New Pay Transparency Requirements for Illinois Employers On the Horizon for 2025
Seyfarth Synopsis: Beginning on January 1, 2025, Illinois will join the list of states that are requiring greater transparency in both the job opportunities available in the state as well as the pay for those jobs. The Illinois Equal Pay Act of 2023 has been amended to require new pay transparency and record-keeping requirements. Employers should prepare now to meet these upcoming obligations.
Effective January 1, 2025, amendments to the Illinois Equal Pay Act will require that employers with 15 or more employees disclose “pay scale and benefits” in all job postings. The required disclosures include the wage or salary, or the wage or salary range, as well as a general description of benefits and other forms of compensation, including bonuses, stock options and other incentives the employer expects to offer for the position. The pay disclosure requirements apply only to those jobs that (1) will be performed, at least in part, in Illinois, or (2) will be performed outside of Illinois if the hired employee will report to a supervisor, office or other work site in Illinois.
Employers are to include the “good faith” range the employer reasonably expects to offer and may rely on factors such as existing pay ranges, the budgeted amount for the role, or the actual range paid to current employees in equivalent positions. Employers may meet their obligation to disclose benefit information by reference to an easily accessible public section of an employer’s website.
If an employer engages a third party, such as an external recruiter or other employment service provider to announce, post, or publish job opportunities, the employer must provide the pay range and benefits information to the third party, or provide a hyperlink to where the information is available. The third party is then obligated to include this data in the job posting. However, if the employer fails to provide the necessary information, the third party may avoid liability by demonstrating that the omission was due to the employer’s non-compliance with the requirements under the Illinois Equal Pay Act.
Another critical aspect of the amendments is the emphasis on transparency regarding internal promotional opportunities. 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.
Record-Keeping and Enforcement Provisions
The Illinois Department of Labor will oversee the enforcement of these amendments and is authorized to adopt rules necessary to administer and enforce provisions of the law. In addition to ongoing record-keeping requirements, employers are also required to maintain records of job postings, pay scales, benefits, and wages for each position for at least five years.
The Department may initiate investigations upon receiving complaints from individuals who claim to be aggrieved by a violation of the pay scale and benefits disclosure requirements or at its discretion. Complaints by individuals must be submitted within one year of the alleged violation.
Upon determining that a violation has occurred, the Department will issue a notice to the employer detailing the violation, applicable penalties, and a specified period for the employer to correct the issue. Penalties vary based on whether the non-compliant job postings are active at the time of the Department’s notice and whether the employer has previous violations.
For active job postings:
- First Offense: Employers are given a 14-day cure period to remedy the violation, followed by a fine not to exceed $500.
- Second Offense: A 7-day cure period is provided, with fines up to $2,500.
- Third or Subsequent Offense: No cure period is allowed, with fines up to $10,000.
For non-active job postings:
- First Offense: Fines up to $250.
- Second Offense: Fines up to $2,500.
- Third or Subsequent Offense: Fines up to $10,000.
To determine whether a posting is “active,” the Department may consider factors such as whether the position has been filled, how long the posting has been accessible to the public, and if the employer is still accepting applications. The Department has discretion to waive or tailor penalties based on the size of the business and the severity of the violation.
Next Steps for Illinois Employers:
Employers should review their job posting and promotional practices to ensure compliance with the new requirements before the amendments take effect on January 1, 2025. This includes implementing processes to ensure that pay ranges and benefits are disclosed in covered job postings and establishing procedures to communicate promotion opportunities to current employees. It is also crucial to ensure that third parties engaged to post jobs are provided with the required pay and benefits information.
Seyfarth’s Pay Equity Group is continuing to monitor this area for additional updates.
