Must nonprofit employers disclose compensation details during the hiring process? If so, how and to whom? In Illinois, the answer is yes, under the Equal Pay Act amendments, certain information must be disclosed to prospective job applicants externally and internally. Effective January 1, 2025, this new Illinois law follows other state wage transparency laws. Largely, employers operating in Illinois and elsewhere should remain attentive to related legal requirements per jurisdiction.
Legal Scope and Trends
The Illinois Equal Pay Act’s new amendment is called the Pay Transparency Law, and its far-ranging requirements address the following: (1) what information must be included in external job postings; (2) what information must be provided internally within an organization; and (3) what information must be provided to job applicants upon request.
The Illinois Pay Transparency Law technically only applies to jobs posted on or after January 1, 2025, but employers may wish to update all existing job postings to avoid doubt and potential penalties. The Illinois Department of Labor (“DOL”) has published a helpful FAQ guide addressing questions and concerns about the new law.
Illinois’ Pay Transparency Law is consistent with employment law requirements in other states, including Minnesota, New Jersey, Massachusetts, and Vermont, which have all enacted job posting and pay transparency requirements to take effect in 2025. Other states have previously enacted similar laws, including California, Colorado, Connecticut, Hawaii, Maryland, Nevada, New York, Washington, and Washington, D.C. Still other states are currently considering such laws, including Michigan, where such bills remain pending.
Illinois Applicability
The Illinois Equal Pay Act was originally enacted in 2003 and covers organizations with 15 or more employees. All employees working inside or outside Illinois, full-time or part-time, count for the purposes of meeting the 15-employee threshold.
For covered employers, the Act’s requirements apply to all part-time and full-time job postings, so long as the work is performed within Illinois. If the work is performed outside of the state, including fully remote positions, the Act applies only if the prospective employee reports to a work site in Illinois or is supervised by a supervisor or management in Illinois. Notably, recruiting for positions without posting available job openings is legally permitted (subject to minor new requirements imposed by the Act), as further addressed below.
External Job Postings
As of January 1, 2025, all external job postings must provide certain information regarding pay scale and benefits. This information includes:
• the anticipated wage or salary or salary range;
• a description of benefits; and
• a description of other available compensation (including bonuses and other incentives)
Employers must provide a good faith estimate of the anticipated salary or salary range information for the offered position, which in turn may depend upon qualifications and other operational considerations. Salary ranges must be specific. For example, it would not be legal to indicate a salary of “$60,000 and up"; instead, the disclosed information must include both a bottom and top end of the anticipated compensation range.
Required benefits disclosures need not include specific dollar values or conditions, but it should indicate a level of specificity - not just that “benefits may be available”. Employers should describe the nature and type of benefits that will be offered for the specific position. See also No. 15 of the DOL’s FAQ guide, as referenced above (indicating that the DOL will later provide more guidance about benefits information that must be provided).
Employers also may provide a publicly accessible link to more detailed wage or benefit information. Any such link, however, must provide specific information customized to the particular job posting. Using this approach may be attractive for some employers, but it should not keep prospective job applicants from accessing the mandatorily disclosed information.
Following the job interview process, employers are legally allowed to offer pay and benefits that fall outside the range provided via the job posting. In other words, so long as the employer provided the job posting information in good faith, the employer can later modify such information such as to recognize a particular job candidate whose skills or experience warrant a higher salary than posted (or perhaps lower). Employers should nevertheless carefully consider what compensation ranges and benefit information to provide through job postings, since they could face government scrutiny and even penalties for failure to list job posting information “in good faith.”
Internal Notice Requirements
The new law requires that whenever an employer posts a job opening externally, it must also provide notice internally to its employees. This internal notice must be provided within 14 days after the external posting, and it must provide the same information from the external posting identified above, including salary information. Internal notice for new job openings may be issued in a variety of ways, including a bulletin board, email, intranet site, or any method that is regularly used for communications to existing employees.
Given the dual external and internal job posting requirements, including pay range information, employers may wish to carefully consider how such information may be received by current employees. For example, if a nonprofit employer has determined that it can afford to pay higher wages to new employees (or otherwise should, such as in light of inflation or other wage-related considerations), organizational leaders may also evaluate whether wage increases for current employees should (and financially can) be provided to internal applicants. Especially within the nonprofit sector, compensation issues can result in unintended morale problems, employee concerns, and other unintended consequences. The new law’s transparency requirements thus carry broader implications than solely for new employee positions.
Recruiting without Job Postings
Significantly, the new Illinois law does not require employers to post all job opportunities. Instead, the law’s requirements apply only when an employer chooses to use job postings. For example, if an employer decides to promote a current employee into a new position, the employer faces no requirement to post that new job opportunity - externally or internally. Similarly, employers may engage in recruiting efforts without using job postings at all, such as through word of mouth, networking, or other informal means.
With any of these non-posted recruiting approaches, the new law requires only that if a job candidate (whether outside or within the organization) requests such information before an offer is made, only then must the employer provide the pay scale and benefit information that it would otherwise be legally obligated to disclose through a job posting. Employers thus should be aware of such requirement and ready to share compensation information, to the extent it may arise as part of a job recruitment or interview process.
Complaint Process, Penalties, and Recordkeeping
Any person “that claims to be aggrieved” by a violation of this law may file a complaint with the Illinois DOL within one year of the violation. Such complaints can be filed anonymously, and the DOL may also initiate an investigation on its own in the absence of a complaint. If an applicant or employee files a complaint, the employer is legally prohibited from retaliating against the person by refusing to consider, hire, or promote the applicant.
If the DOL determines that a violation exists and the job posting is still active, the DOL is required to provide employers with an opportunity to “cure” (i.e., successfully resolve by correcting) the issue before a penalty is assessed. For a first offense, the employer will be given a 14-day cure period, and for a second offense, a 7-day cure period will be given. After the first two offenses, no cure period will be provided, and a penalty will be assessed. The penalties are raised each time an offense occurs – penalties for a first offense cannot exceed $500, while penalties for subsequent offenses can rise to $10,000. Thus, while these penalties are relatively modest for any single infraction, employers with several job postings may face serious financial consequences for noncompliance.
Illinois’ transparency law also requires employers to make and keep related compliance records. Employers must keep records of all job postings and internal notices of promotion for five years. Additionally, they should also keep records related to how pay scale and benefits determinations are made. These records will be relevant to demonstrate legal compliance and to also show that the information was disclosed in good faith if an employer is investigated.
In Illinois and elsewhere, no more may nonprofit employers freely decide whether and how extensively to share job compensation information. They should therefore pay close attention to legally applicable parameters for optimal compliance as well as effective job recruiting.
