Rhode Island Governor Daniel McKee signed pay equity legislation (H 5261A, S 0270A) that will go into effect on January 1, 2023. The new legislation amends Rhode Island’s existing pay equity law and contains the following key provisions.

Pay Discrimination

According to the new amendments, employers may not pay any of their employees “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.” This prohibition applies unless the wage differential falls within certain permissible exceptions outlined in the law.

The amended law’s definition of “comparable work” is broader than “equal work,” the term used in the prior version of the law. The new law defines “comparable work” as “work that requires substantially similar skill, effort, and responsibility, and is performed under similar working conditions.” Under the new law:

Determining whether jobs are comparable will require an analysis of the jobs as a whole. Minor differences in skill, effort, or responsibility will not prevent two (2) jobs from being considered comparable.

The new law allows wage differentials based on one or more of the following factors:

• “[a] seniority system”;

• “[a] merit system”;

• “[a] system that measures earnings by quantity or quality of production”;

• “[g]eographic location when the locations correspond with different costs of living”;

• “[r]easonable shift differential”;

• “[e]ducation, training, or experience to the extent such factors are job-related and consistent with a business necessity”;

• “[w]ork-related travel, if the travel is regular and a business necessity”; or

• “[a] bona fide factor other than” race, color, religion, sex, sexual orientation, gender identity or expression, disability, age, or country of ancestral origin, “which is not based upon or derived from a differential in compensation based on [any of these] characteristics,” “which is job-related with respect to the position in question,” and “which is consistent with business necessity.”

One of the above factors must reasonably explain the differential or “each factor [must be] relied upon reasonably.” The new law prohibits employers from reducing the wages of any employees to comply with this section. Also, under the new law, the fact that an employee agreed to accept certain wages is not a defense to liability.

The new law provides a safe harbor through June 30, 2026, for employers accused of not paying employees the same wages for performing comparable work based on a protected category. An employer has “an affirmative defense to all liability if the employer is able to demonstrate that the employer has conducted a good faith self-evaluation … of the employer’s pay practices within the previous two (2) years and prior to commencement of the action and can demonstrate that any unlawful wage differentials revealed by its self-evaluation have been eliminated.” After June 30, 2026, an employer that performs a good faith self-evaluation and eliminates any unlawful wage differentials will not be liable for compensatory or liquidated damages or civil penalties but can still be liable for unpaid wages.

Salary History Ban

The new law provides that employers may not “rely on the wage history of an applicant when deciding whether to consider the applicant for employment” or “in determining the wages [the] applicant [will be] paid by the employer, upon hire.” Further, employers may not “seek the wage history of an applicant” or “[r]equire that an applicant’s prior wages satisfy minimum or maximum criteria as a condition of being considered for employment.” Employers may consider prior wages after an initial offer is made to justify increasing the compensation offered to the applicant so long as “wage history is voluntarily provided by the applicant for employment, without prompting from the employer.”

Pay Range Disclosure

The new law imposes requirements on employers to disclose pay ranges to both applicants and employees. Upon an applicant’s request, an employer must provide an applicant with “the wage range for the position for which the applicant is applying.” Even without a request from the applicant, the law provides that an employer “should provide a wage range for the position the applicant is applying for prior to discussing compensation.” Upon receiving a request from a current employee, “an employer shall provide the wage range for the employee’s position.” Even in the absence of a request, “[a]n employer shall provide an employee the wage range for the employee’s position both at the time of hire and when the employee moves into a new position.” Employers may not retaliate against applicants or employees for requesting wage range information.

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

Under the new law, employers that violate the equal pay provisions may be liable for unpaid wages, compensatory damages, and liquidated damages in the amount of up to two times unpaid wages as well as attorneys’ fees and costs. For violations of the salary history ban or the requirement to provide wage ranges, employees are entitled to compensatory damages or $10,000 in special damages, equitable relief, and attorneys’ fees and costs.

In addition, employers may be required to pay civil penalties to the Rhode Island Department of Labor and Training, which will vary from $1,000 to $5,000 depending on an employer’s prior violations. In calculating the amount of any penalties, Rhode Island’s director of labor and training or the courts will consider “the size of the employer’s business, the good faith of the employer, the gravity of the violation, the history of previous violations, and whether or not the violation was an innocent mistake or willful.”

Key Takeaways

In advance of the new law’s effective date, employers with employees in Rhode Island may want to review the law and consider how to prepare. Here are a few possible actions employers can take

• Employers that recruit in Rhode Island may want to consider revising application forms and interview questions to avoid asking questions about applicants’ salary histories.

• Employers may want to be prepared to identify the pay range for positions in Rhode Island and implement procedures to disclose those pay ranges upon request or upon hire or promotion.

• Employers may want to consider a proactive pay equity audit to take advantage of the safe harbor under the new Rhode Island law.