obtain an EPRC without specifying how IDOL was to collect that information. IDOL later issued a set of FAQs where it provided a link to a survey for businesses to provide their contact information if they “would like to make sure IDOL has [their] correct contact information.” In the proposed regulations, IDOL stated for the first time that businesses “shall submit an enrollment form notifying [IDOL] that the business is subject to Section 11 of the Act by March 31, 2022” (emphasis added). At this point it is unclear how IDOL will enforce this requirement that was announced two months after the apparent deadline.  Many employers have held off on completing the survey until the final rules are issued from IDOL.

Who can “certify” compliance?  The statute requires a covered business to submit an equal pay compliance statement (Compliance Statement) signed by a corporate officer, legal counsel or authorized agent. In the Compliance Statement, the business must certify that it complies with the IEPA, Title VII, and other relevant laws, and that its pay practices meet certain requirements set forth in the statute. The business must also identify the approach it takes in setting compensation and benefits and the frequency with which compensation is reviewed.  The proposed regulations make it clear that the person signing the Compliance Statement on behalf of the business must be an employee (specifically excluding outside counsel, third-party consultants, and vendors) with knowledge of its pay practices and designated by its corporate officers to submit the Compliance Statement.

What happens after a business files an application? Within 45 calendar days of receipt of an application, the IDOL will issue either an EPRC or a Statement of Rejection with an explanation of why the application was rejected. Businesses have 30 calendar days from a Statement of Rejection to cure any deficiencies in its application that led to the rejection and resubmit the revised application. Businesses may also appeal rejected applications by submitting an appeal in writing within 14 calendar days of a Statement of Rejection. The IDOL will respond to the appeal within 30 calendar days.

Suspension and revocation. An EPRC may be suspended or revoked if the business fails to make a “good faith” effort to comply with the Act or other relevant laws, fails to make a “good faith” effort to comply with Section 11 of the Act, or has multiple violations of Section 11 of the Act. “Good faith effort” means demonstrable efforts by the business to promote pay equity and combat employment discrimination, including, by example, through internal compensation reviews, staff training, adoption of equal opportunity policies, and evidence that those policies were enforced through evaluation, investigation, and personnel action. An employer may request a hearing before the IDOL to contest the suspension or revocation.

Corrections. As referenced above, several employers have already been issued a notice of deadline from the IDOL and will have to file their application for an EPRC before having the benefit of the final regulations. The proposed rules require employers to proactively correct any misinformation on an application for certification. In the event a correction is warranted, the proposed rules require the employer to “submit to the department a revised application with correct or complete information, along with a letter identifying the information that was amended.”

Recertification. Employers will need to recertify every two years. The proposed rules specify that the IDOL will “notify the business that recertification is required and will provide the business with a recertification due date at least 180 calendar days before the recertification due date.” The proposed rules also provide for an employer to be released from recertification obligations if it has less than 100 covered employees.

Employee access to reporting data. The proposed rules allow for current employees to request anonymized pay data submitted by their employer from the IDOL, and that the IDOL shall provide both current and historical data in response to these requests.

Open Questions:

• There is no clear guidance on what methodology will be accepted by the IDOL for purposes of the certification that “the average compensation for the business’s female and minority employees is not consistently below the average compensation for its male and non-minority employees within each of the EEO-1 job categories.”
• Additional Requirements: In addition to the list of employees, and their wages, there is a vague reference to include “any other information required by the department on the application form.” Employers should expect that that the IDOL will change or modify reporting requirements in the future.

Pay equity continues to be a “top of mind” issue for federal and state agency and enforcement action, but also for employees, investors, shareholders, customers, and other business stakeholders.  Aside from preparing to complete the application for the EPRC for the IDOL, employers in Illinois and other states should be prepared to have answers to questions regarding pay and promotion practices given the trend of legislation imposing various pay data reporting obligations including at the time of posting jobs. A privileged pay equity audit is a helpful tool to review your company’s pay practices in a proactive manner given the increased transparency with regards to pay and promotion data.