By: Sarah Pozzi
Because we are now solidly into 2019, employers should already be mindful of Oregon’s new equal pay laws; however, now that implementation of the new laws is well under way, employers may have new questions arising regarding compliance.
As an overview, The Oregon Equal Pay Act changed two important aspects of the existing law on January 1, 2019. First, the Act expanded protections to cover broader classes of persons, and second, it now prohibits employers from either asking about—or even considering—prior salary information in hiring decisions.
The Act was signed into law by Governor Kate Brown in June 2017 and has been implemented since in intervals. Starting October 2017, employers were prohibited from seeking pay history of employment applicants. Beginning January 1, 2019, the Oregon Bureau of Labor and Industries (BOLI) began enforcing this prohibition and may assess civil fines to employers found violating the new rules. Employees will have a private right of action for violations beginning in 2024.
The Act broadens the reach of Oregon’s current prohibitions on employment discrimination from “between the sexes” for comparable work to “protected class[es],” which is statutorily defined as persons “distinguished by race, color, religion, sex, sexual orientation, national origin, marital status, veteran status, disability, or age.” Oregon Equal Pay Act of 2017 sec. 1(5).
Pay disparities are acceptable only if they are founded on a "bona fide factor," including systems based on seniority or merit, quantity or quality of work, or if the pay differences are the result of travel, different workplace locations, education, training or experience. Id. sec. 3(2)(a)-(i). For example, paying employee Y less than paying comparable employee Z could be acceptable if the pay disparity is based on employee Y living in a city with a lower cost of living than employee Z.
Prior Salary Information
Under the Act, requesting—or even considering—an employment applicant’s salary history in a hiring decision is now unlawful. Further, employers are barred from determining a new employee’s compensation based on current or past compensation. Compensation is broadly defined and includes an applicant’s salary or wages, bonuses, benefits, and equity-based compensation.
Consequences & Safe Harbor Provision
An employer found violating these rules is potentially liable for back pay and for compensatory and punitive damages. Moreover, if an employee files a complaint with BOLI and the commissioner issues a final award in favor of the employee, the Commissioner must award back pay for the period the complaint was pending and for the two-year period preceding the complaint or the period the employee was subject to the wage disparity—whichever is shorter. ORS 659A.870(4).
However, the Act provides a safe harbor provision that limits damages for employers who satisfy three conditions. A court is required to grant an employer’s motion proscribing punitive damages and compensatory damages beyond back pay where the employer has demonstrated it (1) completed an internal equal-pay analysis within three years of an employee’s complaint; (2) eliminated the pay difference for the complainant; and (3) made “substantial progress toward eliminating wage differentials for the protected class asserted by the plaintiff.” Oregon Equal Pay Act of 2017 sec. 12(1).
With these changes, employers should continue reviewing their hiring policies and consider completing an internal equal-pay analysis through an audit. Further, if they haven’t already, employers must be sure to change any internal hiring policies or employment applications seeking an applicant’s prior wage information, and train interviewers to not ask about past compensation. Review of these internal policies is the first step toward compliance with Oregon’s new equal pay laws.