Rhode Island Employers Should Prepare for New Pay Equity Law

Rhode Island Gov. Daniel McKee recently signed broad new pay equity legislation into law that will require you to change many common workplace practices. The new law is slated to take effect on Jan. 1, 2023. While it might seem so far into the future that you can ignore the law for the time being, you would best be served by beginning your compliance efforts now to put your organization in the best position to get in line with the new standards.

Like many other states' pay equity laws, the new law will prohibit you from requesting applicants' salary histories before initial employment offers and requires pay transparency in the workplace. Unlike many other states' pay equity laws, however, which focus primarily on achieving pay parity between genders, Rhode Island's act addresses wage discrimination based on several protected characteristics beyond sex. The new law also provides a safe-harbor mechanism that might permit you to escape legal liability, but which requires you to take proactive steps sooner rather than later. Here's what you need to know about—and do as a result of—this significant new law.

Employer Obligations

The act prohibits an employer from paying any employee "at a wage rate less than the rate paid to employees of another race, or color, or religion, sex, sexual orientation, gender identity or expression, disability, age, or country of ancestral origin for comparable work."

"Wage" includes nearly all types of compensation, but expressly excludes tips and overtime pay.

"Comparable work" means work that, "as a whole," requires "substantially similar skill, effort, and responsibility, and is performed under similar working conditions." Minor differences in skill, effort or responsibility will not prevent two jobs from being deemed comparable.

If two employees are performing comparable work as defined by the act, wage disparities are only permissible if reasonably explained by, or if the employer reasonably relied on, one or more of the following:

• Seniority.
• A merit system.
• A system that measures earnings by quantity or quality.
• Geographic location.
• Shift differentials.
• Job-related education, training or experience.
• Work-related travel.
• Any other bona fide job-related factor other than membership in a protected class.

Importantly, employers may not reduce any employees' wages to comply with the act, and employees may not agree to be paid less than that to which they are entitled under the act. In addition, employees' wage histories may not be used to justify a pay differential.

Employers must conspicuously post a notice of employee rights under the act, to be published by the Rhode Island Department of Labor and Training (RIDLT), or face a civil penalty of between $100 and $500.

Avoiding Liability

Through June 30, 2026, employers will have an affirmative defense to all liability for any alleged unlawful pay practices if they can show they: (1) conducted a "self-evaluation" of their pay practices within the two years preceding the commencement of a pay equity lawsuit; and (2) can show they have eliminated the allegedly unlawful wage differentials revealed by the self-evaluation.

The act states that the RIDLT will issue a template for employers to complete self-evaluations; however, employers may use their own forms if they choose. An employer has 90 days from the date it completes a self-evaluation to perform any necessary wage adjustments to take advantage of the affirmative defense.

After June 30, 2026, employers that perform good-faith self-evaluations and eliminate any unlawful wage differentials will not be liable for compensatory damages, liquidated damages, or civil penalties—but can still be liable for unpaid wages and equitable relief.

Salary History Inquiries Prohibited

The act also prohibits employers from asking for or relying on applicants' wage histories when deciding whether to consider them for employment and, when hiring individuals, determining what wages to pay them. After extending an initial employment offer, employers may use an individual's wage history to justifying increasing the compensation offered, but only if:

• The wage history was voluntarily provided by the applicant without the employer's prompting.
• The contemplated, higher wage does not create an unlawful pay differential within the organization.

Disclosing Salary Ranges

Employers must also provide a wage range for any position, including open positions, upon request. Likewise, an employer "should provide a wage range for the position the applicant is applying for prior to discussing compensation." In addition, when a current employee transfers to a different position within the company, the employer must provide the wage range for the new position, even if the employee does not affirmatively request it.

Employers are prohibited from retaliating against applicants or employees for requesting wage ranges. Employers also may not prevent "an employee from inquiring about, discussing, or disclosing the wages of such employee or another employee or retaliate against an employee who engages in such activities."

Penalties for Noncompliance

If, after an RIDLT investigation, the agency determines that an employer has violated the act's pay equity mandates, it may impose civil penalties between $1,000 and $5,000, depending on the number of previous violations of the act, the size of the employer, the good faith of the employer, the gravity of the violation, and whether the employer made an innocent mistake or acted willfully. The RIDLT may also order other appropriate relief or refer the case to the state attorney general. Note that the act gives employers a grace period, as it provides that no civil penalties may be assessed from Jan.1, 2023 to Dec. 31, 2024.

The act also permits individuals to file a complaint with the RIDLT or in court within two years after the occurrence or discovery of an occurrence that may violate the act or within three years after the occurrence or discovery of such an occurrence if the complaint alleges a "willful and wanton" violation. An employer may be liable in such an action for compensatory damages, "special damages" of up to $10,000, up to twice the amount of unpaid wages and/or benefits owed as liquidated damages, reinstatement of the employee's position, fringe benefits, and seniority rights, punitive damages (if the employer acted with malice or reckless indifference), and attorney's fees and costs.

What's Next?

The RIDLT has been tasked with developing the act's implementing regulations but has not provided a timeframe for publishing the regulations, the required employer notice, or the self-evaluation template. Rhode Island employers should stay abreast of regulatory updates and/or RIDLT guidance on the act.

Deepa K. Desai and Joshua D. Nadreau are attorneys with Fisher Phillips in Boston. © 2021 Fisher Phillips. All rights reserved. Reposted with permission.