Originally enacted in 2003, the Illinois Equal Pay Act (the "Act") has undergone several amendments over the years to strengthen its provisions and promote fair pay practices across the state. As we first described last year, one of the most significant updates to the Act is a new pay transparency requirement, which will take effect on January 1, 2025.
In 2025, Illinois and four other states (Massachusetts, Minnesota, New Jersey, and Vermont) will join a growing number of U.S. statesthat have enacted similar pay transparency laws over the past few years, including California, Colorado, Connecticut, New York, and Washington. Like its counterparts in other states, the new Illinois mandate aims to promote wage equality and provide job seekers with critical information about compensation, thereby fostering a more transparent and equitable job market.
Key Provisions of the Pay Transparency Requirement
Starting January 1, 2025, employers in Illinois with 15 or more employees will be required to include pay and benefit information in all job postings. This requirement applies to both internal and external job postings, ensuring that current employees and potential candidates have access to the same information. The key provisions of the new requirement are as follows:
- Disclosure of Pay Scale and Benefits: Employers must include either the wage or salary for the position, or the wage or salary range, in the job posting. Additionally, a general description of the benefits and other forms of compensation, such as bonuses, stock options, and other incentives, must be provided.
- Good Faith Obligation: The pay scale and benefits disclosed must be what the employer reasonably expects to offer for the position. This expectation can be based on existing pay scales, the budgeted amount for the role, or the actual range paid to current employees in equivalent positions. This range must be a good faith, reasonable range. In other words, a salary range of $1.00 to $1,000,000.00 likely fails to meet this requirement.
- Remote Positions: The pay transparency requirement applies to positions that will be performed — at least in part — in Illinois, as well as positions performed outside of Illinois if the employee reports to a supervisor, office, or other work site in Illinois.
- Third-Party Job Postings: If an employer uses a third party, such as an external recruiter or employment service provider, to post job opportunities, the employer must provide the pay range and benefits information to the third party. The third party is then obligated to include this data in the job posting.
- Internal Promotions: Employers are required to announce, post, or otherwise make known all opportunities for promotion to current employees no later than 14 calendar days after making an external job posting for the same position.
Penalties and Enforcement
Employers who fail to comply with the pay transparency mandate face penalties of up to $500 for a first offense, $2,500 for a second offense, and $10,000 for a third or subsequent offense. Employers will have a short period to cure the first and second offenses before fines are issued, but there is no opportunity to cure third or subsequent offenses.
Implications for Employers and Job Seekers
As the January 2025 deadline approaches, covered Illinois employers should take proactive steps to ensure compliance with the new requirements. This includes reviewing and updating job postings, training HR personnel on the new provisions, and maintaining accurate records of pay scales and benefits. Foley's Labor & Employment team remains ready to assist with this new Illinois requirement and with similar pay transparency requirements spreading throughout the country.
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.
