Illinois—Joining California—Wants Pay Data

Employment Law

Employers are facing growing requirements to share pay data, with Illinois joining California in enacting a new law mandating transparency.

The push for sharing pay data can be traced back to 2016, when the Equal Employment Opportunity Commission (EEOC) proposed a revision to the EEO-1 report that would require employers to share information about the wages paid to their workers.

While the Trump administration hit pause on the collection, a lawsuit kept the movement alive. After a COVID-19 delay in 2020, the EEOC announced that demographic data reporting required by the EEO-1 will resume this month. Pay data will likely follow in the coming years.

The EEO-1 Component 1 data collection will gather information from employers with 100 or more employees (and federal contractors with 50 or more employees) for 2019 and 2020. Given the two-year backlog of data that employers must provide, the EEOC has extended the collection period to 12 weeks.

California enacted a state analogue of the EEOC’s original pay-reporting rule, requiring employers with at least one employee working in the state and at least 100 workers nationwide to file with the Department of Fair Employment and Housing (DFEH) on an annual basis information related to pay and hours worked.

The report must share the number of employees by race, ethnicity and sex categorized by position: officials and managers, professionals, technicians, sales workers, administrative support workers, craft workers, operatives, laborers and helpers, and service workers.

Reports were due by March 31, although in light of the COVID-19 pandemic, the DFEH accepted requests for extensions through April 30.

Now Illinois has followed suit, enacting SB 1480.

The new law mandates that as of January 1, 2023, Illinois employers that are required to file a federal EEO-1 report submit “information that is substantially similar to the employment data reported [in] the federal EEO-1 report.” Details about format will be provided by the Secretary of State.

Data provided by Illinois employers will then be made public (unlike federal EEO-1 submissions, which are private). According to SB 1480, “the Secretary of State shall publish the data on the gender, race and ethnicity of each corporation’s employees on the Secretary of State’s official website” within 90 days of submission.

In addition, each employer with 100 employees in Illinois will be required to obtain an equal pay registration certificate from the state’s Department of Labor. Failure to obtain this certificate, or suspension or revocation of the certificate by the State, will subject an employer to a significant penalty of 1% of the business’s gross profits.

To obtain an equal pay certificate, employers must submit a copy of the most recent EEO-1 form as well as a list of all employees during the prior calendar year, separated by gender and the race and ethnicity categories found in the EEO-1 report, along with the total wages paid to each employee in the prior year, rounded to the nearest hundred dollars. The employer must also certify, among other things, that the average compensation for female and minority employees is not “consistently below” the average compensation “as determined by rule by the United States Department of Labor” for the employer’s male and non-minority employees within each EEO-1 major job category, taking into account certain listed factors.

To read SB 1480, click here.

Why it matters: Covered employers nationwide should be prepared to report their pay data as required under California’s law, while Illinois employers have a few years to prepare for their reporting obligations.

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