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Illinois Amends Antidiscrimination, Pay Equity, and Business Disclosure Laws

March 30, 2021

Illinois Governor J.B. Pritzker signed Senate Bill 1480 into law on March 23, effective immediately. The new law limits employers’ use of conviction records in making employment decisions, requires broad workplace demographic and pay disclosures, and mandates EEO compliance certifications. The law also provides new whistleblower protections for Illinois employees.

Senate Bill 1480 is part of a series of bills originally set in motion by the 2020 death of George Floyd and the Black Lives Matter movement that aimed to expand economic opportunities for minority communities in Illinois, and it has expanded to include other new requirements on Illinois employers relating to pay equity and other antidiscrimination provisions.

Amendments to Illinois Human Rights Act Limiting Consideration of Conviction Record Information

The law amends the Illinois Human Rights Act (IHRA) to limit Illinois employers’ consideration of conviction record information in making hiring and other employment decisions. A “conviction record” is defined as any “information indicating that a person has been convicted of a felony, misdemeanor or other criminal offense, placed on probation, fined, imprisoned, or paroled pursuant to any law enforcement or military authority.” Answers to the frequently asked questions (FAQs) from the Illinois Department of Human Rights identify examples of a conviction record as “guilty pleas or court orders that show a person was convicted of any felonies, misdemeanors or other criminal offenses.”

Pursuant to the amendment, unless otherwise authorized by law, Illinois employers may not “use a conviction record . . . as a basis to” disqualify or take other adverse action against an applicant or employee, including without limitation as a basis to discharge, discipline, deny employment, or deny a promotion to an individual with a conviction record unless one or more of the criminal offenses has a “substantial relationship” to the job, or employing the person in the job would involve “an unreasonable risk to property or to the safety or welfare of specific individuals or the general public.” A “substantial relationship” means a consideration of whether the job position offers the opportunity for the person to commit “the same or a similar offense” again and whether “the circumstances leading to the conduct for which the person was convicted will recur in the employment position.”

The law lists six factors an employer must consider when evaluating whether to make a decision based on a conviction record:

  • The length of time since conviction
  • The number of convictions that appear on the conviction record
  • 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
  • Evidence of rehabilitation efforts

In the event an employer preliminarily decides to disqualify an individual from employment or take another adverse employment action based on a conviction record, the employer must engage in an “interactive assessment” with the individual before taking any final action. This interactive assessment starts with written notice to the individual of the employer’s preliminary (i.e., non-final) decision that includes the following:

  • The disqualifying conviction(s) at issue and the employer’s reasoning for the disqualification
  • A copy of the conviction history report, if any
  • An explanation of the individual’s right to respond to the notice before the decision becomes final, which must inform the individual that the response “may include . . . submission of evidence challenging the accuracy of the conviction record that is the basis for the disqualification, or evidence in mitigation, such as rehabilitation”

The individual then has five business days to respond to the employer’s written notification. The employer cannot make a final decision without giving the individual an opportunity to respond to the employer’s preliminary decision and considering that response.

If the employer makes a final decision to disqualify the individual from further consideration or to take another adverse action in whole or in part because of the individual’s conviction record (apparently irrespective of whether the individual provides a timely response), the employer must provide the individual with notice of the following in writing:

  • The disqualifying conviction(s) along with the employer’s reasoning
  • Any existing procedure for the individual to request reconsideration of or challenge the decision
  • The individual’s right to file a charge with the Illinois Department of Human Rights

If an employer takes an adverse action based in whole or in part on a conviction record without first engaging in this interactive assessment and otherwise complying with the IHRA, the employer may be liable for committing a civil rights violation under the IHRA.

Amendments to Business Corporation Act Requiring Workplace Demographic and Pay Disclosures in Annual Corporate Reports Filed on or After January 1, 2023

Senate Bill 1480 also amends the Business Corporation Act, and requires corporations (whether organized under Illinois law or authorized to do business in the state) that file an EEO-1 report with the Equal Employment Opportunity Commission (EEOC) to file “substantially similar” data to that reported on Section D of the EEO-1 with its annual corporate report filings with the Illinois secretary of state.

Significantly, this filed data will be made publicly available. For every corporation that submits data, the Illinois secretary of state will publish the data on the gender, race, and ethnicity of the corporation’s employees on its official website within 90 days of receipt of the properly filed annual report. This is in contrast to the EEO-1 report, which is confidentially maintained by the EEOC. It also is a novel requirement and may subject employers to increased public scrutiny regarding their diversity metrics and progress over time.

These new requirements apply to corporate reports filed on or after January 1, 2023.

Amendments to Illinois Equal Pay Act Requiring Equal Pay Registration Certificate to Be Filed on or Before March 23, 2024

The law significantly broadens Illinois’s Equal Pay Act of 2003 by requiring private employers with more than 100 employees in the State of Illinois to obtain an “equal pay registration certificate” from the Illinois Department of Labor. To obtain such a certificate, the employer must pay a $150 filing fee and submit an “equal pay compliance statement” that certifies the following:

  • That the business is in compliance with Title VII of the Civil Rights Act of 1964, the federal Equal Pay Act of 1963, the IHRA, the Illinois Equal Pay Act of 2003, and the Illinois Equal Wage Act
  • That the average compensation for its female and minority employees is “not consistently below” the average compensation (as determined by unspecified rule by the US Department of Labor) for its male and nonminority employees within each of the major job categories in the EEO-1 report, 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
  • That the business does not restrict employees of one sex to certain job classifications and makes retention and promotion decisions without regard to sex
  • That wage and benefit disparities are corrected when identified to ensure compliance with the laws and principles set forth in the first two bullet points above
  • How often wages and benefits are evaluated to ensure compliance with such laws and principles

The employer must also indicate in its equal pay registration certificate whether the employer, in setting compensation and benefits, utilizes a market pricing approach; state prevailing wage or union contract requirements; a performance pay system; an internal analysis; or an alternative approach. (If an alternative approach is utilized, the business must provide a description of its approach.) Businesses with multiple locations or facilities in Illinois need only submit a single application regarding all of its operations in the state.

The law also imposes additional disclosure requirements on covered employers:

  • An employer required to file an EEO-1 report with the EEOC must also submit a copy of its most recent EEO-1 report to the Illinois Department of Labor for each Illinois county in which the business has a facility or employees.
  • An employer (again with more than 100 employees in the State of Illinois) also must compile a list of all employees during the last calendar year, separated by gender and the race and ethnicity categories as reported in the business’s most recently filed EEO-1 report, and report the total wages (as defined by the Illinois Wage Payment and Collection Act) paid to each employee during the last calendar year, rounded to the nearest hundred dollars. This is a novel requirement for private employers that do not have state governmental contracts and raises questions as to how and for what purposes this detailed data will be used. At a minimum, it signals the Illinois Department of Labor’s enhanced focus going forward on equal pay issues.

The foregoing pay data, among other “[d]ata submitted to the Director related to equal pay registration certificates or otherwise provided by an employer in its equal pay compliance statement,” are “private data” not subject to public disclosure under Illinois law—with the notable exception above of workplace demographic data (paralleling EEO-1 reports) that is filed and publicly posted on the Illinois secretary of state’s website.

An employer generally must obtain an equal pay registration certificate (1) within three years after the effective date of the law (i.e., March 23, 2024) or (if later) within three years of commencing business operations subject to the law, and (2) in each case, every two years thereafter.

An equal pay registration certificate “may” be suspended or revoked by the director of the Illinois Department of Labor under various circumstances, including if a covered employer fails to make a good-faith effort to comply with or has multiple violations of Title VII, the IHRA, the federal or Illinois Equal Pay Acts, the Illinois Equal Wage Act, or the amendatory act’s certification requirements.

Prior to suspending or revoking a certification, however, the director must first have sought to conciliate with the business regarding wages and benefits due to employees.

Significantly, the amendatory act provides: “The Department shall impose on any business that does not obtain an equal pay registration certificate as required under this Section, or whose equal pay registration certificate is suspended or revoked after a Department investigation, a civil penalty in an amount equal to 1% of the business’s gross profits.” (Emphasis added.)

The law leaves many unanswered questions, including, for example, whether this penalty is limited to gross profits attributable to Illinois operations; whether it may be imposed only for alleged violations occurring within Illinois; what constitutes a “violation” that may result in such a significant penalty (for example, a jury verdict? An agency finding of a violation? A legal violation that is unrelated to equal pay?); and whether isolated or minor alleged “violations” and/or discrete violations over significant periods of time may trigger the penalty.

New Whistleblower Protections

Senate Bill 1480 also includes new whistleblower protections for Illinois employees. Employers are prohibited from taking any “retaliatory action” against an employee because the employee

  • discloses or threatens to disclose to a supervisor or 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;
  • provides information to or testifies before any public body conducting an investigation, hearing, or inquiry into any violation of a law, rule, or regulation; or
  • assists or participates in a proceeding to enforce the provisions of the act.

Under this section, “retaliatory actions” include “reprimand, discharge, suspension, demotion, denial of promotion or transfer, or change in the terms and conditions of employment.”

Read literally, this amendment appears to protect whistleblowers from reporting violation of any law, not just the employment laws at issue in Senate Bill 1480.

Available remedies include “all remedies necessary to make the employee whole and to prevent future violations,” such as (without limitation) job reinstatement; two times the amount of back pay plus interest; reinstatement of full fringe benefits and seniority rights; and reasonable costs and attorney fees.

What Should Illinois Employers Do Now?

Employers in Illinois should take the following immediate steps to comply and assess their future ability to comply with these amendments:

  • Review and update their background check and other employment-related policies and practices in response to the conviction record amendments to the IHRA
  • Assess whether they will be able to obtain the required equal pay registration certificate by March 2024
  • Consider the practical effects of having their EEO-1 employee composition data being publicly available beginning with annual reports filed in January 2023
  • Revise applicable policies prohibiting retaliation to ensure the policies cover whistleblowers as defined in the new law

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Chicago
Stephanie L. Sweitzer
Jonathan D. Lotsoff
Ami N. Wynne
Sari M. Alamuddin