Pay Transparency Trend Continues – Illinois Joins the Growing List
The trend to mandate pay transparency in job postings is continuing in state and local legislatures, with Illinois joining the growing list of states and localities jumping into this arena. Illinois joins the states of California, Washington, and Colorado, as well as New York City, in mandating transparency regarding compensation for certain job postings. In addition to the growing list of locations that require employers to affirmatively advertise compensation and benefit information, there are other state and local regulations that mandate disclosure of such information upon request of applicants/employees at varying points in the application and/or employment process.
Because all covered employers operating in these localities may face civil penalties for violations, these requirements are likely to continue to create ripple effects nationwide. Multistate employers will want to proactively monitor these requirements to ensure compliance and avoid penalties. For more information on the laws previously passed in these other states, please refer to our previous publications here and here. Below is a summary of the pay transparency requirements that are now included in the Illinois Equal Pay Act of 2003 (the “IEPA”).
Illinois Equal Pay Act (“IEPA”)
Effective Date: January 1, 2025
Covered Employers: Illinois employers with 15 or more employees are covered under the amendments to the IEPA. For purposes of the IEPA, an “employer” is defined as an individual, partnership, corporation, association, business, trust, person, or entity for whom employees are gainfully employed in Illinois and includes the State of Illinois, any state office, department, or agency, any unit of local government, and any school district.
Requirements: Covered employers must disclose “pay scale and benefits” for advertised job openings. The statutory definition is quite broad as it includes “the wage or salary, or the wage or salary range, and a general description of the benefits and other compensation, including, but not limited to, bonuses, stock options, or other incentives the employer reasonably expects in good faith to offer for the position, set by reference to any applicable pay scale, the previously determined range for the position, the actual range of others currently holding equivalent positions, or the budgeted amount for the position, as applicable.” If a covered employer utilizes a third-party for its job postings, it must ensure that such third-party has this information available, and, in turn, includes the same in the job postings. Notably, the IEPA does allow for covered employers to satisfy this notification requirement by including a hyperlink to a publicly accessible website that reflects the required “pay scale and benefits.”
In addition to disclosing the “pay scale and benefits” related to job postings, the amendments to the IEPA also impact potential internal promotions. Specifically, if an employer will be posting a job opportunity for which current employees are eligible to apply / be promoted into, the employer must announce the opportunity to current employees no later than 14 days after the external job posting is made.
Remote Workers: These requirements specifically apply to remote workers. If the duties of a position will be performed, at least in part, in Illinois, or, if the position will be physically performed outside of Illinois, but the employee holding the position will report to a supervisor, office, or other work site within Illinois, covered employers must adhere to the IEPA requirements when posting for the position.
Employer-Sponsored Immigrant Visa Processing: For employers who are working through the process of sponsoring foreign national workers on employment-based immigrant visas that require a labor certification, these requirements need to be addressed in the context of advertisements for the same.
Enforcement: Aggrieved employees may file complaints alleging employer violations with the Illinois Department of Labor, who is authorized to issue civil penalties of up to $10,000 for each employer violation ($500 for first offense; $2,500 for a second offense; and $10,000 for a third and subsequent offense). Depending on the number of offenses and timing, the IEPA does provide, in certain circumstances, the ability for employers to cure alleged violations. Employers must also adhere to recordkeeping requirements to evidence compliance with the new law.
Multi-state employers are well-advised to stay up to date on this ever-changing landscape in order to ensure that their job postings and internal practices remain compliant with applicable state and local laws. If you have questions regarding the new requirements under the IEPA or other pay transparency requirements, please contact an attorney in Koley Jessen’s Employment, Labor, and Benefits group.