Effective January 1, 2023, sweeping changes to Rhode Island’s pay equity law – designed to address the pay practices of businesses in the state – place significant new obligations on employers.
Ocean State employers should carefully review the new legislation – which we have summarized below – and the implementing guidance from the Director of Labor and Training when it becomes available to ensure compliance. Employers who do not regularly review their internal pay practices are strongly advised to do so prior to the effective date of the Act, and should continue to do so on a regular basis thereafter.
Rhode Island’s current pay equity statute prohibits employers from discriminating between sexes relative to wages paid for equal work or work on the same operations. The new pay equity Act prohibits not only wage differential practices for “comparable work” on the basis of sex, but also expands the prohibition on the basis of other “protected characteristics” including:
- Sexual orientation
- Gender identity or expression
- Age or
- Country of ancestral origin.
“Comparable work” is defined under the Act as “work that requires substantially similar skill, effort, and responsibility, and is performed under similar working conditions. 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.”
Employers are required to post a notice regarding the new law prepared by the Director of Labor and Training in a conspicuous location. Failure to comply with posting requirements will result in a fine of no less than $100.00 and no greater than $500.00.
The Act provides that there are circumstances in which employers may utilize wage differentials if an employer can meet certain standards demonstrating the practice to be fair and devoid of pretext for any kind of unlawful wage discrimination. Valid justifications for the use of wage differentials may exist based on one or more of the following factors, which must reasonably explain the differential or the employer can demonstrate that each factor is relied upon reasonably:
- Seniority system;
- Merit system;
- Earnings measured by quantity or quality of production;
- Geographic location (corresponding with the cost of living- provided that no location within the state will be considered to have a sufficiently different cost of living)
- Reasonable shift differential which is not based on a protected characteristic;
- Education, training, or experience to the extent such are job-related and consistent with business necessity;
- Work-related, necessary business travel; or
- A bona-fide factor not based on a protected characteristic and which is job-related to the specific position and consistent with business necessity.
An individual’s wage history alone does not justify an otherwise unlawful wage differential under the Act, nor can an employee’s agreement to be paid less than what they are entitled to under the Act relieve the employer of liability. An employer may not reduce the wage rate of any employee in order to comply.
Additionally, the Act places new restrictions on an employer’s use of wage history in the hiring process. Upon an applicant’s request, the employer must disclose the wage range (as defined under the Act) for the position for which the applicant is applying, and should do so before discussing the subject of compensation. At the time of hiring and at the time the employee moves into a new position, the employer is required to provide the wage range for the employee’s position.
Wage is defined under the Act as “all amounts at which the labor or service rendered is recompensed . . .”. However, an employer shall not be liable for disparities in total gratuities, overtime pay, or commissions if the disparity is due to a factor beyond the employer’s control.
The Act contains anti-retaliation provisions and prohibits an employer from discharging, discriminating, or retaliating against an applicant or employee who opposes an unlawful payment practice defined by the Act, files a complaint against the employer, or institutes or participates in an investigation against the employer, among other things. An employee is not required to disclosure his/her wages, and an employer may not restrict or prohibit an employee from inquiring, disclosing or discussing his/her wages or that of another employee.
Employees may enforce their rights under the Act by filing a complaint with the Director of Labor and Training or through a civil action. If intending to file a civil action, employees must provide their employer with advance notice presumably to provide the employer with an opportunity to investigate and remedy the possible violation and thereby avoid litigation. Written notice must be issued “forty- five (45) days prior to the commencement of any such action and any such written notice shall include a statement from the claimant indicating the claimant’s belief that an unlawful wage differential exists and that it applies to the claimant.”
Employers found liable under the Act shall be subject to compensatory damages, special damages not to exceed $10,000; equitable relief, reasonable attorney’s fees and costs, and civil penalties ranging from $1,000.00-$5,000.00 based on the number of previous violations preceding the complaint. The Act provides that no civil penalties will be assessed for the period of January 1, 2023-December 31, 2024.
Employers can limit their liability with an affirmative defense provided under the Act which requires employers to perform a good-faith self-evaluation of its pay practices. In order to effectively assert this defense, an employer must demonstrate that it (1) conducted a good-faith self-evaluation of its pay practices in accordance with the Act within the previous two years and prior to commencement of the action, and (2) can demonstrate that any unlawful wage differentials revealed by the evaluation have been eliminated. This affirmative defense to all liability under the Act is available for the period of January 1, 2023, through June 30, 2026. Thereafter, the defense will still be available, but may be less comprehensive and may require additional action by the employer.
Disclaimer: The information contained herein is not intended to be construed as legal advice, nor should it be relied on as such. Employers should closely monitor the rules and regulations specific to their jurisdiction(s) and should seek advice from counsel relative to their rights and responsibilities.