New Pay Transparency Law to Impact Illinois Employers Beginning January 2025

Come January 1, 2025, employers in Illinois with 15 or more employees must include pay ranges and benefits when they create job postings online. The new amendment to the Illinois Equal Pay Act, signed into law in August 2023, mandates covered employers to include “pay scale and benefits” in their job postings. The amendment applies to those positions physically performed, at least in part, within the state as well as remote roles where the employee reports to a supervisor, office, or work site in the state.

According to the amendment, “pay scale and benefits” refer to the wage or salary range for each position and a general description of the benefits and other compensation, including bonuses, stock options, or other incentives the employer “reasonably expects in good faith” to offer for the position. The pay scale should be set in relation to a current pay scale, a previously determined range for a position, the actual range of others currently holding equivalent positions, or the budgeted amount for the position. In lieu of posting pay scale and benefits directly into job postings, which is unlike pay transparency laws in other states, employers can satisfy the requirements by posting a hyperlink to a public webpage that includes the relevant pay scale and benefits.

If a third party, such as an external recruitment or talent acquisition agency, is used by the employer to post job listings on behalf of the employer, the required pay scale and benefits information must be supplied to the third party, who is responsible for including the information within the job posting. The third party, not the employer, would be liable for failure to post the required information unless it can demonstrate the employer didn’t provide the required information in these instances.

While the law doesn’t require an employer to create a job posting for every position, upon an applicant’s request, the employer is obligated to disclose pay scale and benefits information prior to any offer or compensation discussion. The amendment states that when only posting externally, employers must also “announce, post, or otherwise make known” any opportunity for promotion to current employees within 14 calendar days after the initial external posting. The sole exception is state workforce positions designated as exempt from competitive selection.

Employers must also preserve records of pay scale and benefits documentation for each position and respective job posting for no less than five years. Fines for repeated offenses may reach $10,000.

With this change, tenured employees will have visibility into the rates new hires could expect starting at the company, so organizations that currently lack internal pay transparency and consistency could be at risk of heightened internal tension once new job postings include these requirements. Companies that have failed to maintain competitive rates with tenured employees may experience negative employee perceptions, a lack of engagement and decreased performance, as well as the possibility of increased levels of employee turnover.

Here are some ways for employers to prepare, avoid noncompliance and reduce negative impacts from the current workforce.

How To Prepare for the New Illinois Pay Transparency Law

1. Develop a Transparent Compensation Framework: Establishing clear guidelines for setting pay scales, including salary ranges, benefits and bonuses, is the best place to begin. By ensuring consistency and fairness across job postings, companies promote internal equity and reduce the risk of dissatisfaction among employees who may compare their compensation to new hires.
2. Assess Market Competitiveness: With pay ranges now visible to candidates, it’s vital for companies to benchmark their compensation packages against competitors in the industry. It is recommended to benchmark rates annually, but companies should strive to conduct market assessments at least once every two years to assist in attracting and retaining top talent.
3. Conduct a Pay Equity Audit: Consider conducting a comprehensive pay equity audit of the workforce to ensure pay structures are consistent and provide the opportunity to identify and address unjustified pay disparities.
4. Update Job Posting Processes: Employers should revise their job posting templates to incorporate pay scales and benefits. This can be done by adding these details directly to postings or by creating centralized resources—such as a publicly available webpage with hyperlinks—that provide the necessary information. This not only promotes compliance but also aids in avoiding potential third-party liability if external agencies are involved in recruitment.
5. Train Hiring Managers & Talent Acquisition Teams: It’s a best practice for recruiters and hiring managers to be trained on the new pay transparency requirements and the associated recordkeeping rules. They should also be prepared to handle candidate inquiries about pay and benefits, as this will become a more frequent and transparent part of the hiring process.
6. Communicate Open Roles Internally: Employers must be prepared to post or announce promotion opportunities to current employees within 14 days of posting any external job opening. Clear and consistent internal communication about open positions that provide promotion prospects will help avoid perceptions of favoritism or lack of advancement opportunities, in addition to meeting the new law’s requirements.
7. Embrace Technology: Applicant tracking systems (ATS) can help employers manage job postings, track applicants and ensure compliance with the new law. Additionally, compensation management software is available, which can assist in benchmarking, conducting pay equity analysis and developing salary ranges in line with the transparency requirements.
8. Establish Compliant Recordkeeping: Maintain detailed records of all job postings, salary ranges, benefits and wages for each position for a minimum of five years to meet compliance standards.

By taking these steps, employers can comply with Illinois’ new pay transparency laws and maintain a competitive edge in attracting and retaining talent while fostering a fair and equitable workplace.

The experts at Sikich have in-depth knowledge of compensation strategy and planning, market benchmarking, pay equity analysis, compensation and incentive plan design, and compliance. If your organization or human resources department needs guidance preparing for these changes or you would like to learn more about our compensation consulting, please contact us to get started.

About Our Authors

Darren Smith, MBA, HRM, PHR, is a manager who brings in-depth knowledge of human capital management services to each client project. Darren excels at performing change management, organizational development, and strategic human resources and business processes services. He has extensive experience working in both shared services and Centers of Excellence business environments.

With over 20 years of experience in recruiting and talent acquisition, Lisa Trujillo, STA, has supported multiple industries, from luxurious casino hotel resorts and national security and defense leaders to global geothermal renewable energy and SaaS-based start-up companies.