Pay equity, diversity and inclusion
Rhode Island’s New Pay Equity Law at a Glance
Rhode Island is joining the wave of pay equity legislation growing across the country with the passage of its Senate Bill S0270.
Effective Jan. 1, 2023, the law aims to ensure fairness in compensation for all employees and offers recourse for workers who have experienced wage discrimination from their employers. Below we have outlined what employers need to know to prepare for the upcoming requirements.
What the law requires of employers
SB S0270 will make it illegal for any employer to “pay any of its 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.”
According to the regulations, “Comparable work” is defined as work that requires significantly similar skill, effort, and responsibility, and is performed under similar working conditions. Employers will need to analyze job descriptions, titles, and types of work to determine comparability across job categories.
The law also states that “wages” encompass most forms of compensation, including employee benefits but excludes tips and overtime pay.
Employers should take note of the exceptions made available for explaining wage differentials. These “bona fide factors” include:
- A seniority system
- A merit system
- A system that measures earnings by quantity or quality of production
- Geographic locations
- Reasonable shift differential
- Education, training, or experience
- Work-related travel
- Other “bona fide factors” consistent with business necessity and not based on an employee’s protected characteristics
Employers can no longer seek wage history or use it to determine pay
Similar to pay equity laws recently passed by other states, SB S0270 includes a salary history ban that prohibits employers from seeking applicant or employee wage history for determining a prospective employee’s earnings. Salary history bans help stop the wage gap from growing by preventing employers from perpetuating low pay for protected class employees.
In addition, organizations must disclose wage ranges for relevant positions when requested by applicants. They also cannot prohibit employees from discussing how much they make with each other – nor can they retaliate against employees who engage in communicating wage earnings. Similar rulings regarding wage range transparency recently passed in Connecticut via HB 6380.
SB S0270 law non-compliance
Employers who violate Rhode Island’s SB S0270 law may be liable for civil penalties that start as high as $1,000 for a first-time violation enforced by the State’s Department of Labor and Training. These penalties are in addition to any other relief to which an aggrieved party may be entitled. Penalties increase for multiple violations. Employees and former employees may file claims against employers for alleged violations to the Department of Labor and Training or in court, and may be eligible to collect back pay, unpaid wages, and damages.
Protection for proactive employers
The bill provides a safe harbor from wage discrimination claims if a company conducts a good faith pay equity audit of its pay structure within two years from a pay discrimination claim. This is a complete defense to “all liability.” Safe harbor provisions that protect proactive employers are cropping up in other state laws’ equity laws, as seen recently in Oregon. To be eligible for this provision, employers must conduct the audit in good faith, with due diligence, and must rectify wage differentials within 90 days from the completion of the self-evaluation.
Rhode Island joins the ranks of many
Rhode Island’s law is part of a movement across the country to combat wage discrimination and move toward a society that values diversity, equity, and inclusion (DEI).
Top labor and employment officials are raising the issue of equal pay head-on. The latest chair of the Equal Employment Opportunity Commission (EEOC), Charlotte A. Burrows, considers pay equity as “front and center,” and the Office of Federal Contract Compliance Programs’ (OFCCP) newest Director, Jenny R. Yang has made closing gender/race pay gaps a top priority. The issue also reached Congress earlier this year, when the Subcommittee on Diversity and Inclusion discussed legislation that would address pay disparities for protected classes in the workplace.
How employers can be proactive and minimize risk
While Rhode Island’s legislation doesn’t go into effect until Jan. 1, 2023, employers can – and should – get ahead by implementing a pay equity policy.
Our PayParity solution has auditing and ongoing monitoring features designed to help your organization stay in compliance and achieve pay equity. To get started, download our white paper, Designing a Successful Pay Equity Program.
If your organization needs assistance achieving its DEI goals, check out our professional consulting services and DEI software, PayParity.