Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
The Illinois Department of Labor recently published final regulations governing the new requirements for employers to comply with the Illinois Equal Pay Act Amendments (the “EPA Amendments”) signed into law by Governor Pritzker on March 23 and June 25, 2021. The EPA Amendments make the Illinois Equal Pay Act one of the most demanding pay transparency statutes in the country because it requires employers with 100 or more employees in Illinois to submit employee pay data and a signed compliance statement to obtain an Equal Pay Registration Certificate (EPRC).1
After a significant public comment period, the final regulations were published in January 2023, effective as of December 22, 2022. While the regulations clarify the IDOL’s expectations for employers subject to the EPA Amendments, they also raise additional questions because of inconsistencies with the statute and information provided on the IDOL website. Below are some of the key takeaways and recommendations for employers:
The Application Process for 2023
To apply for an EPRC, employers must first submit an enrollment form, which provides designated contact information via the IDOL’s submission portal. Employers are encouraged to keep a record of the contact information they provide and the date it is submitted should they need to provide this information to the IDOL to show they complied with this requirement.
At some point thereafter, the IDOL will “randomly assign” a certification deadline by which the ERPC application should be submitted and will contact the employer with no less than 120 days’ advance notice.
Employers must then submit the following materials to the IDOL’s ERPC Portal:
- An “Equal Pay Act Compliance Statement,” signed by a corporate officer, legal counsel (i.e., in-house counsel), or authorized agent of the business;
- List of employees with required information (discussed below); and
- $150 filing fee.
As one important change to the application process for 2023 (the second change discussed below), the IDOL has administratively suspended the requirement for employers to also file their most recent EEO-1 as part of their ERPC application. Though this is inconsistent with the materials that must be submitted per the regulations, it has been confirmed in the IDOL’s FAQs. However, employers that are required to file a “Form BCA 14.05” annual report with the Illinois Secretary of State to keep in good standing must still attach their most recent EEO-1 to that Form. The ERPC application and “Form BCA 14.05” annual report are separate processes subject to their own distinct diversity requirements.
Employers should be mindful that under the Illinois EPA, the IDOL’s “failure to assign a business registration date does not exempt the business from compliance” with the certification requirements. The IDOL expects employers to provide contact information through the IDOL’s submission portal, if not already done, and also plans to contact and provide a certification deadline to all covered employers by the end of 2023 to track the March 24, 2024 compliance deadline contemplated by the EPA Amendments. Regardless of whether the IDOL makes contact, employers that have yet to submit their ERPC application materials should plan to do so, using information from the 2022 payroll year, before March 24, 2024. There is nothing that prevents employers from proactively submitting their ERPC application before being assigned a certification deadline by the IDOL.
Reporting for “Employers” and “Employees” Who Count Towards 100-Employee Threshold
It is important for employers to understand who meets the definition of an Illinois “employee” to assess whether they meet the 100-employee threshold that requires them to obtain an ERPC. The regulations’ broad definition of “employee” takes into account the significant increase in remote workers and expressly states that an “employee” means:
…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 within 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.
Although the regulations offer no clear guidance for subject employers with multiple locations and/or multiple Federal Employer Identification Numbers (FEINs), the IDOL’s FAQs explain:
- If the employer has only ONE FEIN but multiple locations it must create only one login on the ERPC Portal and report all Illinois employees.
- If an employer has MULTIPLE FEINs it can register these entities under one login on the ERPC Portal. Any entity with a separate FEIN and less than 100 Illinois employees does not have to submit an ERPC application. For any covered entity, a separate submission should be prepared for each entity with its own FEIN.
Information Employers Must Provide for Each Illinois Employee
The most significant requirement in applying for equal pay certification is the reporting of wages for an employer’s covered employees. The EPA Amendments require employers to report this information and the regulations set forth the manner in which the wages are to be reported to the IDOL. While the EPA Amendments and the regulations do not exactly match up concerning the information to be provided for all applicable employees, the regulations contain a catchall that employers are required to report, “any other information required by the Department on the application form.”
Employers are encouraged to check the “Equal Pay Registration Certificate Template” on the IDOL’s website to confirm they are submitting all information required by the Department. As of the time of publication, employers must include information on each employee’s: (1) first name; (2) last name; (3) social security number (last four digits only); (4) gender; (5) race; (6) ethnicity; (7) wages rounded to the nearest hundred dollars (W-2 Box 5 should have the most complete information); (8) hours worked rounded to the nearest hour; (9) date of hire; (10) termination date; (11) job classification; (12) job title; and (13) county whether the employee actually reports or the county where the employee reports to management.
Employers may also submit any other information they believe is relevant to explain existing pay disparities among their employees.
Notably, the requirement to provide information on each employee’s hours worked in the payroll year is a significant addition. The IDOL is expected to revise its FAQs to incorporate and address this new requirement. Employers with a certification deadline due before this additional guidance is provided should use the base number of hours per workweek when calculating this figure for exempt employees without tracked hours (i.e., 40 hours per week x 52 weeks = 2,080 hours rounded to the nearest 100 = 2,100 worked per payroll year).
The Regulations Define “Compliance” Employers Must Certify to in Their Compliance Statement
The EPA Amendments require employers to submit a compliance statement signed by a corporate officer, legal counsel (i.e., in-house counsel), or authorized agent of business certifying that:
- The business complies with Title VII of the Civil Rights Act of 1964, the Equal Pay Act of 1963, the Illinois Human Rights Act, the Equal Wage Act, and the Equal Pay Act of 2003;
- The average compensation for its female and minority employees is not consistently below the average compensation for its male and non-minority employees, as determined by the U.S. Department of Labor’s rule, 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, education or training, job location, use of a collective bargaining agreement or other mitigating factors”;
- The business does not restrict employees of one sex to certain job classifications and makes retention and promotion decisions without regard to sex. Businesses with positions for which sex is a bona fide occupational qualification must provide a list of such positions with a short explanation of why sex is a bona fide occupational qualification for those positions;
- The business corrects wage and benefit disparities when identified to ensure compliance with the above-cited laws;
- How often wages and benefits are evaluated to ensure compliance with the above-cited laws; and
- The approach the business takes in determining what level of wages and benefits to pay its employees, and that acceptable approaches include, but are not limited to, a wage and salary survey.
The regulations clarify that the definition of “compliance” for purposes of the statement:
means that, as the date of application or recertification, the business either: (1) has not had any final and non-appealable adverse judgment or final and non-appealable administrative ruling entered against it in the preceding two years under [any of the above specifically identified laws]; or (2) has corrected any final and non-appealable adverse judgment or final and non-appealable administrative ruling entered against it in the preceding two years under [any of the above specifically identified laws].
Based on an inquiry to the IDOL, we were advised that employers need to consider only final and non-appealable adverse judgments or final and non-appealable administrative rulings in Illinois for these purposes.
In order to certify to the bullet point that, “[t]he adverse compensation for its female and minority employees is not consistently below the average compensation for its male and non-minority employees…” employers should: (1) look to the most recent U.S. Bureau of Labor Statistics State Occupational Employment and Wage Estimates publication; and (2) look to the employee pay data to be reported for their ERPC application to review and address any pay discrepancies consistent with the requirements of the Illinois EPA.
Compliance Statement Adds Requirement for Positions Requiring Bona Fide Occupational Qualifications
As noted above, the regulations add a requirement for employers with positions that refer to a person’s sex as a bona fide occupational qualification. When submitting their compliance statement, these employers must provide a list of such positions with a short explanation of why an employee’s sex is a bona fide qualification for the applicable position.
The Regulations Add a Duty for Employers to Revise Incomplete or Incorrect Information
A supplement to the regulations provides that should employers discover they submitted an application with incorrect or incomplete information, they shall submit to the IDOL a revised application with a letter identifying the information amended. Employers will not be subject to penalties for submitting incorrect or incomplete information provided that the information was submitted in good faith and without knowledge of being incorrect.
Issuance of Certificate or Rejection
Within 45 calendar days of receipt of an employer’s ERPC application, the IDOL must either issue the ERPC or a Statement of Rejection that will provide information on the reason(s) the application was rejected. If an employer receives a Statement of Rejection, the employer will have 30 days to cure any deficiencies and resubmit a revised application. The IDOL’s Website contains an “ERPC Process Flowchart” that identifies the different options for employers who have received a Statement of Rejection.
Any employer receiving a Statement of Rejection may appeal from the IDOL’s decision within 14 days. Within 30 calendar days after the receipt of an appeal, the IDOL will notify the employer of its decision. If the appeal is granted, the IDOL will issue an ERPC. If the appeal is denied, the IDOL will send a notice explaining the reason for the denial and provide a date by which the employer must submit an amended ERPC application. This is also reflected in the IDOL’s ERPC Process Flowchart.
Suspension and Revocation of the ERPC
Once an employer receives an ERPC, it is important to remember that it may still be suspended or revoked if it is determined that the employer has failed to make a good-faith effort to comply with the EPA Amendments, the certification requirements or other laws mandating non-discrimination and/or equal pay consistent with the requirements of Title VII of the Civil Rights Act of 1964, the Equal Pay Act of 1963, the Illinois Human Rights Act and the Equal Wage Act [820 ILCS 110]. The Regulations specify that an ERPC may be suspended or revoked if an employer has two or more violations of these statutes.
Investigation and Hearing
Per Section 11(e) of the Illinois EPA, before the IDOL suspends or revokes an employer’s ERPC, it will conduct an investigation to determine whether reasonable cause exists to do so. The IDOL will notify the employer about its investigation within 30 days of its initiation and of its decision once the investigation is completed. If the employer is notified its ERPC has been suspended or revoked, the employer may then make a written request for a hearing within 20 business days. The regulations are silent as to what the repercussions of a business having a suspended or revoked ERPC will be, but future legislation is expected that will provide this information.
Employee’s Right to Information
Another far-reaching aspect of the EPA Amendments is to provide employees the right to make a written request for anonymized (meaning not individually identifiable) data regarding their current job classification or title as well as the pay for that title or classification. The written request must include the employee’s name, date of hire, job title or classification, the specific dates for which the data is being requested and a signed affidavit that the employee holds the specified job.
Letters of Non-Compliance
Over recent weeks some employers have received a notice from the IDOL on the purported basis they had not obtained an ERPC by their certification deadline. Some of these notices were sent out to employers, regardless of the fact that (1) the employer had provided its contact information to the IDOL, and (2) the employer had not received any notification from the IDOL of the required submission date for compliance certification and related information. This occurred as a byproduct of the difficultly the IDOL has had in obtaining correct contact information for every covered employer in Illinois. Employers that received such a notice in error should make the IDOL aware of its mistake and obtain clarification regarding their applicable certification deadline (which should provide the employer at least 120 days’ notice). These employers can contact DOL.ERPC@Illinois.gov or the ERPC hotline: (312) 793-6797. These employers should be prepared to discuss what contact information they provided and when, as well as confirm that they never received notice of a required submission date.
After initially receiving an ERPC, employers must recertify every two years by submitting another ERPC application. The IDOL will contact employers to provide a recertification deadline with at least 180 days’ notice.
Recommendations for Employers
- Employers should closely review the definition of “employee” under the EPA Amendments to determine whether a company meets the 100-Illinois-employee threshold.
- Employers subject to the EPA Amendments that have not already submitted contact information to the IDOL should immediately access the following link: Equal Pay Act Registration Certificate (EPARC) (office.com). At that link, the employer is required to provide the information described below. The form, which is referred to as the Equal Pay Act Registration Certificate (EPARC) includes a comment at the top “Notice: If you have less than 100 employees you do not need to participate.” (*Required response)
- In preparation for their ERPC application, employers should conduct pay audits and compile the employee information they will be required to report.
- If a covered employer has not already provided their ERPC application, it should consider immediately accessing the IDOL site and reviewing the ERPC spreadsheet in order to review and analyze the pay information that will need to be provided in order to make any adjustments that may be required in order to be prepared to represent that it is in compliance with the statute.
- Periodically check the IDOL website for new or additional guidance the IDOL may provide through its FAQs.
- Consult with legal counsel if there are questions about the ERPC process or compliance with the Act.
Littler will continue to monitor these new requirements on employers and will provide additional updates.
1 For more information on these new requirements, see Meg Karnig, Paul Newendyke, and Barry Hartstein, Illinois Will Require EEO-1 Transparency and Equal Pay Data, Littler Insight (Mar. 29, 2021); Barry Hartstein, Jennifer Jones, and Paul Newendyke, Illinois Equal Pay Certificate Requirements Amended, Littler Insight (Aug. 24, 2021); and Barry Hartstein, Victoria Vanderschaaf, and Jennifer Jones, Illinois DOL Provides Guidance on Equal Pay Registration Certificate Application Process, Littler ASAP (Apr. 20, 2022).