By Calvin Gower, Trüpp.
The Oregon Equal Pay Act of 2017 (House Bill 2005) has officially been signed into law with the purpose of reducing unfair pay differences and expanding protections for employees susceptible to discriminatory pay practices. Most provisions will not go into effect until January 1, 2019 to give employers time to analyze and correct pay disparities wherever necessary.
The current equal pay law focuses on ensuring employees are equally compensated for similar work regardless of gender. This bill effectively expands this law to include protections for employees based on any protected class*. It also expands the definition of “compensation” beyond wages and salary to include bonuses, benefits, fringe benefits, and equity-based compensation. When the law goes into effect, the following will be unlawful employment practices:
- Discrimination based on protected class in the payment of wages or other compensation for work of comparable character.
- Payment of wages or other compensation at a greater rate than those of a protected class for work of comparable character.
- Screening of applicants or determination of compensation based on current or past compensation, including requesting salary history information.
Employers may pay at different compensation levels if pay is based on any of the following factors:
- Seniority system
- Merit system
- System measuring earnings by quantity or quality of production
- Workplace locations
The law provides employers an important method for limiting potential damages under this law. Employers who completed an equal pay analysis and take steps to address unfair pay practices up to three years before of an allegation is filed may request that compensatory and punitive damages be excluded, which can be significant.
The law’s provision prohibiting employers from requesting salary history information goes into effect 91 days after 2017 Legislature adjourns, which should be around October 9, 2017. The remainder of the law goes into effect January 1, 2019, giving employers time to evaluate their current pay practices and bring them in line with this new law.
With 2019 less than two years away, employers should strongly consider conducting a compensation study, including assessing their current salary levels and confirming their salary structure meets current market demand, consistent with their compensation strategy. Doing so will:
- Enable employers to assess and correct noncompliance with the pay equity law;
- Limit the cost of any court action under this law, should a complaint be filed in the future; and
- Help ensure the employer can compete for talent now that prior salary cannot be used as a basis for making salary offers.
*Protected class includes race, color, religion, sex, sexual orientation, national origin, marital status, veteran status, disability, or age.