6 Steps to Prepare for Oregon’s Equal Pay Law

Effective January 1, 2019, Oregon’s Equal Pay Law (EPL) expands equal pay protections of ORS 652.220 beyond gender, and makes it an unlawful employment practice (1) to discriminate on the basis of a protected class in compensation; (2) to pay different compensation to any employee of a protected class for “work of comparable character” to others; (3) to screen job applicants based on current or past compensation; or (4) to determine compensation for a position based on current or past compensation of a prospective employee.

The new EPL prohibits employers from asking about a prospective employee’s current or past compensation history, and also expands equal pay protections beyond gender to include race, color, religion, sexual orientation, national origin, marital status, veteran status, disability or age. The law defines “compensation” broadly to include wages, salary, bonuses, benefits, fringe benefits, and equity-based compensation.

An employer may not pay employees differently for work of a comparable character defined as work requiring  “substantially similar knowledge, skill, effort, responsibility, and working conditions in the performance of work, regardless of job description or job title” absent a “bona fide factor.” A “bona fide factor” includes such reasons as a seniority system, merit system, a system that measures earnings by quantity or quality of production, workplace locations, travel (if travel is necessary and regular for the employee), education, training, and experience or any combination thereof. For example, a female doing comparable work of a male may be paid more as she has 5 more years of training in the field and lives in a city with a higher cost of living. 

The Oregon Bureau of Labor and Industries (BOLI) will enforce this law beginning on January 1, 2019. Individuals may bring private civil actions against employers beginning January 1, 2024. In a civil action, a court may award compensatory and punitive damages, unless the employer can demonstrate that it completed an equal-pay analysis within three years before the date that the employee filed the action.

Here are 6 steps employers should take now to prepare:

1. On or before January 1, 2019, post a notice of the requirements of the law in every establishment where employees work. BOLI provides a template that meets the required notice provisions. Download it here in English and here in Spanish.
2. Review and update job applications, postings, and questionnaires. Remove any question that asks for current or past compensation, including salary and benefits. Train interviewers to not ask about current or past compensation during the job application process and if an applicant volunteers that information, disregard it.
3. Avoid compensation differentials. Ensure that job descriptions are current and regularly updated to accurately reflect the qualifications, skills, and duties required for the position. Assess performance review procedures to ensure that the process is applied uniformly and does not tend to favor certain individuals over others absent a bona fide reason. Provide training to managers, supervisors, or others involved in determining compensation. 
4. Conduct an attorney-client privileged equal-pay analysis of your pay practices at least once every 36 months. An “equal-pay analysis” is defined under the law as “an evaluation process to assess and correct wage disparities among employees who perform work of comparable character.” Results of an equal-pay analysis are admissible in court as evidence of good-faith compliance with the law for the next three years. Depending on the size and complexity of your workforce, you may need to work with an outside expert to help perform statistical analysis of your compensation data or you may be able to perform an individualized analysis in-house. In either case, you should ensure that the analysis is performed at the direction of an experienced employment attorney to ensure the analysis and results are protected by the attorney-client privilege. While you may wish to eventually offer the results of such an analysis as an affirmative defense as noted above, if results are adverse, you do not want to have to produce such a study and the privilege protects it. We have a compensation analysis program that we can customize to your unique workforce and situation. Learn more at our free webinar,Conducting a Compensation Analysis: Why Pay Equity Is a Big Issue and What Employers Can Do About It, on October 30, 2018 from 10:00 – 11:00 a.m. (Register here). We also have other resources to recommend for assistance.
5. If compensation differentials exist, determine if any bona fide factor(s) listed above would explain the compensation differential. For example, an employee located in Portland could face a higher cost of living than an employee located in southern Oregon, which could explain a compensation differential. If there are any unjustified disparities, you must raise the affected employee’s compensation to a level comparable to those performing “work of comparable character.” You may not, however, reduce the compensation of any employee in order to comply with the law. This is expressly prohibited.
6. Consider sharing your equal-pay commitment and selected information internally with employees. Being transparent about your efforts to pay workers fairly can boost employee morale, promote transparency, and avoid future claims.