Rhode Island has enacted House Bill 5261A (the Act), which bans salary-history inquiries and adds pay-equity requirements. The law is effective January 1, 2023.

PAY EQUITY:

The Act generally prohibits employers from paying employees at a wage rate less than the rate paid to employees of another race, color, religion, sex, sexual orientation, gender identity or expression, disability, age, or country of ancestral origin for "comparable work." Under the Act, comparable work is defined as work that is substantially similar in skill, effort, and responsibility and is performed under similar working conditions. The Act makes clear that minor differences in skill, effort, or responsibility won't prevent two jobs from being considered comparable.

Exceptions:

Under the Act, wage differentials are permitted if they are based on:

• A merit system;
• A system that measures the quality or quantity of production;
• A seniority system (note: pregnancy-related leave or parental, family, and medical leave cannot reduce an employee's seniority);
• Geographic location, if the areas have different costs of living;
• A reasonable shift differential that is not tied to an employee's protected class;
• Education, training, or experience, if they are job-related and consistent with business necessity;
• Work-related travel, if the travel is regular and a business necessity; or
• Another "bona fide" factor that is not based on a protected class, is job-related and consistent with business necessity. This factor may not apply if an employee can show that their employer refused to adopt an alternative business practice that could have avoided the wage differential.

Restrictions:

The Act also prohibits employers from:

• Using an employee's wage history, by itself, to justify an unlawful wage differential;
• Reducing employees' wages to comply with the Act; or
• Retaliating against an applicant or employee who opposes unlawful practices, files a charge or complaint or participates in an investigation into violations under the Act.

Safe Harbor:

Under the Act, employers may be able to avoid certain liabilities if they show that they've made a good-faith self-evaluation of their pay practices within the previous two years (and prior to the start of legal action) and eliminated any unlawful wage differentials within 90 days of completing the self-evaluation. See the text of the Act for details.

SALARY HISTORY:

Employers are prohibited from:

• Requiring that an applicant's prior wages satisfy minimum or maximum criteria as a condition of their employment; or
• Seeking or relying on an applicant's wage history (from a current or previous employer) when making hiring decisions and deciding what wages to offer the candidate.

Exception:

Employers generally may consider an applicant's wage history after they make an initial offer of employment, provided that the candidate voluntarily provides their wage information and the employer uses that information to support a higher offer.

WAGE RANGE:

Employers must, at the time of hire, when employees move into a new position, or upon an applicant or employee's request, provide the wage range for a position. The Act also prohibits employers from retaliating against or refusing to interview, hire, promote, or employ applicants or employees who ask about a wage range.

Under the Act, a wage range is what an employer anticipates relying on when setting wages for a position, such as an applicable pay scale, a previously set range of wages for a role, the actual range of wages for those in current, equivalent positions, or the budgeted amount for the role.

Pay Transparency:

Under the Act, employers cannot:

• Prohibit an employee from inquiring about, discussing, or disclosing their wages or another employee’s wages;
• Retaliate against an employee who engages in such activities;
• Require employees to enter into a waiver or other agreement that denies an employee the right to disclose or discuss their wages; or
• Prohibit employees from helping or encouraging another employee to exercise their rights under the Act.

Note: Nothing in these restrictions requires an employee to disclose their wages.

EMPLOYER NOTICE:

The Rhode Island Department of Labor and Training will develop a notice that employers will be required to post and regulations that further explain the requirements of the Act. It may also issue further guidance on the wage information employers are required to provide.

COMPLIANCE RECOMMENDATION:

Rhode Island employers should review their pay policies and procedures to ensure compliance with House Bill 5261A. Please contact your dedicated service professional with any questions.