What Employers Need to Know About the New Illinois Transparency Law
On January 1, 2025, an amendment to the Illinois Equal Pay Act will require many Illinois employers to adopt new practices in job postings to enhance salary transparency. Signed into law by Governor J.B. Pritzker in August 2023, this amendment introduces several significant requirements for employers in Illinois.
What is the New Illinois Pay Transparency Law?
The Illinois Pay Transparency Act will make compensation and benefits information more accessible to job seekers. It will require Illinois employers with 15 or more employees to include pay scale and benefits information in job postings. The law applies to all jobs performed in Illinois, including remote jobs where the employee reports to an Illinois-based supervisor or office.
Key Requirements Under the New Law
Employers will be required to disclose the predetermined salary range for the position, actual salary range for employees currently in the position, or budgeted salary for the role in the job posting along with a general description of benefits (e.g., health insurance, retirement plans, bonuses. This information must also be provided to third-party recruiters, or the recruiter may be held liable under the new law. Current employees need to be notified about promotional opportunities no later than 14 days after a position is posted to give internal candidates a chance to apply.
For positions not publicly posted, employers must still provide pay scale and benefits information to applicants before any offer or salary discussion, ensuring clarity about compensation expectations. Employers must also retain records of the pay scale and benefits for each position for at least five years, or longer if an investigation is ongoing. This recordkeeping is essential for compliance, particularly if the Illinois Department of Labor (IDOL) reviews hiring practices.
Penalties for Non-Compliance
Non-compliance may result in penalties ranging from $250 to $10,000 from the Illinois Department of Labor, depending on the number and nature of violations. For active postings, fines will be up to $500 for a first offense, $2,500 for a second, and $10,000 for third or subsequent offenses. A cure period of 14 days applies for the first offense, seven days for the second, and no cure period thereafter. For inactive postings, fines will be up to $250 for a first offense, $2,500 for a second, and $10,000 for subsequent offenses. Continuous violators will face immediate penalties for a third violation. The same goes for any further violations within five years of the third violation. Employers and employment agencies are prohibited from retaliating against individuals for exercising their rights under the Act, including protections against refusal to interview, hire, promote, or employ based on the exercise of these rights.
How to Prepare
To ensure compliance, employers should begin preparing well in advance of the January 2025 effective date. Employers should review current job posting templates and update them to include the required pay scale and benefits information. Employers should also communicate with third-party recruiters to confirm their understanding and adherence to the requirements, and train hiring managers and HR staff to implement the new transparency measures effectively.
The Illinois Pay Transparency Act represents a significant shift towards fairness in hiring practices. By preparing now, employers can ensure compliance and foster trust with prospective employees. If you need assistance with updating your hiring practices to meet the new requirements, please reach out to Walker Lawrence. Walker Lawrence chairs Levin Ginsburg’s employment law practice and has extensive experience in employment law and corporate counseling.
