Several states and cities are passing laws to further bolster the federal Equal Pay Act.
The PayParitySM Post is featuring some of these laws to provide insight into trends in pay equity compliance requirements as more of these laws are considered by states, counties, and municipalities.
In this post, we are looking at Oregon’s Equal Pay Act of 2017
Effective June 2019, Oregon’s Equal Pay Act was amended to clarify the “safe harbor” criteria as well as expand upon wage increases and pay differentials.” The bill and the changes to Oregon’s Equal Pay Act can be viewed here.
In June 2017, Governor Kate Brown signed Oregon Equal Pay Act of 2017 (OEPA) into law. The OEPA takes an aggressive stance on pay equity, including expanding the definition “protected class” under Oregon law and implementing a salary history ban. The OEPA also contains concessions for business, including phasing in elements of the law over time and creating a “safe harbor” for certain employers that conduct a pay equity analysis.
A significant portion of the OEPA’s mandates came into effect on January 1, 2019. However, regulators only issued final rules in November 2018. This means that covered employers (including in the public and private sectors) must move quickly to stay in compliance with theOEPA.
What does the OEPA require?
The OEPA requires equal pay for work of comparable character. Let’s unpack this. Under the OEPA, “equal pay” means compensating employees based on reasons other than protected characteristics, including race, color, religion, sex, sexual orientation, national origin, marital status, veteran status, disability or age. “Work of comparable character” means work that requires similar knowledge, skill, effort, responsibility, and working conditions. In short, to figure out whether two employees are performing work of comparable character, an employer must look at their duties and what is required to perform the duties—not just job titles or descriptions.
Are there any exceptions to the OEPA for legitimate pay differences?
The OEPA lays out a limited set of circumstances where employers can pay employees from separate protected classes differently despite performing work of comparable character. In legalese, these exceptions are called “bona fide factors” if they account for the entire pay differences. The exceptions are:
A seniority system;
A merit system;
A system that measures earnings by quantity or quality of production, including piece-rate work;
Travel, if travel is necessary and regular for the employee;
Any combination of these factors, if the combination of factors accounts for the entire pay difference.
It’s important to note that pay systems should be documented in employment policies and used consistently in order to qualify as bona fide factors.
Senate Bill 123 amended the OEPA regarding wage increases stating “evidence that an employer has increased an employee’s pay as a result of conducting an equal-pay analysis may not be considered as an admission of liability in a civil action alleging a violation.”
Which employers must comply with the OEPA?
All employers, public and private, with at least one employee in Oregon.
What are the penalties for non-compliance?
The OEPA spells out two sets of penalties: administrative and civil.
Administrative penalties: If Oregon’s Bureau of Labor and Industries (“BOLI”) finds an OEPA violation, the penalties consist of up to two years of back pay, plus back pay for the period between filing the complaint and the BOLI order.
Civil penalties: Courts may award back pay of up to one year prior to filing the complaint, attorney fees, witness fees, and liquidated damages in the same amount as the back-pay award. Judges also may impose injunctive (e.g., back to work order), punitive (for punishment/deterrence) and compensatory (e.g., pain and suffering) damages in certain circumstances.
What is considered to be a “safe harbor” under the OEPA if I perform an “equal pay analysis?”
An employer can minimize risk of OEPA liability by conducting an equal pay analysis of its operations within the three years prior to an equal pay lawsuit. Specifically, this “safe harbor” allows employers to avoid compensatory and punitive damages by doing the following:
Conducting a reasonable, good faith evaluation of compensation processes designed to “assess and correct wage disparities among employees who perform work of a comparable character.”
Eliminating the wage disparities for the equal pay plaintiff and demonstrating reasonable and substantial progress toward eliminating wage differentials for the plaintiff’s protected class.
Senate Bill 123 amended the OEPA to specify that in order for an employer to claim safe harbor, it must make “reasonable and substantial progress toward eliminating unlawful wage differentials for its employees.”
The amended OEPA broadens the application of the safe harbor and the possible conclusions following a pay equity audit. The amendment further encourages employers to conduct a pay equity audit.
Organizations that are considering performing a pay equity audit should ensure that they are legally protected. They should consult with counsel and accountants about legally protecting the information documented and generated in an audit. Organizations that don’t feel they have the in-house capability to conduct an equal pay audit should consider the data quality management expertise of the outside experts retained to help conduct the audit. Working with outside vendors with specific expertise in data cleansing and validation will ensure that the results of your pay audit will be accurate. As the saying goes, garbage in, garbage out (“GIGO”)—a meaningful review of pay practices depends on the integrity of your employment data.