In an effort to decrease wage disparities experienced by black employees, Illinois lawmakers passed H.B. 4743 on Nov. 28, 2018, amending the state’s Equal Pay Act. The amendment prohibits employers from paying black workers less than non-black workers. The new law, which becomes effective Jan. 1, 2019, forbids employers from paying black workers at rates less than those paid to non-black workers “for the same or substantially similar work on a job that requires equal skill, effort, and responsibility and is performed under similar working conditions.”
Though race-based wage disparities were already prohibited under the Illinois Human Rights Act and federal laws, Assistant Majority Leader Kimberly Lightford (D-Maywood) said that the new law was needed to clarify the prohibition and reinforce the need to end the growing wage gap between black and non-black workers. According to a 2017 Federal Reserve study, black employees earn lower wages compared to their white counterparts, a disparity that cannot be adequately explained by factors other than race, such as differences in education, age, job type or location.
The enactment of this amendment comes at a time when the wage gap has widened, despite prior efforts to ameliorate the problem. In 1979, the average black man in the United States earned about 80 cents on the dollar earned by the average white man for similar work. In 2016, the average black man earned only 70 cents on the dollar earned by the average white man for similar work. The same is true for black women, who in 1979 earned 95% of what white women earned, and in 2016 earned only 82% compared to white women on average.
While this does not present a change in the law for Illinois employers mandating policy changes, it does provide a reminder of the need to diligently examine pay disparities among employees. Employers should consider the following best practices to ensure compliance with the new law and avoid potential liability under it and other state and federal discrimination laws:
- Conduct an Internal Audit. It’s important to intermittently review and assess employee wage ranges to ensure compliance and avoid inadvertent violations. Even unintentional wage disparities can subject your business to liability. Allocate time to categorize all employees by the type of work they perform. Workers who perform the same or substantially similar work requiring an equal amount of skill, effort and responsibility should be grouped together. Then evaluate whether the rates workers are paid within these groups are the same for black and non-black employees (and other protected categories as well). To any extent that the audit and its results may reveal unfavorable information, consider having the audit done by your attorney, with appropriate steps taken to maintain the audit and its results as privileged.
- Take Action and Follow Up. If the internal audit reveals disparities, corrective action should follow. Raising the wage rate for black employees rather than lowering it for non-black employees is likely the safest move. Lowering the wages of other employees without good cause may violate certain employment contracts and result in other lawsuits such as a Title VII reverse discrimination suit. After addressing wage disparities, it’s important to follow up and continue to monitor the wage rates of black workers versus non-black workers.
- Make it a Policy. Create an internal policy that forbids unwarranted wage disparity in your workplace. Make sure all employees who have hiring capabilities or who set salaries are trained on and follow the policy to ensure compliance.
Questions? Feel free to contact Taft’s Illinois employment attorneys.