How CPA Firms Can Prepare for Illinois’ Pay Transparency Law

Despite efforts to combat pay inequality over the past six decades, pay gaps persist in the United States, especially among women and underrepresented people. In 2017, only four states banned employers from asking applicants about previous pay, a practice that can perpetuate pay inequities. As a result, pay transparency (i.e., disclosing the pay range for an advertised job) has become a growing practice in addressing pay inequity in the workplace, with laws being enacted in states and cities across the U.S.

Currently, more than one out of every four Americans (26.6%) lives in a location that requires employers to list a salary range in a job advertisement. In 2025, Illinois will be one of those states.

Signed into law in August 2023, HB 3129 amends the Illinois Equal Pay Act to include pay transparency provisions. The law, which goes into effect Jan. 1, 2025, requires employers with 15 or more employees to include the pay scale and benefits in any job posting for an open position. This applies to jobs that’ll be physically performed, at least in part, in Illinois or outside of Illinois where the employee reports to a supervisor, office, or other worksite in Illinois.

The law also requires employers using third parties for posting their job opportunities (e.g., job boards or social media sites) to provide the pay scale and benefits or a hyperlink to the pay scale and benefits. Additionally, the law has a provision around promotions, where an employer must tell their employees all opportunities for promotion within 14 days of posting the role.

What Can Firms Do Now to Prepare?

Even though Illinois’ pay transparency bill doesn’t go into effect until January 2025, firms should consider preparing now. Here are three best practices for firms to consider that’ll help ensure compliance with the law.

• Establish a clear compensation policy. A compensation policy spells out how and why you offer the pay and benefits that you do. Salary isn’t the whole picture, but it often gets the most attention. However, in reality, total compensation can also include bonuses, medical benefits, employer contributions to retirement plans, and other non-salary perks. The more clearly you can explain what goes into the pay package, the easier it’ll be to have conversations with both candidates and current staff.
• Conduct an internal pay audit. Use both internal and external data to evaluate your compensation practices. For example, benchmark against competitors in the industry and all geographic locations where you hire. Make sure, however, that the benchmarks you use are drawn from a deep, unbiased data set that’s up to date.
• Educate managers. Let’s say a new hire is going to make $18 per hour, and a current staff member makes $15 per hour—this might cause friction. HR and management should think in advance of how to address the disparity with the current staff member in an honest and appropriate way, explaining how the firm sets pay and what factors go into establishing compensation ranges (e.g., location, skills, experience, benefits, competition, and budgets). This may also provide an opportunity to discuss the current employee’s prospects for growth and development.

Although Illinois’ pay transparency law is quickly approaching, the good news is that CPA firms and other organizations can use this as an opportunity to benchmark their compensation packages to the local labor market. After all, paying fairly can lead to better recruitment practices, and more importantly, successful employee retention.

Helena Almeida, JD, is the vice president, managing counsel at ADP.