- Which employers must follow this law?
All employers with one or more employees performing work in the state of Oregon.
- Which employees are protected by this law?
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.
- May employers still ask job applicants for their preferred salary?
Yes. Asking a job applicant for their preferred salary is not prohibited under the law.
- Has an employer automatically violated the law if an applicant discloses salary history without being asked?
No. However, an employer may not consider salary history even if an applicant voluntarily discloses it.
- May an employer consider the salary history of its own employees during an internal transfer or promotion?
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.
- What is “work of comparable character”?
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.
- Are there any scenarios in which some employees performing work of comparable character may be compensated differently than others?
Yes, employees performing work of comparable character may be compensated at different levels so long as the differences are based entirely on one or more of the “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 consistent and verifiable method that was in use at the time of the alleged violation.
- Are employees covered by a collective bargaining agreement exempt from the requirements of this law?
No. The law does not provide an exemption for collective bargaining agreements. However, SB 123 (2019) clarified that an employer may pay employees for work of comparable character at different compensation levels on the basis of one or more of the bona fide factors listed just above that are contained in a collective bargaining agreement.
- 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?
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.
- 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?
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 and is based on one or more of the bona fide factors provided by law.
- What is included in determining an employee’s “compensation” under the pay equity law?
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.
- Must an employer take the different tiers of Public Employee Retirement System (PERS) benefits into consideration when calculating employees’ compensation?
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.
- May employers give bonuses to individual employees (such as sign-on, retention, attendance and performance)?
Yes. Employers may give employees bonuses, so long as they are available to all employees performing work of comparable character on an equal, non-discriminatory basis. While providing employee bonuses is not prohibited under this law, the opportunity to obtain a bonus must be included as part of an employee’s total compensation.
The pay equity statute also permits employers to pay employees who perform work of comparable character at different compensation levels if the difference in compensation is accounted for by one or more of the bona fide factors listed in the law.
In practice, moving forward with a difference in pay among workers who do comparable work ought to happen only after:
- Identifying a bona fide factor (education, training, merit, etc) that justifies the reason for the difference and
- Ensuring any other employees performing comparable work are also eligible for the same pay differential.
An employer could choose to offer a hiring bonus based on several of the bona fide factors as well as the final bona fide factor allowing employers to combine the factors.
For example, an employer could pay, say, a $7,000 sign-on bonus to an engineer that has a highly desirable degree like aerospace engineering under the bona fide factor of education. This means that the employer can 1) pay this engineer more than other engineers based on a bona fide factor of education but 2) must give every other engineer with this degree an equivalent increase in compensation if the bonus caused their compensation to be unlawfully unequal.
Likewise, nothing prevents an Oregon employer from offering a signing bonus to match a similar incentive offered by, say, an employer in Washington. A signing bonus could be set at a rate to match or exceed competing offers. Of course, if the bonus creates a pay gap between the new hire and those who would be performing comparable work, the bonus would need to rest on specific bona fide factors that the individual brings to the job such as unique skills, education or experience and it would also need to be available to any current employees who bring the same qualifications.
Employers may offer retention bonuses as part of their seniority plan — assuming they are available to all employees performing comparable work who hit the benchmark for the bonus. A health care provider, for example, could create a policy of paying nurses a one-time retention bonus of, say, 5% on completion of 12 months with the organization under their seniority system. The provider would need to pay this to all nurses performing work of comparable character who complete 12 months with the organization.
Retention bonuses could also be offered in order to keep an employee who is considering departing based on any of the bona fide factors, like education or experience, that would make them worth retaining. Here again an employer would need to ensure that the bonus is available to other employees performing comparable work and who have the same qualifications.
Productivity & Merit Bonuses
Under the bona fide factors of the law, productivity bonuses could be offered under a merit system, a system that measures earnings by quantity or quality of production, and the final bona fide factor, which allows employers to combine the factors. So, if a retailer has a quarterly sales quota and an employee exceeds that quota by a percentage set by the employer, the employer could lawfully allow a productivity bonus. The employer would only need to pay this productivity bonus to employees who surpassed the threshold set by the employer.
Similarly, a hospitality provider could create a policy of paying a merit bonus to staff that receive a 5 out of 5 on their annual performance review; the employer would not need to pay this bonus to those that did not receive 5 out of 5 on their performance review.
- Are shift differentials based on work performed on weekends/holidays/time of day/etc., allowed under this law?
Yes. The hours an employee works, including time of day or day of the week, may differentiate employees’ work enough to be considered not work of comparable character, justifying payment of employees at different compensation levels.
- May employers still provide different pay, benefits, etc., for temporary employees?
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 non-temporary employees, they may be compensated at a different level.
- May employers provide different benefits to employees who insure their spouses or dependents from those who only insure themselves?
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.
- What is an equal-pay analysis?
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 included a review of practices designed to eliminate unlawful wage differentials, the court must disallow compensatory and punitive damages if the employer has also made reasonable and substantial progress toward eliminating wage differentials for the employer’s employees. Evidence of an equal-pay analysis is not admissible in any other proceeding and may not be considered an admission of liability in a civil action alleging a violation of ORS 652.220. Also, evidence that an employer has not conducted an equal-pay analysis may not be used as evidence of a violation of ORS 652.220.
- How should an employer conduct an equal-pay analysis?
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 bona fide factors gives that employee a cause of action to file a complaint with the Bureau of Labor and Industries or in civil court, if based on a protected class.
- 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 included a review of practices designed to eliminate unlawful wage differentials; and
- Has made reasonable and substantial progress toward eliminating unlawful wage differentials for the employer's employees.
If the court grants an employer’s motion to disallow awards of compensatory and punitive damages and the plaintiff prevails on the claim, the court shall order the employer to eliminate the unlawful wage differential for the plaintiff and award back pay or unpaid wages, and may allow the 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.
Evidence that an employer has increased an employee’s pay as a result of conducting an equal-pay analysis may not be considered as an admission of liability in a civil action alleging a violation of ORS 652.220.
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.
- Must an employer ask employees to provide information on their protected classes in order to conduct an equal-pay analysis?
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.
- Are there resources available that an employer may use to assist with conducting an equal-pay analysis?
The Bureau of Labor and Industries 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, employers are encouraged 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.
- 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?
No. An employee’s compensation may not be reduced in order to comply with the requirements of the pay equity law. Freezing or red-circling a salary until other employees are brought to a higher level is not considered to be a reduction. This method may allow employees who are not being compensated equitably to catch up over time, but does not necessarily achieve pay equity in the meantime.
- 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?
Yes, unless the higher compensation is justified by one or more bona fide factors provided by law.
- May an employer award extra days off to an employee in recognition of productivity, going above and beyond, participation in employer events, etc.?
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. Best practices include having defined systems in place to recognize specific bases for differentials. Merely “going above and beyond” may be difficult to quantify.
- Legal remedies under the law
The law provides that if the commissioner of the Bureau of Labor and Industries 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).
- Additional resources on equal pay