Jissel Esparza, Associate

Joining a handful of other states with so-called pay transparency laws, Illinois now requires employers with 15 or more employees to disclose “pay scale and benefits” in all job postings for positions located in Illinois or positions that will report to a supervisor, office or other work site located in Illinois. Employers are now also required to disclose “promotional opportunities” to current employees through internal communications. This alert discusses common issues that may arise regarding these new requirements, which were part of an amendment to the Illinois Equal Pay Act (the “Act”) that became effective January 1, 2025.

Covered Employers and Positions

Any employer with 15 or more employees who posts for a covered position is subject to the Act, whether the employer is located within Illinois or not. In certain circumstances, the Act will apply even if the position itself is outside of Illinois. Job postings that are regulated under the Act are those employment opportunities that will be (1) physically performed, at least in part, in Illinois, or (2) performed outside of Illinois, but the employee reports to a supervisor, office, or other work site in Illinois.

The Act does not merely apply to external job postings broadcast to the public at large. If the employment opportunity would otherwise meet the criteria above, the pay transparency requirements would apply to internal job postings. Moreover, once an external posting is made for a covered position, employers must then notify their current employees of “all opportunities for promotion” within 14 calendar days.

Employers should keep in mind that the Act does not compel employers to post any and all job opportunities. The touchpoint for coverage by the Act is whether the job posting pertains to a covered position. So, if an employer with 15 or more employees chooses to post for a job to be performed and supervised outside of Illinois, the posting need not include the pay and benefits information required by the Act. Similarly, if an employer with a vacancy prefers to fill the position in some way other than a posting – such as by word of mouth or networking – then the Act does not require a posting be made. However, even if no posting is made, the Act requires that an employer filling a covered position must disclose pay scale and benefits information upon the applicant’s request, prior to any offer or discussion of compensation. 

Pay Scale and Benefits To Be Disclosed

The Act requires disclosure of “pay scale and benefits.” The Illinois Department of Labor’s guidance defines “pay scale and benefits” to include anticipated wage/salary, or salary/wage range. If a range is provided, the range should be the amounts that the employer might in good faith pay for that position. An acceptable posting would include both the highest and lowest amounts an employer would be willing to pay. Additionally, employers must include a general description of the benefits and other compensation offered, including but not limited to, bonus, commission, stock options, or other available incentives. Because only a general description is required, employers will not be expected to post specific details, terms and conditions, or dollar amounts of their benefit offerings.

While the disclosed “pay scale and benefits” in job postings must be made in good faith, an employer will not necessarily be subject to penalty for making an offer outside the provided range. Job postings are forward-looking and are necessarily crafted before the employer has a full knowledge of the applicant pool. At times, an employer may also reassess its needs after the posting has been made or otherwise change its expectations for the vacancy. Such a hiring decision would not violate the Act so long as the “pay scale and benefits” disclosure was made in good faith. If an employer offers a candidate an amount that is higher or lower than what was posted, it should maintain records supporting the decision to do so.

Stiff Penalties and Broad Application

As noted, the Act’s requirements project beyond Illinois’s borders, even to remote positions where the employer had reason to know or it was reasonably foreseeable that the position would: (1) be done, at least in part in Illinois, or (2) would report to a supervisor, office, or other work site in Illinois. In addition, third parties like online posting services and recruiters may face exposure as well if they fail to include the pay and benefits information. However, if the third party can demonstrate that the employer never provided the pay transparency requirements for the job posting, then only the employer may be held liable. Employers who fail to comply with the Act may be penalized with fines ranging from $500 to $10,000 with opportunities to cure for the first and second offenses, but not for the third or subsequent offenses.

Next Steps for Employers

Pay transparency requirements are now in effect in Illinois, with many employers potentially subject to them – some with no physical presence in the state. Covered employers will now need to modify their posting practices and work to identify a wage and benefits range to be offered, in many cases before even reviewing their first resume. Additionally, covered employers will need to begin tracking and retaining more information, including the job postings themselves, which they might previously have discarded once a vacancy was filled. Also, employers with a nationwide reach should be aware that an increasing number of jurisdictions have begun to enact similar pay transparency laws. Finally, the above discussion addresses some of the main issues, however, a different analysis may apply to covered positions which also involve H-1B or green card sponsorship by the employer. 

If you need any assistance in becoming compliant, or have any questions about how the recent to Amendment to the Illinois Equal Pay Act, or any similar state or local law will affect your company or business, please contact your Lewis Rice Labor & Employment attorney.