Criminal conviction records and diversity and pay reporting: What Illinois employers need to know about Senate Bill 1480

On March 23, 2021, Illinois Governor JB Pritzker signed Senate Bill 1480 (SB 1480), which amends the Illinois Human Rights Act (IHRA), the Illinois Equal Pay Act of 2003 (IEPA), and the Illinois Business Corporation Act to impose new requirements on Illinois employers.  Covered employers are required to follow new procedures before disqualifying an applicant or employee based on a criminal conviction record (effective immediately), to report workforce demographic data (beginning in 2023) and to apply for an equal pay certification (starting in 2024). Significantly, employer EEO-1 reports filed in Illinois will be published publicly by the Illinois Secretary of State within 90 days of filing.

Employers are encouraged to review their background check policies, practices and forms and to prepare for greater transparency of diversity and pay equity data.

Amendment to the Illinois Human Rights Act regarding criminal convictions

SB 1480 amends the IHRA to limit the use of conviction records in employment-related decisions. Under these new amendments, which took effect immediately, an employer must determine that there is either a substantial relationship between the conviction and the position sought or that the granting of employment would involve an unreasonable risk to property or the safety or welfare of specific individuals or the general public.

To determine if there is a substantial relationship between the conviction and the position sought, the employer must consider whether the employment position offers the opportunity for the same or a similar offense to occur. The employer must also consider whether the circumstances leading to the conviction will recur in the employment position. SB 1480 includes numerous factors that employers must contemplate in making this determination:

• The length of time since the conviction
• The number of convictions that appear on the criminal record
• The severity of the conviction
• The circumstances surrounding the conviction
• The age of the employee at the time of the conviction
• Any evidence of rehabilitation of the employee

If an employer elects not to hire an individual based on his or her criminal record, the employer is to engage in an interactive process in which requires specific notice to the affected individual. Additional information about this interactive process and its requirements, what qualifies as a conviction record, examples of conviction records, the policies that employers can maintain in relation to individuals with convictions, and  more, can be found here.

Penalties for noncompliance with the new requirements of SB 1480 include uncapped compensatory damages, back pay, front pay, reinstatement, attorney’s fees and costs, and punitive damages. As such, when evaluating a potential or current employee’s conviction record, employers are encouraged to consult with counsel before implementing an adverse employment action as a result of an individual’s conviction.

New obligation to report EEO data in annual reports to the Secretary of State

SB 1480 also amends the Business Corporation Act. This amendment will affect employers that are required to file an EEO-1 with the federal Equal Employment Opportunity Commission, which generally includes private employers with at least 100 employees and some federal contractors with 50 or more employees. An EEO-1 is a survey concerning company employment data by race, ethnicity, gender, and job category. Affected employers will be required to disclose information that is substantially similar to the information required by the EEO-1 in an employer’s annual corporate reports filed with the Illinois Secretary of State. This requirement will affect annual corporate reports filed with the Illinois Secretary of State on or after January 1, 2023, and employers should be aware that such information will be published on the Illinois Secretary of State’s website.

Employers are urged to be cognizant of disclosure requirements and annual report deadlines. Employers who fail to properly report the disclosures required by this amendment will be subject to a monetary penalty.

New obligation for employers with more than 100 employees to obtain an equal pay certificate

Further, SB 1480 amends the Illinois Equal Pay Act of 2003. This legislation will require employers with more than 100 employees in Illinois to obtain an “equal pay registration certificate.” Existing corporations must acquire certificates within three years after the effective date of the new law (ie, by March 23, 2024) and new corporations must acquire certificates within three years after beginning operations.

To prepare for the enactment of SB 1480, employers are encouraged to compile a list of all employees during the past calendar year categorized by gender, race, ethnicity, and total wages. Specifically, “wages” under SB 1480 refers to the definition of “wages” provided by the IEPA, which includes wages, salaries, earned commissions, and other forms of compensation. To acquire a certificate, an employer must submit a statement signed by a corporate officer, legal counsel, or other authorized agent of the business certifying the employer’s compliance with particular federal and state laws. The signed statement must also pledge compliance with the employer’s nondiscriminatory compensation practices.

The IEPA’s penalty provisions provide for reinstatement, two times back pay, interest and attorney’s fees and costs. Moreover, any employer that fails to attain a certificate or that is subject to suspension of its certificate after an Illinois Department of Labor investigation is subject to a monetary penalty in a sum equal to 1 percent of the employer’s gross profits.

Next steps for employers

As noted previously, the changes impacting criminal background checks took effect on March 23, 2021. Accordingly, Illinois employers are urged to review their hiring policies and procedures to ensure compliance. While employers may have a longer runway to prepare for EEO-1 reporting and pay certification requirements, early preparation will be critical.