(The Center Square) – An employment trends expert is highly critical of a new Illinois law involving pay transparency.
The law requires employers with 15 or more workers to provide information on pay scale and benefits in job postings. It also requires employers to provide employees their current wage or salary range along with a general description of benefits upon that employee’s hiring, promotion or transfer, upon the employee’s request.
Rob Wilson, a Chicago area employment expert and president of Employco USA, said this type of law can de-incentivize top-performing employees who might otherwise have received higher pay as a reward for their “can-do” attitude.
“You’ve got less than average employees, average employees, and you’ve got your best employees,” Wilson told The Center Square. “They all typically make a different amount in a firm.”
Wilson said bonuses and raises may also become a thing of the past because employers don’t want to be accused of unfairly rewarding one employee over another.
Chris Davis, Illinois director of the National Federation of Independent Business, said the law will be detrimental to smaller mom-and-pop shops when they are forced to advertise that they pay less than larger businesses.
“It fails to recognize that smaller employers struggle to compete with larger employers to recruit talented employees and talented workers,” said Davis.
There currently are pay transparency laws in California, Colorado and Washington. New York will be joining that list in September 2023 and Hawaii will follow on Jan. 1, 2024. Illinois’ law is scheduled to go into effect Jan. 1, 2025.
Supporters of the legislation said transparency is essential to ensure employees are not misled when accepting a job.
“When people are left in the dark, they can’t advocate for themselves,” state Rep. Mary Beth Canty, D-Arlington Heights, said in a statement. ”Pay secrecy keeps women, people of color and other marginalized groups at a disadvantage when they negotiate salaries, perpetuating the status quo of the gender and racial wage gaps.”
Employers found to be in violation of the law’s requirements will be assessed a fine of up to $500 for a first violation, up to $2,500 for a second violation, and up to $10,000 for third and subsequent violations.