By Eric J. Uhl / April 16, 2019

On April 12, 2019, Governor Mills signed a new law, L.D. 278, aimed at fighting against unequal pay by prohibiting employers from asking applicants, and/or applicants’ current or prior employers, about the applicants’ compensation history. Prior to this new law, it was not uncommon for employers to ask about an applicant’s prior position, dates of employment, and compensation level. The legislative intent accompanying the new law states that its purpose is to promote equal pay for comparable work by preventing employers from using compensation history to perpetuate unequal pay.

The new law prohibits asking about an applicant’s compensation history in two different respects. First, the law provides that making an inquiry about an applicant’s compensation history is evidence of “unlawful employment discrimination” under the Maine Human Rights Act. Second, the law flatly prohibits an employer from using or asking about an applicant’s compensation history. Under the new law, an employer making a prohibited inquiry about compensation history would be subject to damages under the Maine Human Rights Act, in addition to remedies under 26 M.R.S.A. § 626-A for treble damages based on unpaid wages, interest, attorney’s fees, costs, and a civil forfeiture penalty of $100 to $500 for each violation.

In addition, the new law adds to the prohibition against employers banning employees from disclosing their own wages by also prohibiting employers from banning employees from disclosing another employee’s wages if the purpose is to enforce the Equal Pay law.

Although the new law does not expressly state what type of unlawful employment discrimination is implicated by an inquiry about compensation history, it is clearly intended to cover discrimination on the basis of sex, but other types of discrimination (for example, age or disability discrimination) could be triggered as well. It is not clear whether making the prohibited inquiry constitutes a new type of adverse employment action or whether it is supposed to be evidence of discriminatory intent only.

Under the new law, an employer may inquire about compensation history after an offer of employment is made that includes all the terms of compensation. Also, if an applicant voluntarily, without prompting, discloses compensation history, an employer may confirm the information prior to an offer of employment. The law does not apply to an employer who must ask about compensation history pursuant to any state or federal law that requires disclosure of compensation history.

Employers should take steps to review and amend their background check practices and applicable policies to make sure they are not making an impermissible inquiry about an applicant’s compensation history. Be sure to contact us if you have any questions about this new law or any of your other hiring and compensation practices.

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