The Illinois Equal Pay Act (the "Act") is officially going live January 1, 2025.  It was passed in 2023 and amended several times. Employers in Illinois with 15 or more employees will be required to include pay and benefit information in all job postings both external and internal.    The following are specific provisions that must be complied with:

• Disclosure of Pay Scale and Benefits: 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 $1.00 to $1,000,000.00 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.
• Internal Promotions: 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.

Specifically, the new law makes clear that employers may satisfy the “wage or salary, or the wage or salary range” requirement by referring to:

• Any applicable internal pay scale;
• The previously determined pay range for the position;
• The actual pay range of others currently holding equivalent positions; or
• The budgeted amount for the position, as applicable.

Further, if the position is outside of Illinois but reporting into an Illinois based supervisor, the range should be what the employer would pay in Illinois.

In addition, if an employer uses a third party for the job posting, the employer must provide the pay scale and benefits (or a hyperlink to the pay scale and benefits) to the third party, who, in turn, must include that information in the job posting.

When it comes to recordkeeping there are specific requirements. Employers are required to make and preserve records that document the pay scale and benefits for each position, as well as the job posting for each position.  The following are examples that should be maintained:

• Records showing that an employer that engaged a third party did include pay and benefit information in the materials it provided to the third party;
• Records showing when and by what means an employer (directly or through an engaged third party) published a specific job posting, whether external or internal-only;
• Records showing when and by what means an employer that externally published a specific job posting (directly or through an engaged third party) made the promotional opportunity known to its current employees;
• Records showing when and how an employer in good faith determined pay or pay range and benefits used in a specific job posting; and
• Records showing if the employer ultimately determined to offer different pay and benefits than those in the specific job posting and the good-faith reason for the change.

Finally, there will be penalties for violations of the law. The Illinois Department of Labor (IDOL) may initiate investigations (for both active and inactive job postings) of alleged violations of the law upon receiving a complaint from any person who claims to be aggrieved or at the IDOL’s own discretion.  If the IDOL determines that a violation has occurred and determines the job posting is still active, the IDOL will send to the employer a notice setting forth the violation, the applicable penalty, and the period to cure the violation.

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.

Source: Foley & Lardner LLP 12/3/24, Jackson Lewis 11/27/24