If you’re a private employer with 100 or more employees, it’s important you understand what the State of Illinois now requires of your company.
According to the Society for Human Resource Management, a recent amendment to the Illinois Equal Pay Act requires that employers with more than 100 employees in Illinois must certify compliance with the Equal Pay Act by obtaining an equal pay certificate from the Department of Labor, beginning on March 23, 2024. Requirements under this amendment include disclosing demographic and pay data on “the gender, race and ethnicity” of employees for certain private employers. Ultimately, if your company is authorized to do business in Illinois as of March 23, 2021, you must obtain an equal pay certification between March 23, 2022 and March 23, 2024.
What is required?
To receive certification from Illinois, companies must:
- Submit an official statement declaring the business is compliant with Title VII of the Civil Rights Act, the Equal Pay Act of 1963, the Illinois Human Rights Act, the Equal Wage Act and the Equal Pay Act of 2003.
- Assert that it does not restrict certain genders to specific roles and makes employment decisions without regard to sex.
- Describe how often the business reviews wages and benefits for discrepancies among protected and non-protected classes of employees and certify that wage and benefit disparities are corrected when acknowledged.
- Outline a system to establish employee base and incentive compensation through market pricing, state wage requirements, a performance pay system or other means.
This certification needs to occur every two years for existing companies and within three years for new companies.
What are the consequences of non-compliance?
Violations of the Equal Pay Act’s reporting and certification requirements can subject employers to audits and penalties.
What are the steps employers should take now?
As employers prepare to meet these new regulations, there are several actions to take prior to seeking certification:
1. Review your employment practices
Conduct a review of your hiring, internal movement and promotion practices to ensure they don’t discriminate based on gender or race. Subsequently, create or update your employee handbook.
2. Establish an “Equal Pay Compliance Statement”
Develop a total rewards statement to reflect how you provide compensation and benefits to employees to demonstrate that they are equally available to similar positions/levels within the organization and not based on gender or race.
3. Evaluate your compensation plans and pay practices
Conduct an annual compensation analysis to identify any disparities and create plans to correct them. Evaluate pay practices and the legitimate business factors used to evaluate employees and their pay. Consider also conducting market-based compensation studies for all positions. Update your job descriptions to include legitimate business factors and skills required for the positions and implement pay-for-performance processes and pay cycles.
4. Managerial and leadership training
Finally, consider providing annual training to managers on the total rewards statement and pay practices.
When you’re ready to fulfill the certification, follow these steps:
- Apply for an “equal pay registration certificate” from the Illinois Department of Labor.
- Submit a statement certifying compliance with various equal pay and discrimination laws.
- Submit your company’s most recent EEO-1 report.
- Compile and submit demographic data and wage records.
If you’d like assistance developing the required information for the Illinois Department of Labor, contact us to get started.