The 2017 Oregon Legislative Assembly enacted one of the broadest pay equity laws in the country. House Bill 2005, also known as the Equal Pay Act of 2017, amends Oregon’s existing equal pay statute and makes it applicable to all protected classes, not just gender.
Protected Class. The law defines “protected class” as those distinguished by race, color, religion, sex, sexual orientation, national origin, marital status, veteran status, disability or age. The law makes it an unlawful employment practice to:
- Discriminate on the basis of a protected class in the payment of wages or other compensation; and
- Pay wages or other compensation to any employee at a rate greater than the wages paid to employees of a protected class for work of comparable character.
Permitted Factors for Wage Differences. Employers may pay employees for work of comparable character at different wage levels only if the difference is based on a “bona fide factor” based on one or more of the following:
- Seniority system
- Merit system
- System that measures earnings by quantity or quality of production
- Workplace locations
- Travel, if necessary and regular
- Education
- Training
- Experience
The key to developing a pay structure that complies with the law is to make sure there is an organized and structured procedure for determining pay based on written, pre-determined criteria. Ad hoc decisions and after-the-fact justifications do not qualify as “systems.” Also, a competing job offer is not a basis for pay differential.
Equal-Pay Analysis Can Provide Some Relief. The law also provides employers with a defense against compensatory and punitive damages in a civil action if the employer can show that it completed an equal-pay analysis of its pay practices within three years before the date the employee filed the action.
- The equal-pay analysis must be reasonable in detail and scope in light of the size of the employer, related to the protected class asserted by the employee in the action and eliminated the wage differential for the employee and made reasonable and substantial progress toward eliminating wage differentials for the employee’s protected class.
No Screening Applicants Based on Salary. The law also makes it an unlawful employment practice to:
- Screen job applicants on the basis of current or past compensation.
- Determine compensation based on a prospective employee’s current or past compensation.
Effective Dates. Bureau of Labor and Industries (BOLI) enforcement of the law begins on January 1, 2019. The private right of action for employees becomes operative on January 1, 2024. The prohibition on asking for salary history went into effect on October 6, 2017.
Penalties. The penalties for non-compliance are harsh and include two years’ back pay, liquidated damages (double pay), and attorney fees.
Steps to Take. If you haven’t done so already, employers should immediately update their job applications and counsel interviewers not to ask for an applicant’s salary history. You are permitted to ask an applicant what their minimum salary requirement is, but you may not ask for their current or past salary during the application process.
Employers should also review their compensation procedures now to make sure there are written, systematic, and pre-determined criteria for salary differentials. Merit systems should be organization-specific, and production-based systems should be clear and measurable.
Larger employers may wish to conduct a pay-equity analysis now to make sure there are no existing salary differentials and correct any wage differentials that do not meet the law’s requirements. Employers may not reduce an employee’s compensation in order to comply with the law.
