Discussing Salary History: What’s Allowed Under the New Illinois Law?
If you’re hiring for a healthcare business or practice in Illinois, you may need to make changes to comply with the state’s Equal Pay Act.
Questions about applicants’ current or past compensation have long been a tool in the screening process. Employers find the information a useful indicator of whether an applicant’s salary expectations align with their own.
However, salary history can also undermine an applicant’s earning power. Workers who have accepted lower pay in the past may receive lower offers in the future. As a result, some argue that salary history information perpetuates the historical wage gap between men and women. If this is true, it hinders the effectiveness of state and federal equal pay acts that prohibit wage discrimination.
On September 29, 2019, Illinois became one of several states to implement a ban on salary history questions for all prospective employees, part- or full-time. The new law does not apply to contractors.
If you’re planning to hire new staff for a healthcare business or practice in Illinois, you’re probably curious about what your boundaries are. What if an applicant volunteers the information? What if someone’s salary is already public record? And how, exactly, can you find out the applicant’s salary expectations without tripping over the law?
Prohibited Activities Under the New Salary History Law
It is unlawful for you, as an employer, to request or require that an applicant provide information about compensation—current or prior— to be considered for a job. The ban includes not only information about wages and salary, but also commissions, benefits, bonuses, and any other forms of compensation.
If you’re looking for alternative ways to determine an applicant’s compensation history, beware. You may not request the information from current or prior employers. Furthermore, you may not ask third parties such as recruiters and staffing agencies to collect compensation information or use it to screen applicants on your behalf.
In a nutshell, the law prohibits you from investigating a job applicant’s salary history or asking the applicant about it directly. Note that there are two exceptions: internal applicants (i.e., when the applicant is seeking a new position with his or her current employer) and applicants whose salaries are in the public record.
What to Do If an Applicant Volunteers Salary Information
Imagine a scenario in which an applicant, unprompted, reveals his or her pay or benefits. Has the employer committed a violation? May the employer use this unsolicited information to inform hiring decisions or pay negotiations?
Under the new rules, employees are still free to volunteer information about their salaries if they wish. In fact, as part of the new law, employers may no longer prohibit employees from discussing their pay. However, if you’re an employer, you may not consider the information in the hiring decision or use it to determine compensation.
How to (Legally) Uncover an Applicant’s Salary Expectations
The ban on salary history does not prevent employers from discussing compensation entirely, it merely restricts the conversation to the current opportunity. You may still ask an applicant about his or her salary expectations, and you may talk about salary ranges or other elements of compensation that you’re offering.
Penalties for Violating the Salary History Ban in Illinois
The penalties vary by the size of the employer and the number of infractions. For the first offense, the law treats businesses with fewer than four employees with much more leniency, with a fine capped at $500 (vs. $2500 for businesses with four or more employees). The maximum fine for a second offense for the smaller employers is $2500 (vs. $3000 for businesses with four or more employees). For the third and subsequent offenses, the maximum fine is the same for all businesses, $5000. Note that these fines are applied per violation per affected employee.
Moreover, if you violate the new law and an employee has been paid less than “the wage to which he or she is entitled,” the employee may file suit to recover all wages plus interest and attorneys’ fees. The employee may also seek additional damages — including punitive damages.
Steps for Staying Compliant
If you’re an employer in Illinois, you’ll need to review your hiring practices, including online postings, application forms, and interview guides. Be sure to train everyone involved in your hiring process to refrain from asking about compensation history, and work only with reputable recruiters and agencies who operate within the legal boundaries.
The attorneys of Jackson LLP are ready to help you navigate employment issues, including workforce policies, handbooks, and contracts— all with a deep knowledge of the special considerations of healthcare. To learn more about working with us, set up a free consultation by clicking the button below.