Illinois employers are about to face a significant shift in pay transparency. A new law, recently signed by Gov. J.B. Pritzker, will compel them to divulge salary information in job postings. On August 11th, the Illinois Equal Pay Act underwent amendments that will enforce the disclosure of pay scale and benefits details in job listings for positions that will either be physically performed in Illinois or, if outside the state, require the employee to report to a supervisor, office, or another worksite within Illinois.
While the law won’t fully effect until January 1, 2025, businesses must prepare for this groundbreaking change in employment practices.
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5 Key Insights Into the New Law
The revised Illinois Equal Pay Act introduces five significant changes:
- Enhanced Job Posting Requirements: Covered organizations must now include wage or salary information, or a range thereof, along with a general description of the benefits and other compensation they expect to offer in job postings. This rule applies to positions that will be physically performed, at least in part, in Illinois or those outside the state where the employee will report to an Illinois-based supervisor, office, or worksite. Moreover, covered organizations must make all job opportunities known to current employees on the same day the job is posted.
- Disclosure of Pay Scale and Benefits to Applicants: Although the law doesn’t mandate job postings, it does require employers to disclose the pay scale and benefits to applicants before any compensation discussion or offer upon the applicant’s request.
- Recordkeeping Requirements: Employers must retain records of pay scale and benefits information for each posted position for at least five years. However, in ongoing investigations, these records must be preserved until authorized for disposal by the state Department of Labor or a court order.
- Potential Liability for Third-Party Job Postings: Employers in Illinois are now liable for any third-party job posting and recruitment services failing to include pay scale and benefits information in job listings on their behalf. Employers must furnish this information or a hyperlink to third parties for inclusion in postings.
- Stringent Penalties for Violations: The Illinois Department of Labor can penalize employers found violating the law. Upon receiving notice of a violation, employers have seven days to rectify it; otherwise, they face a civil penalty of $100 per day for each day the violation persists. Each non-compliant job posting is considered a separate violation.
Your Roadmap to Compliance
Even though the law won’t be enforced until 2025, Illinois employers are advised to take proactive measures:
- Review Job Postings: Review and update them to ensure they meet the new requirements.
- Employee Training: Train your hiring managers, talent acquisition professionals, and HR staff on the new regulations.
- Regular Compensation Review: Establish a routine process for evaluating and updating compensation and benefits to align with the law’s requirements.
- Third-Party Coordination: Collaborate closely with third-party recruitment services to ensure they are well-informed about and compliant with the upcoming law.
- Consult Legal Counsel: Consider conducting a privileged pay audit with legal counsel to ensure compliance with state and federal equal pay regulations. Moreover, consult with counsel to develop a standardized pay scale format that aligns with pay equity principles.
- Multistate Strategy: If your organization operates in states that do not have similar pay transparency requirements, assess whether you will adopt a uniform approach or a patchwork strategy for job postings in those states. Each system has advantages and disadvantages, so working closely with legal counsel is essential to determine the best action.
This new Illinois law signifies a groundbreaking shift towards greater pay transparency in the employment landscape. Employers should view it as an opportunity to promote fairness and equity within their organizations while ensuring compliance with the evolving legal landscape.
By taking proactive steps to understand and implement the new requirements, businesses can avoid potential penalties and foster trust and fairness in the workplace. Moreover, this law aligns with broader societal trends toward greater transparency and fairness in compensation practices, making it a pivotal moment for Illinois employers to lead by example in pay equity.
As the January 1, 2025 deadline approaches, Illinois employers should stay updated on any additional guidance or regulations that relevant authorities may issue. This will help ensure a smooth transition to the new pay transparency requirements and minimize potential compliance challenges.
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