Pay transparency laws are becoming more widespread as more and more states and local legislatures are passing them. These laws, simply put, are increasing the visibility of pay practices with the intended outcome to improve pay equity.
What is pay transparency? It is the practice of disclosing information about employee compensation standards to others — internally, externally or both (Beppel, Hannah. “Pay Transparency Laws: Your Questions Answered.” ADP.https://www.adp.com/spark/articles/2023/03/pay-transparency-laws-your-questions-answered.aspx).
Illinois is one of the states with the most stringent pay equity laws. In addition to the Equal Pay Act, which prohibits employers with four or more employees from paying unequal wages to men and women for doing the same or substantially similar work and from paying African-American employees less than another non-African American employee for the same or substantially similar work, it also prohibits employers from enforcing any sort of ban on employees from discussing their wages with other employees. In addition, Illinois law restricts employers from inquiring about applicants' pay history. This prevents the perpetuation of discrimination pay practices from previous employers which can result in the new employer offering a lower wage based on the applicants’ pay history. Lastly, it requires employers with 100 or more employees to obtain an equal pay registration certificate from the Illinois Department of Labor every two years. In order to get and remain certified, employers must complete an equal pay compliance statement (signed by a corporate officer) which proves the employer is in compliance with the EPA and other anti-discrimination laws as well as other requirements outlined by the law.
Furthermore, a new pay equity bill is approaching a final vote which would require organizations to comply with the following pay transparency requirements in their job postings:
Organizations with 15 or more employees must include the pay scale and benefits information in any job posting in Illinois.
If an organization publishes job postings through a third party, that third party must include the pay scale and benefits in the job posting.
Employers would be required to announce, post, or otherwise make known all job opportunities to all existing employees no later than the same day of the job posting.
Record keeping requirements would also be imposed, including a new requirement for employers to maintain records of the pay scale and benefits for each job posting.
The IL Department of Labor would be able to enforce and investigate alleged violations of this new bill.
Embracing best practices of pay transparency not only helps you comply with the laws, but also helps build trust amongst your employees. Reverie has provided a list of best practices for you:
Remove any language indicative of confidentiality, such as "THIS IS CONFIDENTIAL," from any compensation documents or packets given to employees.
Review employee handbooks and remove any language that could be misconstrued as restricting pay conversations amongst employees.
When recruiting, do not ask about previous salary. Instead provide the applicant with the salary ranges for the role and ask the candidate if that salary range meets their minimum salary requirements for this role.
Include the minimum and maximum pay range, benefits, and bonus information in all job postings.
When recruiting for a new position, consider posting the job internally first OR, at the very least, on the same day that the job is being posted externally.
Create and save a written job description and job posting that includes pay scale and benefits information for every role you hire.
Likewise, create and save an official job offer letter, which includes the compensation, benefits, bonus information for the specific role. Ask the new employee to sign the letter and keep that in the employee’s personnel file.
Keep a well-documented job and salary history for all employees.
Perform a pay audit to confirm the salary and wages you pay your employees are equal to or higher than the industry standards for similar positions. You may also want to do an internal audit to make sure that you are paying similar salaries for people who are performing similar roles.
For any questions related to this blog, please do not hesitate to reach out to the Reverie Team at TheLab@FindReverie.com.