Equal Pay Act Amendment to Require Greater Wage Transparency from Local Governments - Ottosen DiNolfo Hasenbalg & Castaldo, Ltd

by Erin Kiernat

Beginning January 1, 2025, an amendment to the Equal Pay Act (820 ILCS 112/1, et seq.) takes effect that will require employers—including local governments—to include pay scales and benefits in job postings and to inform current employees of promotion opportunities. In addition, the Act will mandate that employers disclose compensation information to job applicants.

The Equal Pay Act was originally enacted to help eliminate compensation disparities due to gender and race. However, as of 2022, women in the United States still earned approximately 82% of what men earned. And in 2020, the typical full-time Black worker earned about 20% less than a typical full-time white worker. To help bolster wage equality, Illinois will join at least 8 other states in enacting wage transparency laws.

What Does This Mean for Local Governments?

Local governments are already subject to several laws that mandate the disclosure of employee compensation information. The Freedom of Information Act and the Illinois Constitution of 1970 both provide that records relating to the use of public funds are public records subject to inspection. In fact, the Illinois Attorney General has issued a number of binding opinions holding that a public employee’s compensation information is related to a public body’s use of public funds and, therefore, is subject to disclosure. In addition, Section 7.3 of the Open Meetings Act (5 ILCS 120/7.3) requires employers participating in the Illinois Municipal Retirement Fund to post compensation information for particular employees.

The Equal Pay Act, however, will require far more affirmative wage transparency after January 1, 2025.

Posting Job Notices and Promotion Opportunities

While the Act does not mandate that employers post job openings, employers with 15 or more employees that do post job openings will have to include the pay scale and benefits for each position posted. The pay scale and benefits are defined as the wage/salary or the wage/salary range, and the benefits and other compensation that an employer reasonably expects to offer for a position. Other compensation includes, without limitation, bonuses, stock options and other incentives. In determining the pay scale, an employer should: (1) refer to an applicable pay scale; (2) look to the previously determined pay range for the position; (3) consider the actual wage/salary, range of individuals holding comparable positions; or (4) use the amount budgeted for the position. Within 14 calendar days of externally posting a job position, an employer must inform all current employees of all opportunities for promotion.

The requirement to include the pay scale and benefits in job postings applies whether the employer or a third party engaged by the employer posts the job opening and regardless of where the job opening is posted. Also including a hyperlink to a public webpage that includes the relevant pay scale and benefits will satisfy this requirement of the Equal Pay Act.

Disclosure of Compensation for Open Positions

If a posting for a job, promotion or other opportunity has not been made available to an applicant, the employer (or the employment agency, if applicable) shall disclose the pay scale and benefits to be offered for the position at an applicant’s request and before any offer is made or there is any discussion about compensation.

Employers may not screen applicants based on wage or salary history or request or require applicants to provide wage or salary history. However, the Equal Pay Act does not prohibit an employer from asking an applicant about his or her wage or salary demands or requests.

Record Retention

To comply with the Equal Pay Act, employers must also make and preserve records that set forth: (1) the name, address, and occupation of each employee; (2) the wages paid to each employee; (3) the pay scale and benefits for each position; (4) the job posting for each position; and (5) any other information required by the Illinois Department of Labor. These records shall be maintained for a minimum of 5 years and, in the event of an investigation or enforcement action, until destruction of the relevant records has been authorized by court order or the Illinois Department of Labor.

Failure to Comply with the Amendments to the Equal Pay Act

A current employee, former employee, or person claiming to be wronged by a violation of the amendments to the Equal Pay Act may, within 1 year from the date of the violation, file a complaint with the Illinois Department of Labor. The Illinois Department of Labor may, after receiving a complaint or at its discretion, initiate investigations of alleged violations of the Equal Pay Act. If it is determined that a violation has occurred, the department shall issue a notice to the employer that sets forth the violation, the applicable penalty and the cure period.

Penalties for active job posting violations may be up to $500 for a first offense, $2,500 for a second offense and $10,000 for a third or subsequent offense. For first and second offenses, employers will be afforded a cure period (14 days for a first offense and 7 days for a second offense) to remedy the violation. A third or subsequent offense will expose employers to automatic penalties without a cure period, for 5 years.

Conclusion

To ensure compliance with the amendments to the Equal Pay Act, employers should begin revising hiring and job posting practices and procedures. At a minimum, employers should remove inactive job postings, include pay scales and benefits in all job postings, budget for future positions, notify current employees of job openings and potential promotions and inform individuals responsible for hiring (including third parties) that they have a duty to disclose pay scale and benefits to applicants prior to discussing compensation or an offer and at an applicant’s request.