The Rhode Island General Assembly is poised to consider a new law that would prohibit prospective employers from asking candidates about their wage and salary history before making an offer of employment to them. The bill seeks to level the playing field between potential employees and employers so that employees would be free to negotiate and agree upon a wage or salary without their prior compensation setting an arbitrarily low basis for their new salary. On the flip side, however, the bill expressly permits potential employees to disclose their wage and salary history during negotiations. Therefore, if employees believe that their prior wage or salary will help them in negotiations, they are free to disclose that information to the prospective employer.

This bill provides candidates with substantial bargaining power because it allows them to use their wage and salary history to their advantage if they so choose. It also would outlaw a longstanding practice by many employers, which is contacting references or prior employers to verify a candidate’s salary and dates of employment. If this bill passes, Rhode Island employers will have to immediately adjust their vetting and hiring practices to avoid violating this new law.

The same bill also addresses an important issue involving unequal pay claims between men and women. Under Rhode Island law, seniority is one factor employers can consider when setting wages or salaries. However, this bill would prohibit employers from deducting pregnancy-related or family or medical leave from the seniority calculation. Employers will have to make sure that their seniority calculations are carefully made and do not penalize workers who may have been out of work for those legitimate reasons.

This bill is not all bad news for employers, however. The bill also creates a defense that employers can rely upon if they are accused of violating the bill’s restrictions. An employer will not be liable under this new law if it can show that within the last three years it “completed a self-evaluation of its pay practices in good faith and can demonstrate that reasonable progress has been made to eliminate wage differentials based on gender for equal work.” Therefore, employers should immediately begin thinking about performing this self-evaluation in order to address pay inequalities and to set up a defense they can use if they are sued. Even if this bill does not become law this legislative session, it is always a good idea for employers to regularly self-assess its pay and hiring practices to minimize the chances of a lawsuit or a labor investigation. For more information on this issue or other employment law or business matters, contact PLDO Partner Brian J. Lamoureux at 401-824-5100 or email [email protected]. We welcome your comments, questions and suggestions.