Illinois Issues Proposed Regulations in Connection With Equal Pay Registration Certificate Requirements

The Illinois Department of Labor (IDOL) has, at long last, issued proposed rules implementing its equal pay registration certificate requirements. As a reminder, Illinois is setting deadlines for covered employers to apply for certification on a rolling basis. The deadline for the first round of employers to file for certification is just days away.

The proposed rules largely reiterate the statutory requirements with only slight clarifications. The bulk of the rules focus on the state’s procedures for processing applications and appeals.  Here are some of the proposed rule’s key highlights.

Key Highlights

Definition of “Employee”

The regulations clarify the definition of “employee” to be counted and reported under the law. They provide 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.

While this definitions leaves some open questions, it clarifies that the law covers not only employees based at a business’s physical location in Illinois, but also (1) employees who work remotely outside of Illinois whose work is directed or controlled within Illinois, and (2) remote employees within Illinois whose work is controlled or based outside of Illinois but in a state where none of the work is performed. The regulations do not clarify which county is to be reported for employees working remotely outside of Illinois, the Illinois county to which the employee reports, or the county outside of Illinois where the employee works.

Definition of “Minority”

“Minority” means a minority person as defined in the Business Enterprise for Minorities, Women, and Persons with Disabilities Act. That act defines “minority” to include a person who is a citizen or lawful permanent resident of the United States and who is any of the following

1. American Indian or Alaska Native
2. Asian
3. Black or African American
4. Hispanic or Latino
5. Native Hawaiian or Other Pacific Islander

Due Date

The application due date is the date by which the application for certification must be received by the IDOL.

Potential Additional Requirements

The list of employees and their wages that the law requires must also include, “any other information required by the Department on the application form.” It is unclear what other information may be required by the department. It appears this language is intended to leave room for the IDOL to change its template or requirements in the future, but it also creates uncertainty as to what else an employer may be required to report in the future.

Authorized Signatory

The proposed rules clarify that “[a]n Equal Pay Compliance Statement, signed by a corporate officer, legal counsel employed by the business, or authorized agent employed by the business” is required. This makes clear that outside counsel or other agents may not sign the compliance statement.

BFOQ Exception

The proposed regulations add a “bona fide occupational qualification” exception to the requirement that the business not restrict employees of one sex to certain classifications and makes retention and promotion decisions without regard to sex.

Recertification

The proposed rules require businesses to recertify every two years. 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.” If the business has dropped to fewer than 100 employees on December 31 of the business’s payroll year, the proposed rule requires it to notify IDOL in writing, by the recertification due date, of the number of employees employed by the business on December 31 of the business’s payroll. The proposed rules do not require the business to recertify in that event.

Corrections

The regulations impose an affirmative obligation to correct any misinformation in a company’s application for certification. The rules call for a business to “submit to the Department a revised application with correct or complete information, along with a letter identifying the information that was amended.”

Certificate or Rejection

No more than 45 calendar days after receipt of an application for certification or recertification, IDOL will issue to the business an Equal Pay Registration Certificate or a Statement of Rejection stating why the application was rejected. If IDOL rejects a company’s application for certification, the company has “30 calendar days from the date the Statement of Rejection is received to cure any deficiencies in its application that led to the rejection and resubmit the revised application to the Department.”

Appeals

The proposed regulations also set forth detailed procedures for an employer to appeal a rejected application for certification or recertification. Under the proposed regulations, employers have only 14 days to appeal a Statement of Rejection, and the request must be “prominently marked REQUEST FOR EPRC APPEAL on both the letter and the envelope; or, if emailed, shall contain the subject line REQUEST FOR EPRC APPEAL.”

Good Faith Effort

The regulations define “good faith effort” to comply with the certification requirements as “demonstrable efforts by the business to promote pay equity and combat employment discrimination, including but not limited to, internal compensation reviews, staff training, adoption of equal opportunity policies, and evidence that such policies were enforced through evaluation, investigation, and personnel action.”

The IDOL may suspend or revoke a business’s Equal Pay Registration Certificate when it fails to make a good faith effort to comply 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, or any other relevant laws. The IDOL also may suspend or revoke a business’s Equal Pay Registration Certificate when it fails to make a good faith effort to comply with the equal pay registration certificate requirements found in Section 11 of the Illinois Equal Pay Act of 2003 or when a business has multiple violations of equal pay registration certification requirements or the other laws noted in this paragraph.

If a business receives a notice of suspension or revocation, it may request a hearing before the IDOL to contest the suspension or revocation.

Employee Request for Data

The proposed regulations clarify that current employees may request anonymized data regarding their job classifications or titles and the pay for their titles or classifications if the employee submits a “signed affidavit swearing that the employee holds the specified job title at that business, and evidence that the employee currently holds the specified job title at that business.” In response to a substantiated request from an employee, IDOL “shall provide current data, historical data from no more than 10 years prior to the date of the request, or both.”

”Enrollment” and Contact Information

The proposed regulations provide that businesses were supposed to have submitted an “enrollment form including designated contact information for the business by March 31, 2022.”  The IDOL has had a ”survey” available on its website for companies to provide contact information, but the website did not contain any statement that businesses subject to the statute must complete the ”survey,” and there is no current requirement under the law to complete the survey. Many employers held off on completing the survey to receive regulations or further guidance from IDOL, some of which may be necessary to complete the survey (for example, how to calculate whether an employer has 100 or more employees). It is unclear how the state will enforce the deadline that was not announced until almost two months after it had passed.

Unanswered Questions

The regulations also leave open many questions, some of which IDOL has reportedly commented on informally, but not in the regulations. Among these are the following.

• How are related entities treated for purposes of calculating whether a company has 100 or more employees?
• How should companies reconcile the answer included in the IDOL’s frequently asked questions (FAQs) advising employers to report each role an employee holds during the year (including the “pay rate” for that role) on separate lines of the company’s application but also advising companies to report the full amount of wages, which the FAQs say to define by box 5 of the W-2? Tracking promotion and transfer dates, much less wages earned in two different positions in one year (as opposed to wage rates in each position), may be a real challenge for most employers.
• How does the state intend for companies to evaluate 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” EEO-1 category?

Illinois law requires the proposed regulations to undergo a 45-day comment period, which will be followed by internal review before the rules become final. So there may be additional changes before the rules become final. However, some employers that have been issued notice of a deadline will have to file their Application for Certification before that point.

Ogletree Deakins’ Chicago office will continue to monitor changes to this law and will post updates on the firm’s Illinois and Pay Equity blogs with respect to the evolving landscape and potential compliance issues related to the Illinois Equal Pay Act. Important information for employers is also available via the firm’s webinar and podcast programs.