Pay Equity Comes to RI: Proactive Steps for Employers to Prepare

On July 1, 2021, Rhode Island took an important step towards achieving pay equity.  The Rhode Island General Assembly approved a historic bill to strengthen the state’s existing wage discrimination laws and close gaps in statutory protections.  Governor Dan McKee signed the bill into law on July 6th.  The law takes effect on January 1, 2023.

The new pay equity law makes it unlawful for an employer to pay an employee at a wage rate less than the wage rate paid to employees of another race, color, religion, sex, sexual orientation, gender identity/expression, disability, age, or national origin for performing comparable work, unless the employer is able to demonstrate that the wage differential between employees satisfies the following criteria:

  1. The wage differential is based upon one or more of the following factors:
    • A seniority system;
    • A merit system;
    • A system that measures earnings by quantity or quality of production;
    • Geographic location where the locations correspond with different costs of living;
    • Reasonable shift differential;
    • Education, training, or experience that are job-related and consistent with business necessity;
    • Work-related travel; or
    • A bona fide factor that is job-related and consistent with business necessity.
  2. For wage differentials based in seniority, merit, and quantity/quality systems, such systems are fair and not being used as a pretext for unlawful wage differentials;
  3. The factor or factors relied upon by the employer must reasonably explain the wage differential; OR
  4. Each factor is relied upon reasonably by the employer.

The law makes it unlawful for employers to prohibit employees from inquiring about, discussing, or disclosing their wages or the wages of another employee or to retaliate against employees for doing so.  Employers cannot require employees to waive their right to disclose or discuss their wages.

Like many wage and hour laws, the new pay equity law contains anti-retaliation provisions.  It prohibits employers from discharging, discriminating, or retaliating against applicants for employment and employees who engage in certain legally protected conduct (e.g., opposing a practice made unlawful under the law, filing a complaint with the employer or the Rhode Island Department of Labor & Training (DLT), testifying as part of an investigation, proceeding, or hearing, etc.).

The law includes new posting requirements.  Employers are required to post in a conspicuous location in their workplace a notice prepared by the DLT setting forth the provisions of the law.  Failure to comply with the new posting requirement carries a fine of $100-$500.

The law includes a private right of action for applicants, employees, and former employees who believe that their rights may have been violated.  They can file a complaint with the DLT or a commence a civil action in the Superior Court.

The law imposes new limitations on employer use of wage history information prior to an offer of employment that includes compensation.  Under the law, it is unlawful for employers to:

  • Rely on the wage history of an applicant for employment when deciding whether to hire the applicant;
  • Require that an applicant’s prior wages satisfy minimum or maximum criteria as a condition to being considered for hire;
  • Rely on the wage history of an applicant when determining compensation upon hire; or
  • Seek the wage history of an applicant for employment.

The law also requires employers to provide a wage range to an applicant for employment upon their request and prior to any discussions of compensation.  Employees must be provided with a wage range for their position at the time of hire and whenever they move into a new position.  Employees also must be provided with a wage range for their position upon request.

The statute of limitations for bringing a claim under the law is two (2) years from when the plaintiff knew or reasonably should have known of the occurrence of a discriminatory practice; however, in cases of willful violations, the statute of limitations is enlarged to three (3) years.

All claims brought under the new pay equity law are subject to a condition precedent:  before the plaintiff can file a claim, the plaintiff must provide the employer with at least forty-five (45) days prior written notice of their belief that an unlawful wage differential exists and that it applies to the plaintiff.

Under the law, prevailing plaintiffs are entitled to the following relief:

  • Unpaid wages and/or benefits;
  • Compensatory damages;
  • Liquidated damages in an amount up to two (2) times the amount of unpaid wages and/or benefits owed;
  • Equitable relief, including reinstatement of employment, fringe benefits, and seniority; and
  • Reasonable attorney’s fees and costs.

Employers found to be in violation may be liable for a civil penalty to the DLT.  Penalties range from up to $1,000 for a first violation to up to $5,000 for an employer with two (2) or more violations within the seven (7) year period prior to the filing of the plaintiff’s complaint.  In determining the amount of the penalty to impose, the DLT 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 the violation was innocent or willful.  No civil penalties will be assessed from January 1, 2023 – December 31, 2024.

Similar to the Massachusetts Equal Pay Act, Rhode Island’s new pay equity law includes a safe harbor provision.  Any employer against whom a claim is asserted will have an affirmative defense to liability if they are able to demonstrate that they have conducted a good faith self-evaluation of their pay practices within the previous two (2) years and prior to commencement of a civil action and can demonstrate that any unlawful pay differential identified by their self-evaluation have been eliminated.  To take advantage of the safe harbor, employers will have ninety (90) days from the date of completion of their self-evaluation to adjust salaries or wages to eliminate any unlawful wage differentials.

The new Rhode Island law differs from the Massachusetts Equal Pay Act in two important respects.  First, it requires employers to demonstrate that they have actually eliminated any unlawful wage differentials uncovered by their self-evaluation instead of merely demonstrating “reasonable progress” towards eliminating said differentials.  Second, Rhode Island’s safe harbor provision is available to employers for only a limited time.  After June 30, 2026, employers that conduct self-evaluations of their compensation practices and eliminate any unlawful wage differentials will only be relieved of liability for liquidated damages and compensatory damages.  They will no longer receive the benefit of an affirmative defense.

Employers should use the time remaining before the January 2023 effective date of the law to bring themselves into compliance.  For more information about the proactive steps that you can take now to prepare for pay equity, please contact Jean Harrington to learn more.

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