Rhode Island recently reformed its pay equity law in an effort to ensure fairness in compensation for all employees and enhance accountability measures for individuals who have experienced wage discrimination in the workplace.

One key feature of the amended law is legal protection for employers who perform a proactive pay equity audit. The Rhode Island Safe Harbor provision provides employers with the opportunity to proactively address pay equity and avoid or limit wage discrimination liability through a self-evaluation of pay practices. 

While the updates don’t go into effect until January 1, 2023, employers should begin preparing now. Below we have outlined timely information employers need to know about the law, particularly as it relates to the safe harbor.

What is a safe harbor and how does it help employers?

Similar to provisions seen recently in Oregon and Massachusetts, the Rhode Island pay equity law provides a safe harbor from wage discrimination claims if an organization conducts a voluntary self-evaluation, or pay equity audit, of its pay structure and resolves any unlawful pay practices.

This advantage will be available to employers from January 1, 2023 through June 30, 2026. Thereafter, employers who meet the safe harbor requirements will not be liable for liquidated damages, compensatory damages, or other civil penalties, though they may still be responsible for unpaid wages.

How do employers qualify for the safe harbor?

In order to avoid liability for wage differentials, employers must demonstrate due diligence by conducting a good faith self-evaluation within the two years prior to an equal pay lawsuit. Importantly, employers must rectify any unlawful wage disparities identified in the self-evaluation within 90 days.

Employers will be allowed to use their own self-evaluation plan, or use a template issued by the Department of Labor and Training.

The Department of Labor and Training will analyze completed evaluations. It’s worth noting that employers should retain all records relating to evaluations to demonstrate due diligence. If such measures are not taken, the application may not qualify for the safe harbor. 

Why does this matter right now?

While the amendments to Rhode Island’s law don’t take effect for more than a year, the safe harbor is a mechanism for helping employers get ahead. Employers should conduct a pay equity audit now to ensure positions meet equal pay for comparable work requirements.

Other proactive efforts include staff and manager training, recruitment, and updating relevant applications and forms.

A quick look at the Rhode Island Pay Equity Law

At its core, the Rhode Island pay equity law amended by SB S0270 provides protection from pay inequities based on characteristics including race or color, religion, sex, sexual orientation, gender identity or expression, disability, age, or country of ancestral origin for employees performing comparable work. Wage differentials may be permitted based on a limited set of “bona fide factors” consistent with business necessity and not based on an employee’s protected characteristics.

Aside from the safe harbor provision, the legislation includes a salary history ban, preventing employers from seeking the wage history of an applicant or employee or using it to determine pay. Employers will be required to disclose wage ranges for positions when requested by applicants and cannot prevent employees from discussing how much they make with each other nor can they retaliate against employees who engage in communicating wage earnings.

The Department of Labor and Training will handle regulation and enforcement of the law. Violations can cost employers up to $1,000 for a first-time violation, in addition to any other relief owed to an aggrieved party, including back pay, unpaid wages, and damages.

Rhode Island’s amendments are part of a larger movement rippling across the country to bolster pay equity. Efforts at the local and state level set the stage for federal legislation to further close the gap for protected classes in the workplace. The move toward workplace equality has already taken a foothold internationally in countries like Canada and Ireland. Prudent employers are taking advantage of pay equity safe harbor provisions as they prepare for a new era and begin the important work of fostering work environments that center around and value diversity, equity, and inclusion (DEI). 

Our PayParity solution uses pay equity software designed to help your organization identify wage disparities at the intersections of race, gender, age, and disability. Ongoing auditing and monitoring features allow employers to achieve pay equity throughout their entire workforce, and at every intersection.

To learn about how to be proactive and achieve your organization’s DEI goals, download the research report we sponsored, Creating a Culture of Diversity, Equity, and Inclusion, conducted by Harvard Business Review Analytic Services in partnership with SHRM.

Organizations looking to disclose pay equity, diversity, and inclusion data information should do so within an ESG reporting framework. Download our white paper, DEI in ESG Reporting to learn about the different standards you can leverage for sharing your progress.

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