Illinois Enacts Stronger Anti-Discrimination and Equal Pay Laws Focusing on Criminal Convictions and Demographic Reporting

In  2021, the Illinois General Assembly passed Senate Bill (SB) 1480, which amends the Illinois Human Rights Act, the Illinois Equal Pay Act, and the Illinois Business Corporation Act. On March 23, 2021, Governor J.B. Pritzker signed the bill into law. The new law—which takes effect immediately—limits employers’ ability to consider criminal convictions in making hiring and employment decisions, imposes new requirements for reporting workforce demographics to the state, and requires employers to obtain a certification that they are complying with federal and state equal pay laws.

Here is what employers need to know.

Limits Employers’ Ability to Consider Criminal Convictions When Making Employment Decisions

The Illinois Human Rights Act (IHRA) has long barred employers from making adverse employment decisions based on a person’s arrest record. SB 1480 goes further and bars employers from basing adverse employment decisions on a conviction record, unless the employer can show (1) the conviction is substantially related to the person’s job or (2) employing the person despite the conviction would pose an unreasonable safety risk.

SB 1480 defines a “conviction record” 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. SB 1480 makes it a civil rights violation for “any employer, employment agency, or labor organization to use a conviction record …. as a basis to refuse to hire, to segregate, or to act with respect to recruitment, hiring, promotion, renewal of employment, selection for training or apprenticeship, discharge, discipline, tenure or terms, privileges or conditions of employment” unless:

(1) [t]here is a “substantial relationship” between one or more of the previous criminal offenses and the employment sought or held; or

(2) the granting or continuation of the employment would involve an unreasonable risk to property or to the safety or welfare of specific individuals or the general public.

The new law and the answers to new frequently asked questions (FAQs) from the Illinois Department of Human Rights provide that “substantial relationship” means a consideration of whether the employment 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 employers must consider when evaluating the “substantial relationship” or risk to property or safety analyses:

1. “the length of time since 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; and
6. evidence of rehabilitation efforts.”

Under SB 1480, if an employer decides to disqualify a person from employment or take another adverse action based on a conviction, the employer must engage in an “interactive assessment” before taking action. The first step in that assessment is for the employer to notify the employee or applicant of its preliminary decision in writing. This written notification must include: (a) notice of the disqualifying conviction and the employer’s reason for the disqualification; (b) a copy of the conviction report if any; and (c) an explanation of the employee’s right to respond before the decision becomes final.

The employee or applicant then has five business days to respond to the notification before the employer makes the preliminary decision final. The employer must consider the information submitted by the employee before making a final decision. If the employer makes a final decision to disqualify or take an adverse action, the employer must supply the employee or applicant the following in writing:

• notice of the disqualifying conviction along with the employer’s reasoning;
• any existing procedure for the person to request reconsideration or challenge the decision; and
• notice of the right to file a charge with the Illinois Department of Human Rights.

If the employee or applicant disagrees with the employer’s assessment that a conviction is substantially related to the job in question, the employee can file a charge with the Illinois Department of Human Rights.

There are several remaining open issues and questions with the background check components of the new law. The interplay between the federal Fair Credit Reporting Act-required pre-adverse action process and the new Illinois pre-adverse action process is not well-defined, making unclear a pre-adverse action process compliant with both federal and Illinois law. Additionally, despite FAQ number 19’s indication that employers cannot inquire about a criminal conviction until after a conditional offer, the new statutory amendments do not change the timing of an employer inquiry under 820 ILCS 75/15(a) of the original law—which states inquiries may occur (a) after an applicant has been deemed qualified and notified that the applicant has been selected for an interview [which is earlier than the conditional offer] or (b) if there is no interview, after the conditional offer.

Requires Employers to Certify Equal Pay Compliance

SB 1480 requires private employers with more than 100 employees to obtain an “equal pay registration certificate.” The equal pay certificate will certify:

• “that the business is in compliance 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;”
• “that the average compensation for its female and minority employees is not consistently below the average compensation, … 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 above mentioned employment laws; and
• “how often wages and benefits are evaluated to ensure compliance with” applicable employment laws.

If an employer fails to obtain an equal pay certificate within 3 years of the effective date of the law, the Illinois Department of Labor may impose civil penalties totaling up to 1 percent of the employer’s gross profits.

To obtain an equal pay certificate, employers must pay the $150 filing fee and submit an equal pay compliance statement to the Illinois Department of Labor within 3 years after the effective date of the law and must recertify every 2 years thereafter. The employer must indicate in its “equal pay compliance statement … whether the business, 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.” (Employers must provide a description of its approach if it uses an alternative approach.)

SB 1480 also includes whistleblower protections prohibiting retaliation. Employers are prohibited from taking any “retaliatory action” against an employee because the employee:

• “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;”
• Provides information to or testifies before any public body conducting an investigation, hearing, or inquiry into any violation of a law, rule, or regulation;”
• “Assists or participates in a proceeding to enforce the provisions of this 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.”

Imposes EEO-1-Style Reporting Requirements at the State Level

SB 1480 requires that employers that are required to file an Employer Information Report EEO-1 with the federal Equal Employment Opportunity Commission to also provide substantially similar information to that “reported under Section D of the corporation’s EEO-1 in a format approved by the Secretary of State.”

Key Takeaways

In light of the immediate effectiveness of SB 1480, employers with employees in Illinois should consider taking steps right away to update policies and procedures regarding basing employment decisions on criminal convictions. Employers may also want to audit pay practices and outcomes to be sure they will be able to obtain the required equal pay certificate. Finally, employers should consider reviewing their demographic reporting obligations under both federal requirements and Illinois’ new requirements and submit data accordingly.

Ogletree Deakins will continue to monitor and report developments with respect to SB 1480 and will post updates on our Illinois blog as additional information becomes available. The background check aspects of the new Illinois law and background check laws in other jurisdictions, as well as compliant background check forms and letters, are provided in the OD Comply: Background Checks subscription materials, which are updated and provided to OD Comply subscribers as the law changes.