Illinois Passes New Equal Pay Act and Expands Statutory Coverage


On May 11, 2003, Illinois Governor Rod Blagojevich signed the Equal Pay Act of 2003. The Illinois Act mirrors the federal Equal Pay Act in that it prohibits employers from paying an employee of one sex less than an employee of the opposite sex for work that is the same or substantially similar. As under the federal Equal Pay Act, under the Illinois Equal Pay Act, substantially similar work is work that requires "equal skill, effort, and responsibility" under similar working conditions. Like the federal Equal Pay Act, the Illinois Equal Pay Act does not prohibit unequal pay based on a seniority system, a merit system or the quality or quantity of work. In addition, the Illinois Act does not prohibit unequal payments based on a factor other than (a) sex or (b) a factor that would constitute unlawful discrimination under the Illinois Human Rights Act. Employers may not come into compliance with either the federal Act or the Illinois Act by reducing any employee's wages.

The Illinois Act is Broader than the Federal Act

The Illinois Equal Pay Act is broader than the federal Act in at least two ways. First, the Illinois Act covers all employers with at least four employees. Thus, the Illinois Equal Pay Act covers Illinois employees that do not meet the statutory requirements of the federal Equal Pay Act (either because they do not meet the individual test, or do not conduct business of at least $500,000 per year).

To be sure, many Illinois employers who are not covered by the federal Equal Pay Act are still prohibited by Title VII of the Civil Rights Act of 1964 and the Illinois Human Rights Act from discriminating on the basis of sex with respect to compensation. Under the Illinois Equal Pay Act, however, it may be easier for an employee to demonstrate discrimination by comparing somewhat distinct positions that require the same skill, effort and responsibility under similar working conditions.

The Illinois Equal Pay Act, in addition to covering more employers, is also broader than the federal Equal Pay Act in its scope. For example, the federal Act mandates equal pay within an establishment, which is interpreted as "a distinct physical place of business" rather than as an entire enterprise. (Under certain circumstances, an "establishment" under the federal Act can be much broader than a single facility.) The Illinois Equal Pay Act, on the other hand, is not limited to employees within the same establishment but rather to employees within the same county. Specifically, the Illinois Equal Pay Act states that it is not to be interpreted to require employers to pay an employee in one county the same as an employee in another county. Companies, then, need not fear paying some employees more based on a higher cost of living in one county relative to the next. But, within a county (and absent an exception), an employer may not pay unequal wages to employees of the opposite sex who perform substantially similar work even if those employees work in different facilities.

Anti-Retaliation and Anti-Discrimination Provisions

The Illinois Equal Pay Act also prohibits employers from discriminating against employees who exercise their rights (or assist others, such as by giving information to the Illinois Department of Labor) under the Act.

Furthermore, the Act prohibits employers from discharging or otherwise discriminating against an employee who asks about, discloses, compares or discusses his own or any other employee's compensation. Employers with policies prohibiting the sharing or dissemination of information about wages or salaries should reconsider those policies. Policies that prohibit employees from sharing such information violate the spirit of the Illinois Equal Pay Act, and enforcement of those policies may well violate the letter of the Act as well. Nothing in the Act, however, suggests that otherwise inappropriate conduct – such as stealing compensation information from the human resource manager's office – is immunized by the Act. Still, employers should be careful about disciplining employees who share or discuss information about compensation.

Record-Keeping and Notice Requirements

The Act requires employers to keep (for three years) records documenting the name, address, occupation and wage or salary of each employee. The Illinois Department of Labor has the authority to expand those record-keeping requirements.

Employers must also post a notice (which the Illinois Department of Labor will furnish) regarding the Act.

Enforcement and Penalties

Within three years after the employee discovers an underpayment allegedly based on sex, either the employee or the Illinois Department of Labor can sue the employer for the underpayment. If the employee prevails, she can recover the underpayment, interest, costs and attorneys' fees. If the Illinois Department of Labor prevails, it can recover the underpayment, costs and a civil penalty of up to $2,500 for each violation for each employee. If the employer fails to pay the underpayment within 15 days after the order is entered, the employer is liable to pay a 1% penalty each day it continues not to pay, up to twice the original amount.

If an employee prevails under the anti-retaliation provisions, she can recover lost benefits, back and front pay, and liquidated damages that effectively double those amounts.

In addition to an employee's private right of action and the Illinois Department of Labor's right to bring legal action on an employee's behalf, the Illinois Equal Pay Act also gives the Illinois Department of Labor significant power to investigate compliance with the Act. The Act gives the Department of Labor the right to issue subpoenas, interview and depose witnesses, compel production of documents and things, and enter and inspect workplaces.

Conclusion

Illinois employers who have not already done so should ensure that their employee compensation complies with the Illinois Equal Pay Act. In addition, Illinois employers should re-evaluate their policies with respect to the confidentiality of wage and salary information. Finally, Illinois employers should maintain compensation records for three years.