March 24, 2021Client Alert

New Illinois Employment Law: Conviction Records, Pay Equity Data, and Whistleblowers – Oh My!

On March 23, 2021, Governor Pritzker signed into law an Amendment to the Illinois Human Rights Act, Illinois Equal Pay Act, and Illinois Business Corporation Act that will impact Illinois employers in three significant ways. First, Illinois employers now are prohibited from using conviction records to make an employment decision, except in specific circumstances. Second, employers with more than 100 Illinois employees must obtain an “equal pay registration certificate” from the state and must report EEO-1 data to the state. Third, Illinois now has one of the broadest, if not the broadest, whistleblower protection laws in the country. The Amendment represents the latest sweeping change for employers in the state. 

1.   Conviction Use

Effective March 23, 2021, no Illinois employer may use a criminal conviction (including a felony, misdemeanor, probation, or imprisonment) as a basis for employment decisions. There are two limited exceptions: (1) where there is a “substantial relationship” between the conviction and the job position, or (2) where the individual’s conviction poses an “unreasonable risk” to property, the safety or welfare of specific individuals, or the general public. When determining whether to use a criminal conviction to make an employment decision, employers must consider six factors:

  • The length of time since the conviction;
  • The number of convictions appearing on the individual’s 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 individual at the time of the conviction; and
  • Evidence of rehabilitation efforts.

These six factors are mandatory. Employers must collect information regarding each factor before making an employment decision.

Further, if an employer is inclined to use a conviction record to make an employment decision, the employer must first engage in an “interactive assessment” by notifying the individual in writing of the potential use of the conviction record. The written notice must include detailed information about the potential employment action based on the conviction and it must give the individual (employee or applicant) the opportunity to respond and submit additional evidence before the decision becomes final. The law gives individuals up to 5 business days to submit a response and supporting evidence. If after considering the individual’s response and supporting evidence, the employer still decides to withdraw an employment offer or take any other adverse employment action, including termination, the employer must provide the individual a second written notice. The second written notice must outline the employer’s reasoning for taking the adverse action and must inform the individual of the right to file a charge with the Illinois Department of Human Rights (IDHR) if the individual disagrees with the employer’s use of the conviction record.

To the extent Illinois employers have policies or practices in place addressing the use of criminal convictions, those policies should be reviewed and likely revised. Illinois employers should proceed with caution when basing any employment decision on a conviction record, unless the employment decision is required by federal or state law or regulation.

2.   Equal Pay Certification and EEO Reporting

The Amendment also requires employers to obtain an “equal pay registration certificate” from the state and to provide EEO-1 type reporting to the state.

  1. Equal Pay Certification

Employers with 100 or more employees in Illinois must obtain an equal pay registration certificate from the Department of Labor (DOL) by March 2024, with renewals every two years thereafter. To obtain the certificate, a corporate officer, legal counsel, or authorized agent of the employer must submit a signed statement certifying:

  • The employer is in compliance with Title VII of the Civil Rights Act of 1964, the federal Equal Pay Act, the Illinois Human Rights Act, the Illinois Equal Wage Act, and the Illinois Equal Pay Act;
  • The average compensation for female and minority employees is not “consistently below” the average compensation for male and non-minority employees within each major job category in the employer’s EEO-1 report;
  • The employer does not restrict employees of one sex to certain job classifications and makes retention and promotion decisions without regard to sex;
  • Wage and benefit disparities are corrected when identified to ensure compliance with the covered state and federal laws;
  • How often wages and benefits are evaluated to ensure compliance with the covered state and federal laws; and
  • Whether the employer, in setting wages and benefits, uses a market pricing approach; state prevailing wage or union contract requirements; a performance pay system; an internal analysis; or another approach used to determine what level of wages and benefits are paid to employees.

Employers who fail to obtain an equal pay registration certificate, or whose certificates are revoked or suspended following an investigation or audit, will be assessed a penalty of 1% of the employer’s gross profits.

The Amendment’s requirement that employers use EEO-1 job categories to evaluate disparity in “average compensation” is likely to create a false perception for many employers of either compliance or non-compliance with equal pay laws. Employers should not use this approach to determine whether actual pay disparity exists. Nonetheless, employers are encouraged to determine now whether they could obtain an equal pay registration certificate and, if not, what can be done before March 2024.

  1. Illinois EEO Reporting Requirements

In addition to obtaining an equal pay registration certificate, employers who are required to file EEO-1 reports also must file with the Illinois Secretary of State “substantially similar” employment data concerning employees’ gender, race, and ethnicity. Unlike the EEOC, the Illinois Secretary of State will publish the information specific to each employer on its official website. This reporting requirement takes effect January 1, 2023.

3.   New Whistleblower Protection

Finally, the Amendment also includes a new private cause of action for whistleblowers. Though the new provision is contained in the state’s Equal Pay Act, the law is not limited to complaints about unequal pay. Rather, the Amendment broadly prohibits employers from retaliating against any employee who: (1) discloses or threatens to disclose to a supervisor or to a public body any activity, inaction, policy, or practice the employee reasonably believes violates a law, rule, or regulation, or (2) assists or participates in a proceeding to enforce the Equal Pay Act. Retaliation is defined to include a wide spectrum of employment actions, including giving an employee a “reprimand.”

Proving a violation under the Amendment is less onerous than other retaliation laws. An employee or former employee only has to show the whistleblowing activity was a “contributing factor” in the employment decisions. Employers have a defense, however, if they can show by “clear and convincing evidence” the employer would have taken the same action absent the protected conduct. Remedies for violations of this provision include, for example, reinstatement, double back pay plus interest, reinstatement of fringe benefits, and attorney’s fees and costs. Like the new criminal conviction law, the whistleblower provision went into effect on March 23, 2021, when the new law was signed.

These significant legal changes should prompt employers to review their workplace policies and practices, especially those governing the use of criminal records and policies against retaliation. These changes create new causes of action against employers and, thus, will also require employers to consider carefully how to train human resources and management employees on implementing any policy changes. Though the new equal pay reporting requirement provides employers with some time to comply, employers should begin considering what organization-level changes, if any, are necessary to obtain the required certificate.

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