Client Alert,Illinois enacts the Illinois Pay Transparency Act, Effective January 1, 2025
As of January 1, 2025, Illinois requires employers with 15 or more employees to disclose in any job posting for covered roles the corresponding wage or salary range and a description of the benefits and other compensation the position offers. The new law, known as the Illinois Pay Transparency Act, is included as an amendment to The Equal Pay Act of 2003.
Illinois joins numerous states taking steps to address pay disparity concerns, including California, Colorado, Maryland and Washington, D.C., Massachusetts (effective Feb. 1, 2025), Minnesota (effective Jan. 1, 2025), New Jersey (effective June 1, 2025) New York, Vermont (effective July 1, 2025), and Washington.
- Disclosure of Pay Scale and Benefits: Covered 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 $100.00 to $500,000.00 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.
- Current Employees: 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.
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.
Conclusion
As a result of the new law, all covered Illinois employers should take proactive steps to ensure compliance with the new requirements. Please contact Gozdecki, Del Giudice, Americus & Brocato LLP if you have any questions regarding the new law.