January 2023: Rhode Island’s New Pay Equity Law Goes Into Effect

Update Applicable to:
All employers in the state of Rhode Island.

What happened?
On July 6, 2021, Governor McKee signed the Rhode Island Equity Act into law which amends the Rhode Island Equal Pay Law and places significant new burdens on both large and small businesses.

What are the details?
Effective January 1, 2023, the new Act will prohibit all Rhode Island employers from paying an employee a wage less than the wage rate paid to employees of another race, color, religion, sex, sexual orientation, gender identity/expression, disability, age (40 or over), or country of ancestral origin (“Protected Class”) for performing comparable work.

• “Wages” is defined broadly to include nearly all types of compensation, exclusive of tips and overtime pay.
• “Comparable work” is defined as work that, “as a whole,” requires “substantially similar skill, effort, and responsibility, and is performed under similar working conditions.” Importantly, “minor differences in skill, effort, responsibility” will not prevent two jobs from being considered comparable.

Notably, the Act does permit wage differentials, in limited circumstances, where the employer can demonstrate that the pay disparity is reasonably explained by, or the employer reasonably relied on, one of the following:

• A seniority system (provided, however, that time spent on leave due to a pregnancy-related condition or parental, family, or medical leave does not reduce seniority)
• A merit system
• A system that measures earnings by quantity or quality of production
• Geographic location when the locations correspond with different costs of living
• Reasonable shift differentials
• Education, training, or experience (to the extent such factors are job-related and consistent with a business necessity)
• Work-related travel, if travel is regular and a business necessity
• Any other bonafide job-related factor, consistent with business necessity, other than membership in a protected class

Additional constraints on an employer’s ability to justify a wage disparity include the following:

• Employers may not reduce any of their employees’ wages to comply with the Act
• Employees may not agree to be paid less than the wage rate to which they are entitled under the Act
• Employee wage history cannot be used to justify an unlawful wage differential

Pay Disclosures
The Act also imposes a new obligation on employers to, upon an applicant’s request, provide the “wage range” of a position for which the applicant is applying.  Additionally, upon the request of a current employee, employers must provide the wage range for the employee’s position.

Importantly, even in the absence of any wage range requests, employers must provide current employees with the wage range for their position both (1) at the time of hire and (2) when the employee moves into a new position.

FAQs
Below are some hyperlinks to a FAQ provided by JD Supra, written by Adler Pollock & Sheehan P.C., which contains more info and guidance on the new pay equity.

• May We Consider an Applicant’s Pay History?
• May our Employees Discuss their Pay?
• What are the Penalties for Non-Compliance?
• How Can I Avoid Liability?
  
  

For more information, please see the links below:

New Pay Equity Code

Salary History Ban

Article 1 – Article 2

What do employers need to do?
Employers should review the links provided above, and ensure their payroll policies are in compliance with the law by ensuring that all employees are paid their appropriate salary despite race, color, religion, sex, sexual orientation, gender identity/expression, disability, age (40 or over), or country of ancestral origin (“Protected Class”) for performing comparable work.