On June 1st of this year, Governor Brown signed into law HB 2005 making significant changing to ORS 652.220, the Oregon Equal Pay Act. This new law will be a significant change in how employers in all sectors will need to view compensation. This article will provide an overview of the new law, its effects on employers, and begin to explore how employers can ensure they are compliant. For another view point, reference the article on the same subject by Bullard Law – https://bullardlaw.com/news/alert/%E2%80%8Blegislature-passes-oregon-equal-pay-act-of-2017/
The overarching change to ORS 652.220 was to move the act from simply a “Pay Equity Law based on Gender,” to a law that prohibits discrimination on the basis of a “protected class,” defined as “a group of persons distinguished by race, color, religion, sex, sexual orientation, national origin, marital status, veteran status, disability or age.” HB 2005’s other major change was to expand “equal pay,” to “equal compensation” which includes wages, salary, bonuses, benefits, fringe benefits and equity-based compensation. More specifically, the law makes it illegal to:
- To discriminate on the basis of a protected class in the payment of wages or other compensation for work of comparable character; to 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.
Compliance Concepts: The law allows an employer to defend against an “Equal Compensation” claim with evidence from the analysis of a formal compensation study completed within three years of the claim so long as the claimant’s pay was appropriately adjusted at that time. Many employers currently use comprehensive compensation studies as a means of determining market competitive pay and internal equity. These studies will now be an employer’s affirmative defense against a claim of compensation discrimination. Additionally, the law does not allow an employer to lower the pay of a higher paid employee as a remedy.
- To screen job applicants based on current or past compensation; to determine compensation for a position based on current or past compensation of a prospective employee; or to seek salary history of an applicant. This does not apply to internal hiring practices.
Compliance Concepts: In the recruiting process, many employers tend to rely upon the candidate’s past or current pay as a measure of making an offer. Instead, employers will now need to have established pay or pay ranges for positions of comparable character and rely on the results of a compensation study to understand the competitive market for compensation. They will also need to educate hiring managers to no longer ask questions about prior or past pay.
- Provides that the employer 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 in question 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 factors if the combination of factors accounts for the entire compensation differential.
Compliance Concepts: The law does allow employers to set differing compensation levels, but they are based on specific criteria that must be well defined and defensible. If an employer sets these criteria, they must be based on a formal compensation study, with the ability to prove and defend the decision.
One of the other requirements of the law mandates that employers post a notice of the new requirements in their workplaces where both employees and applicants can see it.
Compliance Concepts: The Oregon Bureau of Labor and Industry (BOLI) has been tasked with enforcement of this law. Like other employment resources, BOLI will make these posters available for employers. The law cites a number of other changes and enforcement parameters, all of which can be found in the above referenced Bullard Law article.
To assist our clients and the business community with the changes brought about by this law, HR Answers plans to hold a series of educational sessions on this subject shortly after the close of the 2017 Legislative session. Stay tuned!