Friday, August 2, 2019

Salary History Ban Signed Into Law

On Wednesday, Governor J.B. Pritzker signed into law one of the broadest protections for employees in the State of Illinois to date regarding equal pay. The No Salary History law, which goes into effect 60-days after the Governor’s signature, is a series of amended changes to the Illinois Equal Pay Act.

Prohibition on Wage or Salary Inquiry
The changes prohibit employers from including a salary history question on job applications. The amendment renders it unlawful for an employer to (1) screen job applicants-satisfying a minimum or maximum hiring criteria-based on their wage or salary history at prior jobs; (2) request or require wage or salary history as a condition for consideration of employment or in the interview process; or (3) request or require wage or salary history as a condition of employment.

Exceptions to inquiries regarding wage or salary include information subject to a Freedom of Information Act (FOIA) request; is a matter of public record; made available publicly through an employer, or mandated to be released by state or federal law. Wage or salary information may also be shared internally if an employee is seeking a position within an employer or employment agency. Furthermore, employers or employment agencies do not violate the law if they discuss the wages and benefits offered through a job, engage in a conversation with an applicant or employee about wage and benefit expectations, or converse after a voluntary disclosure by the applicant of their wage history. The caveat is that even if an applicant voluntarily discloses wage and benefit information, the employer may not consider the information as a factor of employment or future discussions of wages and benefits.

Prohibition of Waiver
Employers may not “require an employee to sign a contract or waiver that would prohibit the employee from disclosing or discussing information about the employee’s wages, salary, benefits, or other compensation.” The law, however, requires employers to ensure human resources, supervisors, or other employees from disclosing wage or salary information without prior written consent from the employee when the information is sought or requested.

Bringing a Cause of Action
Lastly, the amendment includes provisions that make it much easier for an employee to bring a cause of action under the Illinois Equal Pay Act. Before, the law protected employees of the opposite sex or African American employees from being paid less than employees based on “equal skill, effort, and responsibility, and which are performed under similar working conditions.” Now, the amended changes allow employees to bring a cause of action against their employer if a differential exists between jobs that are “substantially similar.”

The current law also allows justification of pay differentials based on seniority, merit, or other ways of measuring the quality and quantity of work, or any factor that wouldn't constitute unlawful discrimination based on sex or race. The new amendment, however, requires that the pay differential:
  • is not based on or derived from a differential in compensation based on sex (or race) or another protected characteristic;
  • is job-related with respect to the position and consistent with a business necessity; and
  • accounts for the entire differential.

An affected employee may recover compensatory damages of up to $10,000 and reasonable attorney’s fees and seek injunctive relief where it is appropriate.

Employer Takeaways
To remain in compliance with the law, employers should conduct the following measures:
  • Audit all application forms and application-related materials to ensure any question regarding salary, wage, or benefits history is removed. 
  • Instruct hiring managers and employment decisionmakers within your organization on the new requirements of the law. Also, ensure employment decisionmakers refrain from using pay and benefit history when making internal employment decisions. 
  • Shift inquiries regarding wage, salary, or benefit away from an applicant’s history, to expectations of wage and benefits through prospective employment. 
  • Review compensation structures to ensure any pay differentials comply with the law.