Since Gov. J. B. Pritzker signed Senate Bill 1480 (the Act) on March 23, 2021, the standards for employers have been raised for both hiring and employment practices. The Act incorporated significant changes to the Illinois Human Rights Act, the Illinois Business Corporation Act and the Illinois Equal Pay Act.

As explained below, the Act limits employers’ ability to consider criminal convictions in hiring and employment decisions, requires them to obtain a registration certificate to show compliance with federal and state equal pay laws and imposes new requirements for reporting workforce demographics to the Illinois Secretary of State.

Changes to Illinois Human Rights Act (IHRA)

The Act, which covers “any person employing 1 or more employees within Illinois during 20 or more calendar weeks within the calendar year of or preceding the alleged violation,” prohibits an employer from using a conviction record as the basis for an employment decision unless either of the following is true:

1. there is a “substantial relationship” between one or more of the previous criminal offenses and the employment sought or held
2. the granting or continuation of employment would involve an unreasonable risk to property or to the safety or welfare of specific individuals or the general public

“Conviction record” includes, but is not limited to, information showing that a person has been convicted of a felony, misdemeanor or other crime, placed on probation, fined, imprisoned or paroled by any law enforcement agency or military authority.

A “substantial relationship” exists when employers can demonstrate that both of the following are true:

(a) The position sought by the candidate creates an opportunity for the candidate to engage in the same or a similar criminal offense

(b) The circumstances leading to the conduct will occur again in the sought-out position

Further, when dealing with both elements, employers need to assess six mitigating factors set forth in the Act:

1. the length of time since the conviction
2. the number of convictions that appear on the conviction record
3. the nature and severity of the conviction and its relationship to the safety and security of others
4. the facts or circumstances surrounding the conviction
5. the age of the employee at the time of the conviction
6. evidence of rehabilitation efforts

If after a review of the mitigating factors, an employer makes a preliminary decision that the employee’s conviction record disqualifies them, it must then engage in an interactive process comparable to what is required under the federal Fair Credit Reporting Act (FCRA). This “interactive process” includes giving:

(a) Notice to the employee of the disqualifying conviction(s) that is (are) the basis for the preliminary decision and the employer’s reasoning for the disqualification

(b) A copy of the conviction history report, if any

(c) An explanation of the employee’s right to respond within five days to the notice of the employer’s preliminary decision to dispute that decision with evidence challenging the accuracy of the conviction record and provide mitigating factor evidence before that decision becomes final. Employers must consider the evidence provided by the candidate before making a final decision.

Remedies

The remedies should come as no surprise to employers, as they are the same as the remedies used to protect against other issues subject to the IHRA, yet are triggered for specific reasons under the Act. Candidates, pursuant to the Act, are entitled to receive notice from the employer and engage in an interactive assessment with the employer if the candidate’s conviction record is a reason for the employment decision. During the assessment, the employer must review if there is a substantial relationship between the conviction and the position. If the employee is not notified and an interactive assessment is not completed, the Act protects candidates from being discharged, disciplined, denied employment or denied promotions. As such, candidates who believe they have been discriminated against based on a conviction record may file a charge with the Illinois Department of Human Rights after an employer provides a final decision rejecting the candidate. Candidates are also able to receive actual damages; hiring, reinstatement, or promotion with backpay and fringe benefits; admission into or restoration of membership; commencement of an action after administrative remedies are exhausted to make the candidate whole; and attorney fees and costs.

Changes to the Illinois Business Corporation Act of 1983

Illinois corporations, including corporations authorized to transact business in Illinois, that are required to file Employer Information Reports EEO-1 with the Equal Employment Opportunity Commission (EEOC) must now also include similar, but not identical, demographic information in their annual report to the State of Illinois. Typically, this requirement applies to private employers with 100 or more employees, yet it may include certain federal contractors with 50 or more employees. The president, a vice president, secretary, assistant secretary, treasurer or other duly authorized officer chosen by the board of directors must verify the gender, race and ethnicity of the corporation’s employees and provide the information to the Secretary of State. The Secretary of State will then publish the demographic data on its website within 90 days of receipt of a properly filed annual report. This portion of the Act became effective for all annual reports filed on and after January 1, 2023, which considered 2021 hiring statistics.

The Act does not specify the financial repercussions for corporations that fail to disclose the required demographic information in annual reports, but any corporation that refuses or fails to perform required actions under the Illinois Business Corporation Act is guilty of a Class C misdemeanor. In addition, an employer’s failure to file an annual report within 60 days of the due date requires payment of a penalty of 10% of the amount of any delinquent franchise tax due for the report.

Practically, the Illinois Department of Labor administratively suspended the EEO-1 filing requirement for certain businesses, particularly those with originally assigned deadlines after January 1, 2023. This, however, has not prevented or stopped businesses from submitting information. Importantly, many businesses have submitted the federal EEO-1 form for publication by the Illinois Secretary of State. We strongly advise against allowing for the publication of the entire EEO-1 report because the information is not published by the federal government. The information is considered private and should remain confidential to the extent allowed by law. Illinois only requires the information in Section D of the EEO-1 report. As such, we recommend providing the required information in an Illinois-specific format, eliminating unnecessary information.

Changes to the Illinois Equal Pay Act (IEPA) of 2003

Between March 24, 2022 and March 23, 2024, the Illinois Department of Labor (IDOL) will require employers to either certify that their business complies with the Equal Pay Act of 2003 or apply for an exemption. The IDOL will provide businesses with at least 120 days’ notice of a due date.

All private employers operating in the State of Illinois with 100 or more employees across all sites as of December 31 of the calendar year immediately preceding a reporting deadline, must now obtain an equal pay registration from the IDOL.

If an employer does not obtain a certificate, it must submit the Equal Pay Registration Certificate Exemption/Business Name Change Form to the provided IDOL email address. Businesses that can file for an exemption include:

1. Businesses with 99 or fewer employees as of December 31 of the calendar year immediately preceding a reporting deadline
2. Businesses that are not required to file an EEO-1 report with the EEOC
3. Federal, state and local government agencies, including public school districts

The IDOL may entertain other exemption requests as well. When an exemption is requested, the IDOL will notify employers of a denial and allow the business 30 calendar days to either certify or resubmit an exemption form.

If a business must certify, it is required to recertify every two years and the IDOL has committed to reminding businesses 180 days prior to recertification deadlines. Employers subject to this requirement must compile a list of all employees during the past calendar year, separated by gender, race and ethnicity categories (as reported in the business’s most recently filed EEO-1 report), as well as their total wages as defined by Section 2 of the Illinois Wage Payment and Collection Act, in a text-searchable Microsoft Excel format. Of note, if employees have chosen not to report their race or gender, an employer may specify that those certain employees have chosen not to identify.

A corporate officer, legal counsel or other authorized agent must also submit an Equal Pay Compliance Statement certifying:

(a) That the business is compliant with the Illinois Equal Pay Act (IEPA) and other relevant laws

(b) That the average compensation for its female and minority employees is not consistently below the average compensation for its male and non-minority employees

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

(d) That wage and benefit disparities are corrected when identified to ensure compliance with the relevant laws

(e) How often wages and benefits are evaluated

(f) The approach the business takes in determining what level of wages and benefits to pay its employees, such as a wage and salary survey

The IDOL website also has a helpful presentation to assist employers with submitting required information.

Businesses will also be required to pay a $150 filing fee to submit the statement of compliance to the IDOL for certification. The IDOL will only deny issuance of a certificate if the required information is not listed by the business in its application or the business otherwise is found in violation of the Act. An equal pay registration certificate can be revoked if the IDOL finds a business has not made good faith attempts to comply with, or has multiple violations of Title VII, the Equal Pay Act of 1963, the Illinois Human Rights Act, the Equal Wage Act or the Equal Pay Act of 2003.

The amendment also provides the Department of Labor authority to audit a business to ensure compliance with the IEPA. Any business that fails to comply with the certification requirement is subject to a civil penalty of up to $10,000.

Further, this Act prohibits employers from taking any retaliatory action against an employee of the business because the employee does any of the following:

(a) Discloses or threatens to disclose to a supervisor or to a public body an activity, inaction, policy or practice implemented by a business that the employee reasonably believes is in violation of a law, rule or regulation

(b) Provides information to or testifies before any public body conducting an investigation, hearing or inquiry into any violation of a law, rule or regulation by a nursing home administrator

(c) Assists or participates in a proceeding to enforce the provisions of the new law

Can an Employee Request Data?

A current employee may obtain relevant information from their employer’s EEO report. While no identifiable information will be released, the employee may submit a request to the IDOL for anonymized data regarding the pay for their job classification or title at the business. This request must be in writing and include the following:

(a) Employee’s name

(b) Date of hire

(c) Job title or classification

(d) A signed affidavit swearing that the employee holds the specified job title at that business

(e) Evidence that the employee currently holds that job title

(f) The timeframe of information the employee seeks

Once the employee submits the appropriate request, the IDOL will provide the relevant current data, historical data up to 10 years prior to the submission date, or both.

Remedies

The law provides that an employee may be awarded all remedies necessary to make the employee whole and to prevent future violations of this Act. Remedies also include the reinstatement of the employee to either the same position held before any retaliatory action or to an equivalent position; two times the amount of back pay; interest on the back pay; reinstatement of full fringe benefits and seniority rights; and payment of reasonable costs and attorney’s fees.

Recommended Next Steps

Complying with the amendments that are implemented by the Act will require extensive work. As noted, the requested information is well beyond existing federal requirements, so employers should first review and revise their handbooks, policies and job application forms and templates to comply with background check rules.

An employer should also do the following:

• Train human resources personnel and others in charge of interviewing and hiring on IHRA and FCRA requirements
• Determine whether it should be filing an EEO-1 form with the federal government and, if so, create a template to provide the information in Section D only to the Illinois Secretary of State
• Review pay practices to ensure that the average compensation for female and minority employees is not consistently below the average compensation, that employees of one sex are not restricted to certain job classifications, and that retention and promotion decisions are made without regard to sex
• Complete a pay equity audit
• Confirm email addresses given to the IDOL are accurate to receive notification of any reporting deadlines

Each of these can be completed by the Chicago Fox Rothschild labor and employment team.

Next Up: The Future of Restrictive Covenants in Illinois

Read the Previous Installment: A Year in Review for Illinois Employers: Obligations You May Have Missed

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