Past Pay is History: A New Amendment to the Illinois Equal Pay Act

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Past Pay is History: A New Amendment to the Illinois Equal Pay Act

The Illinois General Assembly recently amended the Illinois Equal Pay Act of 2003 to increase protections for employees. The Act was originally passed to reduce the disparity in compensation between men and women, and it was later amended to protect African-American workers from pay inequity. The most recent Amendment addresses issues tied to salary history. It prohibits employers from: (1) screening applicants based on their wage or salary history, (2) requesting applicants to disclose their wage or salary history, and (3) seeking an applicant’s wage or salary history from a current or former employer.

Exceptions exist for applicants whose wage or salary history is a matter of public record and for current employees seeking a different position with the same employer. Further, the Amendment does not prohibit employers from discussing an applicant’s compensation expectations, and employers may provide information about the compensation and benefits being offered in relation to a position.

The Amendment also increases potential liability for employers who violate it. Employees who prevail on a claim under the Act can recover the amount of any pay differential, plus interest and attorneys’ fees and costs. Employers are also subject to civil penalties of up to $5,000 per affected employee. If an employee demonstrates that the employer acted with “malice or reckless indifference,” punitive damages may be awarded. Employers who violate the new restrictions on salary history inquiries can also be held liable for “special damages” of up to $10,000 and any additional compensatory damages needed to make the plaintiff whole. The Amendment also allows courts to award injunctive relief. The statute of limitations under the amended law will remain 5 years from the date of each underpayment.

In light of the Amendment, it is important that employers review their job applications and hiring processes to ensure compliance. Any questions related to compensation history should be removed from applications, and everyone involved in the hiring process should be trained on how to approach the topic of compensation during an interview. For example, if an applicant voluntarily discloses a current salary, employers should redirect discussions to the applicant’s current compensation expectations.

Employers should also consider revising their employee handbooks, policies, and separation agreements and releases to remove any limitation on the employee's disclosure of information about his or her compensation.

Finally, employers should also conduct a thorough review of their current compensation practices for existing employees. Although many compensation plans and policies appear non-discriminatory, a thorough analysis is necessary to ensure that unintentional disparities do not exist. If disparities are found, employers must proceed with caution. For example, the Act prohibits employers from reducing the pay of any employee to comply with the Act, a provision employers should be aware of.

If employers have questions about what the new Amendment requires, how to properly conduct a compensation audit, or how to handle pay discrepancies, they should seek out experienced counsel.