Oregon's New Pay Equity Law

by Tyler Malstrom

A. Introduction

Oregon’s new pay equity law[1] prohibits paying members of a protected class different compensation than other employees who perform comparable work unless the pay differential is entirely based on factors in the statute (discussed more below).

B. Timing

Some provisions of the law are already in force. For example, it has now been illegal since October 2017 for Oregon employers to ask potential employees[2] their past pay or salary until after an offer of employment is made.[3] Other provisions of the law will soon be in force. By January 1, 2019, employers are required to post the requirements of the pay equity law. The Bureau of Labor and Industries (BOLI) provides posters employers may use at https://www.oregon.gov/boli/ta/pages/req_post.aspx. Also beginning January 1, 2019, employees can file complaints with BOLI and be awarded up to two years of back pay if they succeed. Beginning in the year 2024, employees can take advantage of a private right of action and also recover compensatory damages, punitive damages, and attorney fees and costs.

C. Pay Equity

Although on its face the law applies to protected classes, every person belongs to a protected class. Unless the employer hires only employees that are all members of the same protected classes—which in itself likely violates anti-discrimination laws—then an equal pay analysis is advisable (described below). Basically, the law requires employers to pay any employees[4] working the same job the same amount, subject to certain adjustments. You can pay employees different amounts when they have different duties or when they meet different criteria that is relevant to the job, such as having additional experience or a degree. However, you must be able to fully account for pay differences among employees performing the same duties by either distinguishing the job (e.g., employees working a different shift or at a different location could be paid differently) or the person.

D. Equal Pay Analysis

Employers can minimize exposure to an equal pay claim by conducting an equal pay analysis and fixing any problems discovered. Performing an equal pay analysis also allows employers to take advantage of a safe harbor provision, which protects businesses from being ordered to pay compensatory and punitive damages for three years after the analysis. Businesses that seek the assistance of an attorney with their equal pay analyses every three years also benefit from the attorney-client privilege protecting communications with counsel from disclosure. There are four basic steps to an equal pay analysis.

1. Determine what employees perform work of a comparable character.

Work of a comparable character is work that requires substantially similar knowledge, skill, effort, responsibility and working conditions, regardless of job descriptions or titles. Employees performing work that is not of a comparable character do not have to be paid the same (e.g., part-time versus full-time).

2. Analyze compensation.

Evaluate whether all employees performing work of a comparable character are compensated equally. For purposes of the pay equity law, compensation includes wages, salary, bonuses, benefits, fringe benefits, and equity-based compensation. It does not include tips or reimbursements for actual costs incurred (such as relocation reimbursement or mileage). All employees do not have to receive the same compensation, but the factors that determine compensation must apply the same to all employees performing work of a comparable character.

3. Apply bona fide factors.

If you are paying people differently for work of a comparable character, then you must be able to justify the entire difference in compensation based on factors detailed in the statute: seniority, merit, a system measuring quality or quantity of work (i.e., piece rate work), work location, travel, education, training, experience, or a combination of these factors.

4. Correct unexplained compensation differences.

Once the previous three steps are complete, equalize any pay differentials. You may not decrease any employee’s compensation, but you may freeze his or her pay if you cannot distinguish the job or the employee enough to justify the additional pay.

E. Conclusion

This article is not meant to cover every aspect of the law, but rather to alert employers to some important provisions. This is not legal advice and it does not create an attorney-client relationship. Each individual’s case is unique and you should consider contacting an attorney who can advise you on your specific situation. As always, feel free to contact us with questions. We would also be happy to assist with your company’s equal pay analyses.

[1] See ORS 652.210 to 652.235, enacted in 2017, and related administrative rules.

[2] You also cannot ask a current or former employer for this information except to verify an amount after an offer of employment including compensation has been provided to the applicant.

[3] The law also does not allow employers to determine compensation for a position based on current or past compensation of a prospective employee whether or not you obtain the information by asking for it or otherwise. However, it is not against the law to ask job applicants what salaries they would like to make.

[4] The statute also applies to family member employees.