2023 Compensation Check Up: Legal Updates

Authors Laura Friedel, Becky Canary-King

Compensation is always a top-of-mind issue for employers, but on the heels of the “Great Resignation,” and amidst ongoing labor shortages, economic uncertainties and evolving legal requirements, many employers are reassessing their compensation practices.

In addition to compensation best practices to assist with attracting and retaining talent, employers must make sure to comply with state-specific legal requirements. Here we share new legal requirements for employers.

  1. Prepare to Apply for Illinois Equal Pay Registration Certificate. Employers with 100 or more employees in Illinois must apply for the Certificate between March 24, 2022, and March 23, 2024, and recertify every two years after that. Companies will be notified by the Department of Labor when it is time for them to register and will be given at least 120 days’ notice of their individual deadline. Employers will need to provide certain pay, demographic, and other data as part of the application process. If you have not received the notice from the Department of Labor yet, get started now by considering how you will answer the questions in the compliance statement and report the necessary information.
  2. Ensure Job Postings Comply with New Pay Disclosure Requirements. California, New York City, and Washington State have joined Colorado in requiring some or all employers to disclose wage ranges in job postings. Notably, these requirements include jobs that may be performed remotely in these states. Additionally, Rhode Island joins a growing list of states that require disclosure of the salary range for a position upon request. Employers must understand what information needs to be included in job postings to avoid inadvertently violating these laws. Employers that don’t currently practice pay transparency should also think about how they might get in front of requirements as pay disclosure laws continue to spread. Companies should also consider wage transparency and equal pay laws’ impact on the due diligence process in M&A transactions
  3. Be Aware of Minimum Wage and Minimum Salary Increases. 2023 brings minimum wage increases in many states and localities, as well as increases to the minimum salary that employees must receive to be eligible to be exempt from overtime requirements. Make sure that you are aware of – and complying with – the minimum wage and minimum salary requirements in the jurisdictions where your employees perform work, including the requirements in the locations where you have any remote employees.

For additional information on employment-related best practices, refer to LP’s 2023 Employment Law Checklist.

2023 Compensation Check-Up: Four Questions to Ask About Your Compensation Practices

Authors Laura Friedel, Becky Canary-King

Compensation is always a top-of-mind issue for employers, but on the heels of the “Great Resignation,” and amidst ongoing labor shortages, economic uncertainties, and evolving legal requirements, many employers are reassessing their compensation practices.

Here we share some questions to help guide you.

  1. Is Our Compensation Competitive? Pay isn’t the be-all, end-all to employee recruitment and retention, but it’s important. Employees who feel that they are underpaid are far more likely to entertain another opportunity. If you haven’t done so recently, look closely at how you compensate your employees to ensure that they are being paid appropriately – both inside the company and in the industry/marketplace. If you cannot offer higher salaries, there are other ways to remain competitive. Many employers offer new hire signing bonuses, home office allowances, bonus opportunities, paid professional development opportunities, and generous paid time-off policies.
  2. Are Our Compensation Practices Fair? Employers should ensure that they have a solid rationale for compensation determinations and that there aren’t inappropriate pay disparities that appear to be linked to gender, race, ethnicity, or other protected classes. If a self-audit uncovers any areas for concern, employers should make necessary changes. This is particularly important for Illinois employers preparing to apply for their Equal Pay Registration Certification.
  3. Does Our Compensation Boost Retention? Research shows that helping employees feel valued and part of something bigger is vital to boosting retention. While there are non-monetary ways employers can do this, employers should also consider different compensation arrangements that help put the company’s proverbial “money where its mouth is.” Some examples of ways to help employees feel more invested in their work aside from salary increases are profitability-based bonus pools, phantom equity programs, and long-term bonus programs that allow employees to share in the company’s growth, or transaction bonus programs that enable employees to share in sale proceeds if the company is sold. These kinds of deferred compensation programs can present potential complications so they must be documented in writing with clear terms and crafted with the help of an attorney who understands the applicable tax requirements. When done properly, such programs can create a stronger link for employees between their work and the success of the company.
  4. Are our Compensation Practices Compliant? Many states have new compensation based legal requirements. Employers should ensure they are complying with any state-specific laws that may impact minimum wage and overtime compliance, equal pay reporting, and pay transparency in recruiting/hiring.

For additional information on employment-related best practices, refer to LP’s 2023 Employment Law Checklist.

M&A Diligence Considerations Related to Wage Transparency Laws and Equal Pay Act

Authors Kevin Slaughter, Becky Canary-King

Several states – including ColoradoCaliforniaNew York, and Washington – have wage transparency laws that require employers to post wage ranges in their job postings. Additionally, a growing list of states require disclosure of the salary range for a position upon request and prohibit an employer from requesting an applicant’s salary history. 

These laws seek to promote transparency and fairness in the workplace. By requiring employers to disclose salary information,  these laws aim to reduce the gender pay gap and promote greater equality in the workforce.

Though the specific provisions of these laws vary from state to state or apply only to specific industries, for the most part, these requirements apply to jobs that may be performed remotely in these states. This means that, even if an employer’s home state doesn’t have wage transparency laws, if the job could be performed remotely, the wage transparency laws of other states will likely apply.

Accordingly, all employers must understand what information should be included in job postings to avoid inadvertently violating these laws. The penalties for non-compliance vary depending on the applicable law and the jurisdiction where the violation occurs, but penalties could include fines, loss of business license, public disclosure of violation, and possible legal action.

These state requirements are in addition to the federal Equal Pay Act, which prohibits employers from discriminating against employees based on gender in the payment of wages or benefits for substantially equal work. It also prohibits retaliation against employees who assert their rights under the law. 

Not only do employers need to be aware of equal pay requirements with their own employees and concerning their own compensation practices, but the laws can also impact M&A transactions. 

When conducting M&A due diligence, it is important to assess the target company’s compliance with wage transparency laws and the Equal Pay Act. This involves reviewing the company’s policies, procedures, and records related to compensation, as well as any applicable state and federal laws governing wage transparency.

Here are some steps to consider when conducting M&A diligence related to compliance with wage transparency laws:

  • Review the target company’s compensation policies and procedures to determine if they have established guidelines for wage transparency and pay equity.
  • Review the target company’s past job postings to confirm compliance with wage transparency laws. 
  • Review the target company’s job application and interview process to confirm compliance with laws prohibiting requests for salary history.
  • Review the target company’s records related to compensation, such as employee pay stubs, time records, employment contracts, and any internal compensation audits, to assess whether there are any discrepancies in pay between employees doing similar work.
  • Assess the target company’s compliance with federal and state laws related to wage transparency, including the Equal Pay Act and state laws requiring employers to provide information about employee compensation upon request.

The attorneys in LP’s Corporate and Employment & Executive Compensation Groups are available to answer any questions regarding wage transparency laws or the Equal Pay Act, whether in the ongoing management of your business or in connection with M&A transactions. If you have any questions, please don’t hesitate to reach out.

Illinois Strengthens Equal Pay Protections

Illinois has joined the growing list of states implementing requirements intended to avoid pay discrimination. These requirements, which are effective September 29, 2019, include a new salary history ban, a lessening of the evidentiary burden to prove pay discrimination, strengthened anti-retaliation provisions, and additional damages available to employees.  Employers need to act quickly to ensure that candidates aren’t asked about compensation history, and otherwise comply with these new standards.

The 2019 Amendments to the Illinois Equal Pay Act prohibit Illinois employers from:

  • Screening job applicants based on their salary history
  • Requesting or requiring salary history
  • Otherwise requesting or requiring applicable to disclose salary history information
  • Seeking an applicant’s salary history information from current or former employers (unless it is public record).
  • Considering or relying on compensation history voluntarily provided (without prompting) in deciding whether to offer employment , in making an offer of compensation, or in determining future compensation.

The Amendments make clear that employers may engage in discussions with applicants about their expectations with respect to compensation and benefits, but it’s critical that those conversations are forward – not historically – focused.

The amended IL EPA also makes it easier for employees to prove claims of pay discrimination – both because it expands the group of individuals the employee can compare herself to in making her claim, and because it narrows the grounds on which an employer can justify a difference in pay.

Finally, the Amendments beef up the Illinois Equal Pay Act’s retaliation provisions.  The IL EPA previously provided that Illinois employers should not interfere with, restrain or retaliate against employees who wish to inquire about, disclose, compare or discuss their wages or the wages of other employees.  The Amendments go even further though – prohibiting employers from requiring an employee to sign an agreement that would prohibit them from disclosing or discussing their pay information.

Employees bringing claims under the IL Equal Pay Act will still have five years to bring their claims, and they will still be entitled to recover the entire amount of any underpayment with interest.  But under the Amendments, they will now also have the opportunity to seek compensatory damages in certain situations, as well as punitive damages, injunctive relief and attorneys’ fees.

Illinois employers need to take immediate action to ensure that those involved in the hiring process do not inadvertently violate the new salary history ban.  We recommend implementing a policy that requires that only one or two set individuals are authorized to discuss money with candidates, and that those individuals be trained to only ask about expectations, not salary history.  In addition, in light of the soon-to-be reduced standards for proving pay discrimination, Illinois employers should consider conducting a self-audit to identify – and resolve – any pay inequality before a claim arises.

2019 Labor and Employment Law Checklist

Each year, LP’s Labor & Employment Practice Group is pleased to provide a short checklist of steps that all companies should consider taking to measure their readiness for the coming year. We hope that you find our 2019 Labor and Employment Law Checklist to be a helpful guide to best practices for the year ahead.

Download a fillable PDF here. Print it out for yearlong reference, or get started right away and enjoy the satisfaction of checking some very important items off your list.


  • Keep Ahead of Harassment & Discrimination Claims.  The #MeToo and #TIMESUP headlines did not slow down in 2018, and preliminary data released by the EEOC showed more than a 50% increase in EEOC charges claiming sexual harassment. In addition, Illinois and New York implemented new requirements relating to harassment policies and training, with Illinois requiring policies for employers that do business with the state or claim EDGE tax credits, and New York implementing strict requirements that apply to all companies with New York employees.  The EEOC also issued “Promising Practices for Preventing Harassment” to provide strategies to employers to reduce workplace harassment. Committed and engaged leadership, strong and comprehensive harassment policies, and regular, interactive training tailored to the audience and the organization are the new standard. If you have not conducted training and updated your harassment, discrimination and retaliation policies to meet these standards, put it on the agenda for early 2019.  


  • Update Policies to Reflect New Reimbursement Requirements. Under a new law targeting employers who require employees to use their personal cell phones for business purposes, Illinois now requires employers to reimburse employees for expenses they incur that are “directly related” to the services they are providing their employer. However, employers can set requirements around how and when requests for reimbursement must be made.  It is critical that employers confirm that expense reimbursement policies provide the framework for requesting reimbursement, and that policy manuals are clear that employees are eligible for reimbursement for these expenses, at least to the extent they exceed what the employee would have spent for personal reasons. 


  • Review Compensation Policies. The gender pay gap continues to draw the attention of lawmakers. For example, California, Connecticut, Delaware, Hawaii, New York, New Jersey, Maryland, Massachusetts, Oregon, Puerto Rico, Vermont and a number of municipalities have adopted laws making it easier to prove discrimination and/or limiting the compensation information that can be requested from applicants.  And with the change in leadership in Springfield, Illinois might just follow suit in 2019.  Consider reviewing compensation policies to put the emphasis on the value of the work being performed, rather than on what the applicant was paid in his or her last position.   


  • Confirm Parental Leave Policies Don’t Discriminate.  Being more generous with paid leave to new mothers than new fathers can create significant liability if the difference is based on gender and not on the physical act of giving birth or the employee’s designation as a primary care giver.  In February 2018, Estee Lauder paid $1 million to more than 200 male workers to settle a charge claiming that the company’s parental leave policy discriminated against male employees. Employers should revisit maternity and parental leave policies to make sure that any difference between the leave being provided to male and female employees is based on a permissible reason.   


  • Comply with New Military Leave Protections.  A new Illinois Law –ISERRA– provides some additional protections beyond those of the Federal USERRA.  ISERRA applies to all Illinois employers, regardless of size and requires that a specific notice of rights be posted.  Make sure that your team is aware of these new requirements and that the notice is posted in your workplace. Also, if you have a military leave policy, confirm that it reflects ISERRA.  


  • Are Arbitration Agreements Right for You? After years of uncertainty, the Supreme Court determined that employers can legally require employees to arbitrate any disputes individually. But are these types of agreements right for your company?  There are pros and cons of arbitration, so talk with your legal advisors to determine whether the agreements that require individual arbitration make sense for your organization.   


  • Revisit Workplace Rules Following NLRB Shift. The NLRB, now controlled by Republicans, is undoing many of the standards put in place by the prior NLRB.  Many, but not all, of these rules are considered pro-employer, including a more practical approach to determining when handbook policies regarding confidentiality interfere with employees’ right to engage in concerted activity. This means that some of the disclaimers and limitations in employee handbooks that were put into place in response to the “old” NLRB’s standards are no longer necessary.  Consider revisiting employee handbooks to clarify policies to be consistent with the current rules. 


  • Consider Unpaid Intern Standard Changes.  For years we have counseled clients not to use unpaid interns or risk a variety of employment claims.  However, changes to legal standards from both the courts and the Department of Labor have provided a more practical approach and raises the possibility of treating interns as unpaid.  At the heart of the analysis is whether the internship is more for the intern’s benefit or the company’s, and whether the internship is an extension of their education.  If you have an internship program that works with students, or are considering one, talk to your legal counsel about whether the internships can be unpaid. 


  • Update Restrictive Covenants. There has been lots of conversation regarding restrictive covenants. In fact, states are increasingly passing laws related to non-competes. Most recently, Massachusetts passed the most sweeping legislation we have seen in several years, limiting when and how employers can prohibit competition and even requiring additional consideration during the time period in which the employee cannot compete. If your restrictive covenants are more than a few years old, or if they are not specifically crafted to meet the legitimate business needs of the company, it is important to revisit and update them to maximize enforceability.


If you found this checklist helpful, subscribe to our blog. For concise, practical updates on the developments that impact you and your business, please subscribe at http://lpemploymentlaw.com.

New California Law Broadens “Equal Pay“ Protections

Effective January 1st, California will have one of the toughest pay equality laws in the country.pillars

Existing California and federal law already prohibit employers from paying women less than men for the “same jobs.”  But many feel that these laws were proving ineffective in California – citing data including a U.S. Census Bureau report this year that found that full-time women employees in California are paid substantially less (a median 84 cents for every dollar) than their male counterparts.

The new law, referred to as the California Fair Pay Act, has as its stated purpose attempting to close this gap and broaden the scope of existing equal pay laws by mandating that employers pay male and female employees the same amount for “substantially similar work” under similar working conditions.  So, employees performing “substantially similar work” under similar working conditions must be paid the same amount even if they have different titles or work at different locations.  This new standard will likely make it significantly easier for employees to bring a pay discrimination claim under the California law than under the federal Equal Pay Act.  The law also prohibits retaliation against employees who complain of pay inequities.

California employers should review and update their existing compensation systems and policies to ensure that differences in pay are reasonably related to legitimate business factors (like merit or seniority), and not based on gender.  This is especially important because we anticipate that new legislation will lead to a spike in litigation — especially given that plaintiffs will have an easier task in establishing that they were performing “substantially similar work” rather than the “same job.”