Author: Tom Wardrip
The State of Illinois Department of Labor (DOL) updated their Equal Pay Act in 2021. New rules require private employers authorized to do business as of March 23, 2021 to submit an application between March 24, 2022 and March 23, 2024 to the DOL to obtain an equal pay registration certificate. Covered employers must then recertify every two years.
Complicating the process, many companies haven't received a notice from the DOL to register for their certificate and don't even realize the change is coming — putting their businesses at risk of non-compliance.
Background on the Illinois Equal Pay Act
On March 23, 2021, Illinois Governor J.B. Pritzker signed into law Senate Bill 1480, amending the Illinois Equal Pay Act of 2003. No employer may discriminate between employees on the basis of sex or race by paying wages to an employee at a rate less than the rate at which the employer pays wages to another employee of the opposite sex or a different race. This law applies to wages paid for the same or substantially similar work on jobs the performance of which requires substantially similar skill, effort and responsibility, performed under similar working conditions.1
The new law allows exceptions where payment is made under:
- A seniority system
- A merit system
- A system that measures earnings by quantity or quality of production
- A differential based on any permissible factor (provided that the factor is not based on or derived from a differential in compensation based on sex, race, or another protected characteristic, is job-related with respect to the position and is consistent with a business necessity, and accounts for the differential)
New pay equity requirements may catch employers off guard
Private organizations employing 100 or more in Illinois must obtain an equal pay registration certificate from the state's DOL that's good for two years. In addition to registering for the certificate, businesses must submit to the DOL an Equal Pay Act Registration Certificate Compliance Statement. This statement outlines how the business identifies and corrects wage and benefit disparities, how it evaluates compliance with wage laws, and how often it conducts those evaluations. Further, businesses must disclose the methods they use to determine employee compensation and benefits.
Employees may request data for the pay rates of others employed by their organizations in their job classifications, setting the stage for pay transparency, for which many companies aren't prepared.
Partner with Gallagher to design a total rewards philosophy to guide your action
If your business hasn't yet filed for its equal pay registration certificate, or if you're wondering if your methods are sufficient in today's tight labor market, Gallagher can help. Our team can define a compensation and total rewards philosophy tailored to your organization to guide your action.
This philosophy defines program goals while adhering to applicable laws and regulations such as the Illinois Equal Pay Act. A well-defined philosophy and set of total rewards guidelines allow leaders to understand how to prevent wage disparities based on race, gender and other protected classes. Further, the philosophy and guidelines help leaders determine how to set a standard practice to measure and correct potential disparities when they arise. This guidance defines the approach to review the compensation and benefits offered to employees, whether through market pricing, a performance pay system, collective bargaining agreement or an alternative approach.
Contact Gallagher to perform a compensation assessment for your organization. This detailed, actionable assessment guides your business through the implications of your current program, ascertains your market position and defines a compensation and total rewards philosophy.
Using this foundation, Gallagher works with you to build a compensation program, allowing you to see the design of the compensation philosophy in action as you strive to meet strategic human resource goals.
Let Gallagher demonstrate how data drives decisions to help your organization to face the future with confidence.
