Several states and cities are passing laws to further bolster the federal Equal Pay Act. In this post, we are looking at Oregon’s Equal Pay Act of 2017.

First introduced in June 2017, the Oregon Equal Pay Act (OEPA) takes an aggressive stance on pay equity. The law expands the definition of “protected class” under Oregon law and includes a salary history ban. The OEPA also contains concessions for business, including phasing in elements of the law over time, and provides a “safe harbor” for certain employers that conduct a pay equity analysis.

A significant portion of the OEPA’s mandates went into effect 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 the OEPA.

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. 

The term, “work of comparable character” is defined as work that requires similar knowledge, skill, effort, responsibility, and working conditions. The Oregon  Bureau  of  Labor  and  Industries  (BOLI)  distills OEPA’s equal pay mandate into three employee protections:

  • Employers must pay you the same amount as other people doing comparable work (including wages, bonuses, benefits, and more)
  • It’s illegal for an employer to pay you less than someone else because of your race, color, religion, sex, sexual orientation, national origin, marital status, veteran status, disability or age
  • An employer can’t give someone a pay cut to make their pay equal with other employees.

In short, to figure out whether employees are performing work of comparable character, and therefore must receive equal pay duties—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:

  1. A seniority system
  2. A merit system
  3. A system that measures earnings by quantity or quality of production, including piece-rate work
  4. Workplace locations
  5. Travel, if travel is necessary and regular for the employee
  6. Education
  7. Training
  8. Experience
  9. 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.

Which employers must comply with the OEPA?

All employers, public and private, with at least one employee in Oregon must comply with the Equal Pay Act.

What are the penalties for non-compliance?

The OEPA spells out two sets of penalties: administrative and civil.

  1. 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.
  2. 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 the OEPA litigation safe harbor?

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:

  1. 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.”
  2. 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.

What should I do now?

There’s more to know about Oregon’s Equal Pay Act and employers with operations in the state should see the requirements as an opportunity to better their business. Download our white paper The Oregon Equal Pay Act to learn more about the law’s requirements, and why your organization would be wise to conduct a proactive pay equity audit to 1.) claim safe harbor from litigation and 2.) get your organization on track with the evolving diversity, pay equity, and inclusion (DEI) landscape.

Organizations that are considering performing a pay equity audit should ensure that they are legally protected. Best practices include consulting with counsel and accountants about legally protecting the information documented and generated in an audit. 

If you feel you don’t have the in-house capability to conduct an equal pay audit, and few organizations do, you should consider the data quality management expertise of Trusaic to help conduct the audit. 

Organizations looking to disclose pay equity, diversity, and inclusion data information should do so within an ESG reporting framework. Download our white paper, DEI in ESG Reporting to learn about the different standards you can leverage for sharing your progress.