With 3+ months behind us in the new Equal Pay Registration Certification (EPRC) process in Illinois, there are some important updates and heads-ups to share. If you’re an employer in Illinois, please make sure you are prepared for certification (see Note 1).

The first round of filing dates came and went on June 2, 2022. Despite the lack of formal policies, we are observing an interesting trend: Employers are being notified of “disparities” in their pay data with little-to-no information to support the evidence of disparity or guidance to allow employers to investigate such a disparity.

Based on best guess estimates, it appears that Illinois Department of Labor (IDOL) is simply looking for differences in average pay (see Note 2). On the face of it, this may appear reasonable, but these broad analyses fail to consider basic pay factors that may legitimately explain differences in pay, such as job and labor market differences. The disparities that IDOL has identified are commonly referred to as the “Pay Gap,” which reflects labor market differences in job by gender and race. In other words, men tend to hold higher-paying jobs than women.

Pay gap is not a “Pay Equity” issue. Why? Pay Equity is concerned with “equal pay for equal work,” i.e., apples-to-apples comparisons in pay. Pay gap methodology ignores labor market differences in gender and race availability. Labor market availability differences can be argued as the result of long-term, societal privileges for whites and males, rather than pay discrimination committed by the organization. Should this problem be rectified? Absolutely! Is it an issue of pay discrimination? No! Unfortunately, IDOL is conflating the two as the same.

Title VII of the Civil Rights Act is the ‘gold standard’ in defining pay discrimination and is the foundation for other state-level regulations, including in Illinois. Title VII is very clear that we must consider the nature of the work being performed by the groups being examined for pay disparity. Further, the disparities being identified by IDOL fail to examine the effects of necessary control variables (e.g., time in company, time in job) or other legitimate explanatory factors (e.g., geographic differential pay) that organizations use to determine pay. Again, these are typically considered the basics of modern compensation analysis.

So, what should you do if you received notice of a disparity? As a start, do not panic. Some employers may choose to enlist assistance of counsel, but it is early in the process and that is a decision for you to make depending on your risk tolerance. Regardless of whether you engage counsel, you must engage pay equity experts like BCG to review the data you submitted for potential pay equity concerns; you need a full scan of your pay equity position (see Note 3) so you can begin to frame a response strategy.

There’s no shortage of guesses and predictions out there, but let’s focus on what we know: First, it appears that IDOL is taking a broad sweep at everyone who filed on the June 2, 2022 deadline. Second, IDOL is conducting pay gap analyses and conflating them as pay equity investigations. For the most part, pay gaps are not necessarily pay equity concerns, i.e., equal pay for equal work, because pay gap analyses ignore labor market differences. Pay equity is complex. If you wish to better understand pay equity, BCGi offers many free webinars from our nationally recognized team of pay equity experts. Visit the BCGi Training Events page for a list our upcoming webinars.

You can also reach our pay equity team directly by emailing Brian Marentette, Ph.D. at bmarentette@biddle.com.

Notes:

1. As a reminder, for private companies with 100 or more employees in Illinois, you are required to submit your pay data per PA 101-656 and PA 102-36 (which are amendments to the Equal Pay Act of 2003) between March 24, 2022 and March 23, 2024. The flowchart issued by the Illinois DOL is a helpful visual to follow the process. In sum, IDOL will assign an employer an application due date (with 120-day notice before such date). Then, after submission and upon application review, the IDOL either issues the EPRC or rejects the application, presumably due to finding pay disparity(ies) in the employer’s data.
2. IL equal pay law covers gender (male vs. female) and race (black vs. non-black).
3. There’s a well-established pay equity framework that IDOL is tasked to observe, which includes but is not limited to Title VII of the Civil Rights Act of 1964 (42 U.S.C. 2000e), the Equal Pay Act of 1963 (29 U.S.C. 206(d)), the Illinois Human Rights Act (775 ILCS 5), and the Equal Wage Act (820 ILCS 110). Proper Title VII-oriented pay equity studies investigate pay disparities among employees who are performing substantially similar work, with substantially similar skill, effort, and responsibility, and which are performed under similar working conditions.