Illinois employers should be aware of important legislation, which is likely to be signed into law in the very near future. The Illinois Senate recently passed SB1480, and it currently awaits Governor J.B. Pritzker’s signature. Employers should closely follow this bill, as it imposes new requirements and procedures regarding the use of criminal convictions in employment decisions, workforce demographic data reporting, and equal pay certification.

Criminal Convictions and Employment Decisions

The bill amends the Illinois Human Rights Act (IHRA) to generally prohibit the use of criminal convictions in employment actions. However, the amendment provides two limited exceptions to this ban, namely where there is a “substantial relationship” between the criminal offense and the position and where the granting or continuation of employment would involve an “unreasonable risk” to property or the safety of a specific individual or the general public.

The bill defines “substantial relationship” as “a consideration of whether the employment position offers the opportunity for the same or a similar offense to occur and whether the circumstances leading to the conduct for which the person was convicted will recur in the employment position.” The bill further provides a six factor test to help employers determine whether either of the exceptions applies.

In the event an employer makes a preliminary decision that the conviction record is disqualifying, the employer must: (1) provide notice to the affected individual; (2) engage in interactive communication with the individual and consider information provided about why the conviction should not be dispositive in making an employment decision; and (3) provide notice in writing regarding any final decision to disqualify the individual, which notice shall reference the individual’s right to file a charge with the Department of Human Rights.

Duty to Report EEO Data to Secretary of State

The bill also amends the provision of the Business Corporation Act governing annual filing requirements. Specifically, any corporation required to file an EEO-1 report with the EEOC would also have to file substantially similar data reported on Section D of the EEO-1 with its annual corporate report filings. That means that all corporations would be required to include data on the gender, race, and ethnicity of the corporation’s employees. The data will be published on the Illinois Secretary of State’s website. These new obligations apply to corporate reports filed on or after Jan. 1, 2023.

Equal Pay Certification Requirement for Employers with 100+ Employees

Finally, SB 1480 amends the Equal Pay Act of 2003 to require employers with more than 100 employees to obtain an “equal pay registration certificate” from the Illinois Director of Labor. To receive the certificate, the employer must provide the total wages paid to each employee during the prior calendar year along with the EEO-1 data mentioned above. “Wages” is broadly defined to include wages, salaries, earned commissions, and other forms of compensation. Furthermore, the employer must also submit a signed statement by either legal counsel, a corporate officer, or another authorized business agent which includes the following:

1. 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;
2. That the average compensation for its female and minority employees is not consistently below the average compensation for its male and non-minority employees within each of the major job categories, taking into account specified factors;
3. That the business does not restrict employees of one sex to certain job classifications and makes retention and promotion decisions without regard to sex;
4. That wage and benefit disparities are corrected when identified;
5. How often wages and benefits are evaluated to ensure compliance with the act.

The compliance statement must also indicate the method used in setting compensation and benefits. Notably, the bill contains audit provisions and whistleblower protection, and provides for a civil penalty in an amount equal to 1% of the business’s gross profits, in the event that a business does not obtain a certificate, or if a business’s certificate is suspended or revoked after an investigation by the Illinois Department of Labor. 

Corporations in existence must obtain certification within three years from the effective date of the new law. New corporations must obtain certificates within three years from the date operations commence. Corporations are required to recertify with the state every two years under the new legislation.

These are significant changes for Illinois employers. If you have questions regarding these anticipated changes, please contact Taft’s Employment and Labor Relations team.