On July 31, 2019, Illinois Governor J.B. Pritzker signed into law House Bill 834 (the “Bill”), which amends the Illinois Equal Pay Act of 2003 (“IEPA”) to prohibit employers from inquiring into a job applicant’s salary history. The law becomes effective on September 29, 2019.

Prohibition on Salary History Inquiries

Illinois’s new ban on salary history inquiries will prohibit employers from screening job applicants based on their current or prior salary and from requesting or requiring that applicants disclose information about their salary history as a condition of being interviewed, considered for employment or offered employment. Employers also will be prohibited from soliciting salary history information from an applicant’s former employer. However, this subsection does not apply if the applicant’s salary history is a matter of public record or if the applicant is one of the employer’s current employees.

The amendment also prohibits employers from factoring salary history information into compensation or hiring decisions even if an applicant provides the information voluntarily without prompting.

Employers who violate these new provisions can be liable for a combination of (1) up to $10,000 in special damages; (2) compensatory damages, to the extent they exceed an award of special damages; and (3) reimbursement of the plaintiff’s costs and attorneys’ fees.

Ban on Pay Secrecy Agreements

The Bill also amends the IEPA to prohibit employers from requiring employees to refrain from disclosing information about their compensation and benefits. Employers, however, may still prohibit human resources employees from disclosing the compensation information of other employees without their prior written consent.

Amendment to Employer Defenses

The IEPA requires employers to compensate employees equally for “substantially similar work,” regardless of an employee’s race[1] or sex. Under the IEPA, an employer will not be held liable if an alleged disparity in pay is due to, among other things, a differential based on any other factor than: (i) sex or race or (ii) a factor that would constitute unlawful discrimination under the Illinois Human Rights Act. However, this “catch-all” defense will now require employers to show that the pay differential “(A) is not based on or derived from a differential in compensation based on race or another protected characteristic; (B) is job-related with respect to the position and consistent with a business necessity; and (C) accounts for the differential.”

From “Equal” to “Substantially Similar”

Currently, the IEPA prohibits employers from paying employees of different sexes or races at different rates for “work on jobs the performance of which requires equal skill, effort, and responsibility.” As amended, the IEPA now states that employers may not pay differently for “work on jobs the performance of which requires substantially similar skill, effort, and responsibility.” This change codifies an approach taken by Illinois courts.

Implications

Before the IEPA amendments take effect on September 29, 2019, Illinois employers should:

  • Review hiring practices to ensure compliance with the ban on salary inquiries;
  • Provide training to employees tasked with interviewing and hiring responsibilities; and
  • Review compensation structures to determine the reasons for pay differentials.