Senate Bill 540 aims to enhance employee rights regarding compensation information by prohibiting employers from soliciting or relying on a prospective employee's current or prior compensation when making employment decisions. Specifically, the bill makes it unlawful for employers to ask for this information before extending a job offer, to set criteria based on prior compensation, or to discriminate against individuals for exercising their rights related to compensation disclosure. Additionally, the bill allows current employees to freely discuss their compensation and that of their colleagues without fear of retaliation from their employer.

The bill also establishes enforcement mechanisms, allowing individuals who experience discrimination based on compensation information to file complaints with the Department of Workforce Development (DWD) or pursue civil actions in circuit court. If discrimination is found, the court may award back pay, compensatory damages, and punitive damages, with specific limits based on the size of the employer. Employers are required to post notices informing employees and prospective employees of their rights under this new law, and penalties are established for non-compliance. Overall, the bill seeks to promote transparency and equity in compensation practices within the workplace.