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Pay Equity
Oregon law has long prohibited employers from discriminating between “the sexes” in the payment of wages for work of comparable character. ORS 652.220

House Bill 2005, enacted by the 2017 Oregon Legislative Assembly, amends the current law as follows:

UNLAWFUL PRACTICES UNDER THE PAY EQUITY LAW

Effective January 1, 2019, the law makes it an unlawful employment practice under ORS chapter 659A (Oregon’s unlawful discrimination statute) for an employer to:
  • In any manner discriminate between ​employees on the basis of an employee’s status as a member of a protected class[1] in the payment of wages or other compensation[2] for work of comparable character;
  • Pay wages or other compensation to any employee at a rate greater than that at which the employer pays wages or other compensation to employees of a protected class for work of comparable character;
  • Screen job applicants based on current or past compensation; 
  • Determine compensation for a position based on current or past compensation of a prospective employee (not including a current employee of the employer during a transfer, move or hire of the employee to a new position with the same employer);
  • Seek the salary history of an applicant or employee from the applicant or employee or a current or former employer of the applicant or employee before the employer makes an offer of employment to the prospective employee that includes an amount of compensation. ORS 652.220(1); ORS 659A[3].

[1] “Protected class” is defined as “a group of persons distinguished by race, color, religion, sex, sexual orientation, national origin, marital status, veteran status, disability or age.” ORS 652.210(5).

[2] “Compensation” is defined to include “wages, salary, bonuses, benefits, fringe benefits and equity-based compensation.”​

[3] Effective October 6, 2017, but not enforced until January 1, 2019.​


SALARY HISTORY
  • Effective October 6, 2017, employers are prohibited from seeking the salary history of an applicant or employee from the applicant or employee or a current or former employer of the applicant or employee before the employer makes an offer of employment to the prospective employee that includes an amount of compensation.
  • BOLI enforcement of this provision will begin January 1, 2019.
  • Alleged violations of this provision are only enforceable by filing a complaint with BOLI through 2023. Effective January 1, 2024, an individual may also elect to bring a civil suit alleging violation of this provision.
PERMITTED CIRCUMSTANCES FOR PAYING EMPLOYEES PERFORMING WORK OF COMPARABLE CHARACTER AT DIFFERENT COMPENSATION LEVELS

The law provides that employers may pay employees for work of comparable character at different compensation levels if all of the difference in compensation levels is based on a bona fide factor that is related to the position and is based on:
  • A seniority system;
  • A merit system;
  • A system that measures earnings by quantity or quality of production, including piece-rate work;
  • Workplace locations;
  • Travel, if travel is necessary and regular for the employee;
  • Education;
  • Training;
  • Experience; or
  • Any combination of these factors, if the combination of factors accounts for the entire compensation differential. ORS 652.220(2); OAR 839-008-0015.
ADDITIONAL PROVISIONS OF THE PAY EQUITY LAW

ORS 652.220(3) currently prohibits employers from discriminating against an employee because the employee has filed a complaint under the law or has testified, is about to testify, or because the employer believes the employee may testify in any investigation or proceedings related to the pay equity law. Effective January 1, 2019, the provisions of this law will extend to complaints filed under ORS chapter 659A (unlawful discrimination statute). In addition, the following provisions have been added to the law:
  • Employers may not reduce the compensation of any employee in order to comply with the law;
  • Amounts owed to an employee because of a failure of an employer to comply with the requirements of the pay equity law are considered “unpaid wages” under the law;
  • Employees who assert violations of the pay equity law may file complaints with the Civil Rights Division of the Bureau of Labor and Industries (BOLI) or a civil action within one year after the occurrence of the unlawful practice;
  • An unlawful compensation practice is deemed to have occurred each time compensation is paid pursuant to a discriminatory compensation decision or other practice;
  • Notices of claim against public bodies (tort claim notices) must be given within 300 days of discovery of the alleged loss or injury;
  • Employers are required to post a notice of the requirements of the law in every establishment where employees work. BOLI is to provide a template that meets the required notice provisions. ORS 652.220(4)-(7); ORS 652.230(5)-(7); 659A.875(7) and (8). 
LEGAL REMEDIES UNDER THE LAW

The law provides that if the commissioner of BOLI issues a final order in favor of a complainant alleging a violation of the pay equity law, the order must require the employer to pay an award of back pay for the lesser of:

The two-year period immediately preceding the filing of the complaint, plus the period of time commencing with the date on which the complaint is filed and ending on the date on which the commissioner issued the order; or
The period of time the complainant was subject to an unlawful wage differential by the employer plus the period of time commencing with the date on which the complaint is filed and ending on the date on which the commissioner issued the order. ORS 659A.870(4).

Courts may award injunctive relief and any other equitable relief that may be appropriate, including back pay, as well as compensatory damages. ORS 659A.885(5).

EQUAL-PAY ANALYSES AS DEFENSE IN AWARD OF COMPENSATORY AND PUNITIVE DAMAGES

The amended law provides authority to courts to grant employer motions to disallow awards of compensatory and punitive damages in civil actions alleging violations of the pay equity law if the employer demonstrates by a preponderance of the evidence that the employer:
  • Completed within three years before the date that the employee filed the action, an equal-pay analysis of the employer’s pay practices in good faith that was reasonable in detail and scope in light of the size of the employer and related to the protected class asserted by the plaintiff in the action; and
  • Eliminated the wage differentials for the plaintiff and has made reasonable and substantial progress toward eliminating wage differentials for the protected class asserted by the plaintiff.
If the court grants an employer’s motion to disallow awards of compensatory and punitive damages, the court may award back pay only for the two-year period immediately preceding the filing of the action, and may allow prevailing plaintiff costs and reasonable attorney fees.

Evidence of employer conducting an equal-pay analysis under this law is not admissible in any other proceeding. 

Information that an employer has not completed an equal-pay analysis may not be used as evidence of a violation of the law. ORS 652.235.

FREQUENTLY ASKED QUESTIONS

Q: Which employers must follow this law?

A: All employers with one or more employees performing work in the state of Oregon.

Q: Which employees are protected by this law?

A: All employees who perform work in the state of Oregon. Employees who only work partly in Oregon are not considered employees unless their contract of employment was entered into in Oregon or payments are normally made in Oregon.

Q: May employers still ask job applicants for their preferred salary?

A: Yes. Asking a job applicant for their preferred salary is not prohibited under the law.  

Q: Has an employer automatically violated the law if an applicant discloses salary history without being asked?

A: No. However, an employer may not consider salary history even if an applicant voluntarily discloses it. 

Q: May an employer consider the salary history of its own employees during an internal transfer or promotion?

A: Yes. The law specifically allows employers to consider the compensation of current employees during a transfer, move, or hire to a new position with the same employer. 

Q: What is “work of comparable character”?

A: Work of comparable character is work that requires substantially similar knowledge, skill, effort, responsibility, and working conditions in the performance of work, regardless of job description or  job title. 

Q: Are there any scenarios in which some employees performing work of comparable character may be compensated differently than others?

A: Yes. Even if employees are performing work of comparable character, different levels of compensation are permissible if the differences are based entirely on one or more “bona fide factors” that are specifically provided in the law. The bona fide factors that permit employees to be compensated differently for performing work of comparable character are a seniority system, a merit system, a system that measures earning by quantity or quality of production (such as piece-rate), workplace location, travel (if regular and necessary for the employee), education, training, and/or experience. The entire compensation differential must be based on one or more of these factors. Any system used to justify a compensation differential must be a devised coherent, consistent, verifiable and reasonable method that was in use at the time of the alleged violation. 

Q: Are employees covered by a collective bargaining agreement exempt from the requirements of this law?

A: No. The law does not provide an exemption for collective bargaining agreements.  

Q: What should an employer do if a job applicant discloses a competing job offer during the hiring process? May an employer offer a higher salary to meet the competing offer?

A: An employer may match a competing job offer during the hiring process so long as any difference in compensation between employees performing work of comparable character is not on the basis of a protected class and can be justified by one or more of the bona fide factors provided by law.

Q: Are employers allowed to increase the salary of a current employee with a competing job offer without increasing the salaries of all employees performing work of comparable character?

A: Yes, so long as the increase does not result in a difference in wages or other compensation for work of comparable character between employees on the basis of a protected class or is justified by one or more of the bona fide factors provided by law. 

Q: What is included in determining an employee’s “compensation” under the pay equity law?

A: Compensation includes wages, salary, bonuses, benefits, fringe benefits, and equity-based compensation. It does not include tips or reimbursements for any actual costs incurred by the employee, such as mileage, out-of-pocket expenses, or relocation reimbursements. 

Q: Must an employer take the different tiers of Public Employee Retirement System (PERS) benefits into consideration when calculating employees’ compensation?

A: No. Only benefits provided to employees beyond what is required by law are required to be included as part of an employee’s compensation under the pay equity law. Since PERS benefits are dictated by Oregon law, the varying benefits provided for different tiers of PERS-covered employees do not need to be factored in employees’ total compensation. 

Q: May employers still give bonuses to individual employees (such as sign-on, retention, attendance and performance)?

A: Yes. Employers may still give employees bonuses, so long as they are available to all employees performing work of comparable character on an equal, non-discriminatory basis. While the provision of employee bonuses are not prohibited under this law, the opportunity to obtain a bonus must be included as part of an employee’s total “compensation.” 

Q: Are shift differentials based on work performed on weekends/holidays/time of day/etc., allowed under this law?

A: Yes. The hours an employee works, including time of day or day of the week, may differentiate employees’ work enough to be considered a bona fide factor justifying paying employees performing work of comparable character at different compensation levels.  

Q: May employers still provide different pay, benefits, etc., for temporary employees?

A: Maybe. If temporary employees can be differentiated from permanent employees through either bona fide factors or by determining they are not performing work of comparable character as compared to permanent employees, they may be compensated at a different level. 

Q: May employers provide different benefits to employees who insure their spouses or dependents from those who only insure themselves?

A: Yes. Employers may provide different benefits if the same benefit options are offered to all employees performing work of comparable character. If an employee is offered a benefit but declines it, the declined benefit may be considered as part of the employee’s total compensation. 

Q: What is an equal-pay analysis?

A: An equal-pay analysis is an evaluation process to assess and correct wage disparities among employees who perform work of comparable character. Equal-pay analyses also may be used as an affirmative defense for employers in civil actions ONLY to disallow an award of compensatory and punitive damages by a court. If an employer demonstrates by a preponderance of evidence that within three years of an employee’s claim the employer has, in good faith, completed an equal-pay analysis that was reasonable in detail and in scope in light of the size of the employer and related to the protected class asserted by the plaintiff in the action, the court must disallow compensatory and punitive damages if the employer has also  eliminated the wage differentials for the plaintiff and has made reasonable and substantial progress toward eliminating wage differentials for the protected class asserted by the plaintiff. An equal-pay analysis is not admissible as evidence for a BOLI complaint or in any forum other than civil court. 

Q. How should an employer conduct an equal-pay analysis?

A: One way to approach an equal-pay analysis is to first determine which employees are performing work of comparable character. This is based on actual job duties performed, not titles or job descriptions. If an employer is unsure of an employee’s job duties, that information should be collected from the employee. Once employees have been categorized based on work of comparable character, employers should look for any compensation discrepancies between employees within those groups. For employees who are compensated differently than other employees performing work of comparable character, the employer should determine if the differences are justified by any bona fide factors provided by law. If the difference is not linked to any bona fide factors, the lower paid employees’ compensation must be adjusted to match that of equivalent employees. Any discrepancy between employees performing work of comparable character that is not based on a bona fide factor gives that employee a cause of action to file a complaint with BOLI or in civil court under this law, if based on a protected class. 

Q: Must an employer ask employees to provide information on their protected classes in order to conduct an equal-pay analysis?

A: No. Eliciting protected class information is not a necessary component of conducting an equal-pay analysis. If an employer chooses to collect that information from its employees, great care should be taken with the data that is collected to ensure that it is not the basis for any future discrimination claims. Employees should not be required to provide information that identifies their protected class status other than on an anonymous or voluntary basis.

Q: Are there resources available that an employer may use to assist with conducting an equal-pay analysis?

A: BOLI is aware that a number of sources have provided methodologies or templates for comparing the compensation of employees in one or more protected classes. Given the variety of protected classes and the difficulties of ascertaining protected class membership the agency cannot endorse any particular pay-equity analysis tool. Instead, BOLI encourages employers to focus on establishing which employees are performing work of a comparable character and then rectifying any pay discrepancies (not accounted for by bona fide factors in the law) without regard to protected class membership.

Q: After performing an equal-pay analysis, may an employer lower the salary of an employee that is discovered to be compensated at too high a level?

A: No. An employee’s compensation may not be reduced in order to comply with the requirements of the pay equity law. However, freezing or red-circling a salary until other employees are brought to a higher level is not considered to be a reduction. 

Q: If a new hire negotiates a higher starting salary or better benefits, must an employer match that compensation for all employees performing work of comparable character?

A: Yes, unless the higher compensation is justified by one or more bona fide factors provided by law. 

Q: May an employer award extra days off to an employee in recognition of productivity, going above and beyond, participation in employer events, etc.?

A: Yes, so long as the extra days off are awarded based on one of the bona fide factors provided in the law, such as merit or productivity. 

November, 2018

DISCLAIMER 
Nothing on this website is intended as legal advice.  Any responses to specific questions are based on the facts as we understand them, and not intended to apply to any other situations.  This communication is not an agency order.  If you need legal advice, please consult an attorney.  We attempt to update the information on this website as soon as practicable following changes or developments in the laws and rules affecting Oregon employers, but we make no warranties or representations, express or implied, about whether the information provided is current.  We urge you to check the applicable statutes and administrative rules yourself and to consult with legal counsel prior to taking action that may invoke employee rights or employer responsibilities or omitting to act when required by law to act.
 
TECHNICAL ASSISTANCE FOR EMPLOYERS
800 NE OREGON STREET, STE 1045
PORTLAND, OR  97232
971-673-0824
 
 
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