New Illinois Pay Transparency Law

Arbor Team

Legislation around pay transparency has been on the rise in the United States as several states––including California, New York, Colorado, Hawaii, Washington, Maryland, Nevada, Rhode Island, and several other jurisdictions––have passed laws requiring employers to disclose salary information in job postings. Illinois has become the latest state to join the movement for pay transparency.

On August 13, 2023, Illinois Governor J.B. Pritzker signed into law an amendment to the Illinois Equal Pay Act, which will require certain employers to disclose pay scale and benefits for open positions starting January 1, 2025.

Illinois Pay Transparency Requirements

Under the new law, beginning January 1, 2025, employers with a workforce of fifteen or more will be mandated to include the following in all job postings:

  • Pay Scale: wage or salary, or its range, that employers anticipate offering
  • Benefits: additional compensation, beyond salary or wage ranges, such as bonuses, stock options, or other incentives

Employers can disclose this information either directly within the posting or via a hyperlink leading to a publicly accessible webpage detailing this information.

In addition to mandatory disclosure in job postings, there are several other key provisions to be aware of:

  • Promotion Transparency: The law mandates that employers must communicate any promotional opportunities to all current employees within fourteen calendar days of external job posting. This ensures that existing employees are aware of and can apply for upward mobility opportunities within the organization.
  • Third-Party Posting Compliance: For employers who rely on third-party platforms or agencies for job postings, the responsibility remains to ensure that the pay scale and benefits information is provided to these third parties.
  • Protection for Job Applicants: The law safeguards the rights of job applicants. Employers are prohibited from retaliating against or refusing to hire applicants who seek information about the pay scale and benefits.
  • Covered Positions: These disclosure requirements apply to in-state, remote, and hybrid positions––in particular, any positions that are either 1) performed at least in part in Illinois, or 2) reporting to a supervisor, office, or other worksite in Illinois.

Implications for Employers

While the law goes into effect January 1, 2025, employers should not wait to make sure their hiring practices are compliant. The signing of this new law, amidst a wave of growing pay transparency legislation, represents several trends and opportunities for employers:

  • Enhanced Transparency: The primary objective of this law is to foster transparency in the hiring process. By providing clear information about compensation, employers can set clear expectations and potentially attract candidates who align with the company's compensation structure.
  • Accountability and Compliance: With the Illinois Department of Labor (IDOL) empowered to initiate investigations and impose penalties for non-compliance, employers need to be vigilant. Each violation is treated separately, and penalties can accumulate, especially for repeat offenders.
  • Cultural Shift: This law might catalyze a broader cultural shift within organizations towards more open discussions about pay, benefits, and overall compensation. It encourages a more inclusive environment where employees and potential hires feel valued and informed.
  • Operational Changes: Employers might need to revisit and possibly overhaul their current job posting processes, especially if they work with third-party agencies. Regular audits and checks will become crucial to ensure full compliance with the law.

Illinois’ new pay transparency law signifies another major legislative step toward promoting fairer workplaces. As new legislation is signed and goes into effect, employers must ensure they are staying compliant and taking the necessary steps to foster fair and inclusive workplaces.

About Arbor

Arbor enables leaders to easily capture, analyze, and benchmark DEI and workforce outcomes. Arbor’s data analytics platform enables organizations to stay compliant with a range of regulatory reporting requirements, including new pay transparency laws.

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