United States: Illinois Hops On The Equal Pay Bandwagon: Amends Equal Pay Law, Enacts Salary History Ban

Last Updated: August 7 2019
Article by Kathryn Siegel and Alexandra Hemenway

On July 31, 2019, Illinois Governor J.B. Pritzker signed House Bill 834 into law, strengthening and amending the Illinois Equal Pay Act of 2003 ("IEPA").1 Key changes to the IEPA take effect on September 29, 2019 and include the broadening of the statute's compensation discrimination protections, and a prohibition on the solicitation of salary history information from job applicants.

Compensation Discrimination Amendments

Prior to its amendment, the IEPA generally required that Illinois employers compensate employees equally, regardless of sex or race,2 where the employees performed "substantially similar work," the performance of which required equal skill, effort, and responsibility and where the work was performed under similar working conditions. As amended, the statute provides that employers must compensate employees equally, without regard to sex or race, where they perform "substantially similar work" the performance of which requires "substantially equal" skill, effort and responsibility, thereby broadening the statute's general application.3

Further, like the federal Equal Pay Act, the IEPA previously provided that, to the extent a pay gap existed, it could be considered lawful if the gap could be attributed to one of four statutory exceptions. Under the prior version of the IEPA, pay discrepancies could be explained by: (1) a seniority system; (2) a merit system; (3) a system that measures earnings by quantity or quality of production; or (4) any factor other than sex or race. As amended, however, Illinois employers may invoke the fourth exception only where the factor is not based on or derived from a differential in compensation based on sex, race or other protected characteristic, is job-related with respect to the position is question, is consistent with business necessity, and accounts for the entire pay gap or wage differential. Thus, this fourth exception, commonly referred to as the "catchall" exception in the federal context, has been more narrowly tailored in the amended IEPA to require that any compensation discrepancy be attributable to the job in question.

Anti-retaliation Amendments

The bill also strengthened the IEPA's anti-retaliation protections. The statute continues to provide that an Illinois employer may not interfere with, restrain, or retaliate against employees who wish to inquire about, disclose, compare or otherwise discuss their own wages or the wages of other employees, or who encourage colleagues to do so. As amended, the statute further provides that employers may not require an employee to sign a contract or waiver that would prohibit the employee from disclosing, or discussing, the employee's own compensation information.

Similar to equal pay legislation in other states, however, the IEPA as amended carves out certain employees from these wage transparency protections. The IEPA now provides that an employer may prohibit a human resources employee, supervisor, or any other employee whose job responsibilities require or permit them access to employee wage or salary information, from disclosing that information without prior written consent from the employee whose information is sought.

Under the IEPA, the statute of limitations period for civil actions remains five years from the date of the most recent underpayment, and employees remain entitled to recover the entire amount of any underpayment with interest. Under the amended statute, employees are also entitled to seek additional compensatory damages if they can demonstrate that the employer acted with malice or reckless indifference, as well as punitive damages, injunctive relief, and attorneys' fees, as appropriate.

Salary History Ban

The IEPA, as amended, also includes a salary history ban, adding Illinois to the growing list of states prohibiting employers from soliciting such information. Per the revised statute, Illinois employers, and any agents acting on their behalf, may not: (1) screen job applicants based on their salary history, by requiring that applicants satisfy a minimum or maximum compensation criteria; (2) request or require salary history be provided as a condition of being interviewed, or considered for employment; or (3) otherwise request or require applicants to disclose salary history information as a condition of employment.

The salary history ban further precludes Illinois employers from seeking an applicant's salary history information from the applicant's current or former employers, unless that salary history is a matter of public record. This restriction does not apply if the applicant is a current employee and applying for a position with the current employer.

The IEPA's salary history ban provides certain exceptions to these general prohibitions. For example, the statute clarifies that employers may provide compensation or benefits information relating to the position offered to an applicant during the interview and pre-employment process. The statute further clarifies that employers and applicants can engage in discussions regarding the applicant's "expectations" with respect to compensation and benefits. Finally, if an applicant voluntarily and without prompting discloses his or her current salary, or salary history, the employer will not be in violation of the statute so long as the employer does not consider or rely on the voluntary disclosures as a factor in determining whether to offer the job applicant employment, in making an offer of compensation, or in determining the future wage or compensation of the applicant.

Like the compensation discrimination protections, the statute of limitations with respect to the salary history ban is five years from the date of the violation. If an employer violates this section of the statute, or engages in prohibited retaliation as discussed above, an employee may recover damages incurred, special damages not to exceed $10,000, injunctive relief, and attorneys' fees, as appropriate.

Looking Ahead

The amended statute will become effective on September 29, 2019, 60 days following the Governor's signature. In preparation, Illinois employers should review job applications and other hiring documentation to confirm that any requests, or references, to job applicants' salary history are removed. Employers should promptly train managers and recruiters about the law's prohibitions and requirements. Employers should consider further evaluating their compensation practices to ensure that job-related factors account for any wage discrepancy between employees of different sex or race where the employees perform substantially similar work in the same geographic location (that is, the same county). In addition, employers should cease enforcing policies or practices banning employees from talking about their salaries. In addition to being a likely violation of the revised IEPA, such policies and practices may run afoul of Section 7 of the National Labor Relations Act.

Footnotes

1 Additional information about HB 834 and its legislative history is available here.

2 The IEPA prohibits compensation discrimination on the basis of sex and race, specifically prohibiting compensation discrimination against African-American employees.

3 The IEPA includes a geographic limitation to clarify that the statute does not require an Illinois employer to pay employees equally for "substantially similar work" where the employees are located in different counties within the state. This limitation is unchanged in the amendment.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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