Illinois and Hawaii will join several states — including New York, California, Washington and Colorado — in requiring increased pay transparency in job postings. These changes will further affect how employers recruit and post open positions.
New Illinois Law
On Aug. 11, 2023, Illinois Gov. J.B. Pritzker signed into law House Bill 3129 / Public Act 103-0539, which amends the Illinois Equal Pay Act. The new law, which takes effect on Jan. 1, 2025, will require most Illinois employers to disclose pay scale and benefits information to potential job applicants.
Specifically, all covered job postings must include pay scale and benefits information. “Pay scale and benefits” information includes “the wage or salary, or the wage or salary range, and a general description of the benefits and other compensation, including, but not limited to, bonuses, stock options, or other incentives the employer reasonably expects in good faith to offer for the position, set by reference to any applicable pay scale, the previously determined range for the position, the actual range of others currently holding equivalent positions, or the budgeted amount for the position.”
Providing a hyperlink with a job posting to pay scale and benefits information maintained on an employer’s website would satisfy the law’s requirements.
The new law applies to employers with 15 or more employees and to job postings where the position “will be physically performed, at least in part, in Illinois” or “will be physically performed outside of Illinois, but the employee reports to a supervisor, office, or other work site in Illinois.” Internal job postings and postings publicized by third parties, such as job search sites or recruiters, are also subject to these requirements.
The law also generally requires employers to “announce, post, or otherwise make known all opportunities for promotion to all current employees no later than 14 calendar days after the employer makes an external job posting for the position.”
Violating the law may subject the employer to civil penalties ranging from $500 for a first offense for an active job posting, or $250 for an inactive posting, to $10,000 for a third offense. First offenses can include one or several concurrent postings for the same position. Second and third offenses are limited to a single unlawful job posting. Whether a posting is “active” depends on the totality of the circumstances.
Fortunately for employers, the law provides 14- and seven-day cure periods for first and second offenses if the postings are still active at the time the violation is discovered. No cure period exists for an employer’s third offense or any subsequent offenses for five years after the third offense. Additionally, during the five-year period after a third offense, employers will incur “automatic penalties” and the five-year period will restart if the employer commits another violation during the period.
In addition to the posting requirements, covered employers must preserve for at least five years records that document at least the pay scale, benefits and job posting for each position as well as the prior requirements of name, address, occupation and wages of each employee. Failure to do so may subject the employer to civil penalties ranging from $2,500 for the first offense to $5,000 for the third and subsequent offenses. For employers with 100 or more employees, the penalty could be as much as $10,000 per affected employee.
New Hawaii Law
Hawaii Gov. Josh Green signed a bill with similar ambitions on July 3, 2023. Senate Bill 1057 requires all Hawaii employers to “disclose an hourly rate or salary range that reasonably reflects the actual expected compensation” for a particular job posting. This requirement does not apply to internal transfers or promotions; public employee positions for which salary, benefits or other compensation are determined pursuant to collective bargaining; or positions with employers having fewer than 50 employees. Hawaii’s bill also adds that pay disparities are now prohibited based on any category protected under state law, not just sex. The new Hawaii law will take effect on Jan. 1, 2024.
Employers should review their job postings and record-keeping practices and adjust accordingly to ensure compliance with the new laws. Additionally, with a patchwork of pay transparency laws developing in states and localities across the county, and remote work adding uncertainty to applicability of certain of these laws, employers may want to consider proactively including compensation information within at least their external job postings.
For assistance navigating and implementing these new standards, please contact the authors, your McGuireWoods contact or a member of the firm’s labor and employment team.