Pay Transparency Laws Expand to Two More Jurisdictions

Since our last update on pay transparency, Hawaii and Illinois have signed pay transparency requirements into law. We discuss the changes in both jurisdictions as outlined below.

Illinois

On August 11, 2023, Illinois Governor J.B. Pritzker signed H.B. 3129 to amend the Illinois Equal Pay Act of 2003. The amendments go into effect on January 1, 2025.

The amendment does not require employers to make a job posting, however, in the event an employer with at least 15 employees makes a job posting, they are required to include the “pay scale and benefits” meaning the wage or salary, or range, and other benefits and compensation that the employer expects in good faith to offer for the position. Employers may utilize a hyperlink to a publicly viewable webpage that contains the required compensation information.

Absent a minor exemption for public positions within the government of the State of Illinois, employers are required 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.”¹

Employers utilizing third parties to publish the job posting are required to provide the salary information to those third parties. Third parties will be liable for failing to include the compensation information unless they “can show that the employer did not provide the necessary information.”

Illinois does not consider it a violation when an employer asks an applicant about his or her wage or salary expectations.

Employers are required to maintain records of the pay scale, benefits and job posting for each position for at least five years.

Individuals may file complaints with the Illinois Department of Labor (Department) within one year of the alleged violation. The Department determines whether the job posting is active by looking at the totality of the circumstances. The penalty is impacted by whether the job posting is still active. For active job postings:

• First-time violators are given a grace period of 14 days to cure the deficiency. Failure to remedy the violation within the 14-day period will result in a $500 fine.
• In the event of a second offense, the remedy period is decreased to 7 days and the fine may be increased up to $2,500.
• Third or subsequent offenses within a five-year time frame do not have a deficiency remedy period and will result in a fine of up to $10,000.

For non-active job-postings:

• First-time violations will result in a fine up to $250.
• Second offenses will result in a fine of up to $2,500.
• Third and subsequent offenses will result in a fine of up to $10,000.

Hawaii

On July 3, 2023, Governor Josh Green signed S.B. 1057. The law, which is designed to reduce pay inequalities, takes effect on January 1, 2024.

Pay Transparency

Employers subject to Hawaii’s pay transparency requirements must “disclose an hourly rate or salary range that reasonably reflects the actual expected compensation.”²

The Hawaii Revised Statutes define an employer as: “any person, including the State or any of its political subdivisions and any agent of such person, having one or more employees, but shall not include the United States.”³ However, the amendment carves out exceptions to the application of pay transparency requirements as follows:

1. Positions that are internal transfers or promotions within a current employer;
2. Public employee positions for which salary, benefits, or other compensation are determined pursuant to collective bargaining; or
3. Positions with employers having fewer than fifty employees.⁴

The new law does not specify whether the fifty employees must be located within Hawaii, so all employers with more than fifty total employees nationwide should be prepared to comply.

Equal Pay

In addition to the pay transparency requirement, the recent amendments broaden the application of Hawaii’s equal pay law in two ways. First, the law previously prohibited an employer from discriminating against employees on the basis of sex as it relates to equal pay. The amendment broadens the equal pay protection to cover the following protected categories: race, sex (including gender identity or expression), sexual orientation, age, religion, color, ancestry, disability, marital status, arrest and court record, reproductive health decision, or domestic or sexual violence victim status (if the domestic or sexual violence victim provides notice to the victim's employer of such status or the employer has actual knowledge).⁵

Second, the law previously specified that the equal pay analysis looked at whether employees were performing “equal work.” Under the amendments, the new analysis is whether the employees perform “substantially similar work.” This portion of the amendment mirrors the change adopted recently in New York after advocates and legislators determined that “equal work” was construed too narrowly by the courts.

Conclusion

In recent years, various jurisdictions have implemented pay transparency laws requiring certain employers to include the anticipated hourly or salary range in job posting advertisements. Employers should implement procedures and ensure proper training on pay transparency in job postings and retention of records. If you have any questions about pay transparency in Hawaii, Illinois or other jurisdictions, or have questions about Hawaii’s equal pay amendments, contact Buchanan Ingersoll & Rooney for assistance.