Zachary Mauer Senior Editor Loyola University Chicago School of Law, JD/MPP 2022
In the almost sixty years since the passage of the Equal Pay Act in 1963, women and people of color are still deprived of wages equal to their male and white coworkers. Illinois has recently made strides to level the playing field by passing amendments to their Equal Pay Act requiring large companies to disclose demographic data on their employees and sign compliance statements regarding pay discrimination. Going forward, Chicago is considering requiring employers to post salary ranges on their job postings, while the Biden Administration has been fighting to pass the Paycheck Fairness Act. The future of equal wages in America depends on the results of these crucial legislative battles.
The Equal Pay Act (EPA) was a landmark labor law passed by President Kennedy in 1963. The EPA prohibits discrimination by employers for all types of compensation on the basis of sex. Title VII of the Civil Rights Act of 1964 expanded upon the EPA by prohibiting employment discrimination based on race, color, religion, sex, and national origin. The EPA’s impact can be seen by the fact that women made only fifty-eight percent of men’s wages in 1963, while the Bureau of Labor Statistics estimates that in 2020 women’s annual incomes were 82.3 percent of men’s. Even so, the wage gap remains wide for Black women at sixty-four percent and fifty-seven percent for Hispanic women. Efforts have been made across the country in recent years to galvanize the progress toward closing the pay gap, especially in Illinois.
Recent amendments to the Illinois Equal Pay Act
In March and June of 2021, Illinois Governor J.B. Pritzker signed into law new amendments to the Illinois Equal Pay Act of 2003 (IEPA). These amendments create new compliance obligations for employers with 100 or more employees in Illinois. Specifically, these large employers are required to apply for an “equal pay registration certificate” from the Illinois Department of Labor (IDOL), submit employee demographic and wage records, and submit their most up-to-date Annual Employer Information Report (EEO-1 report).
To receive the “equal pay registration certificate”, companies must submit a compliance statement certifying that they are following federal and state employment and equal pay laws. In addition, companies must certify that they did not restrict job opportunities for one sex, made employment decisions without regard to sex, provided average compensation to their female and minority employees at a rate “not consistently below” average compensation (as determined by the U.S. Department of Labor) for male and non-minorities within relevant EEO-1 Report major categories (discussed later).
Large employers are also required to send IDOL employee demographic data and wage records that include a list of employees during the past calendar year, separated by gender, race, and ethnicity, the total wages paid to each employee during the last calendar year, the county in which the employee lives, and the employees’ start dates. Last, these employers must send IDOL their most recent EEO-1 report, which is the federal mandatory annual data collection of demographic workforce data required for private employers with 100 or more employees and federal contractors with fifty or more employees.
An important first step to shrinking the pay gap
Passing these new disclosure requirements in Illinois is expected to take aim at the gender and racial pay gap by fining non-compliant companies and making them aware of their potential wage discrimination. The two other main ways that Equal Pay laws in other jurisdictions have endeavored to shrink the pay gap are by banning the use of applicants’ salary history when determining their salary and requiring companies to disclose their salary ranges for job postings.
Illinois should adopt similar laws to Nevada and Colorado, where companies must provide salary ranges automatically to applicants. Colorado’s laws particularly stand out as the most expansive because they require salary ranges to be displayed on the job posting, including for national companies that are hiring remotely. According to C. Nicole Mason, a gender and racial equity researcher and CEO of the Institute for Women’s Policy Research, salary transparency laws alone aren’t very effective as a way to close the gender and racial pay gaps. But they are an important first step because it forces employers to confront these disparities.
“We’re making the assumption that no company wants this kind of pay disparity, that it is unintentional,” Mason says. But pay disparity is a deep-seated issue, and not all employers will be enthusiastic about fixing it. Even for earnest companies in states with new rules, bucking the trend could prove difficult”
Chicago is at least attempting to take this important first step. 36th Ward Alderman Gilbert Villegas proposed an ordinance in February that would require all employers to post a salary range alongside their job postings, akin to Colorado’s laws. The ordinance was not ready to be presented at April’s City Council meeting because Villegas says it still needs to be refined.
Paycheck Fairness Act
Meanwhile, a legislative effort to close the gender pay gap at the federal level is the Paycheck Fairness Act (PFA). The PFA aims to close the loopholes of the EPA by requiring, among other things, that the wage disparity between male and female employees is based upon a “bona fide factor other than sex that is job-related and consistent with business necessity” such as education, training, or experience. Another key provision is that employers would be prohibited from asking about applicants’ salary history, with some limited exceptions. Unfortunately, the PFA failed to pass the Senate in June 2021 with no plans for reintroduction on the horizon.
The future of equal wages in America will be likely determined by States and municipalities that take the critical first step in passing wage transparency laws. Congress won’t be able to ignore the issue for long if wage transparency laws become standard across the country.