Consider an equal-pay analysis under the Oregon Equal Pay Law!
By: Taylor Cothran
Introduction to the Oregon Equal Pay Law (House Bill 2005)
The Oregon Equal Pay Law (House Bill 2005) will go into effect on January 1, 2019 to defend protected classes (gender, sexual orientation, etc.) from pay discrimination. Employee wage claims will inevitably arise as a result of the new law. A formal compensation study will afford companies the opportunity to assess their risk of employee wage claims and provide an affirmative defense against claims of compensation discrimination.
Cogence Group is building a model which will allow us to perform an equal-pay analysis or compensation study. Read on for an introduction to the new law and why your company or client may want to get an early start on this type of analysis.
Unlawful Practices Under the New Law
This new legislation makes it unlawful practice under ORS chapter 659A for employers to do the following:
- Discriminate pay between employees on the basis of a protected class for work of comparable character.
- Pay any employee at a greater rate than employees of a protected class for work of comparable character.
- Screen job applicants based on current or past compensation.
- Determine compensation for a position based on current or past compensation of a prospective employee.
- Seek the salary history of an applicant or employee prior to the employer making an employment offer that includes an amount of compensation.
Protected classes specified in the Equal Pay Law include:
- Sexual orientation
- National origin
- Marital status
- Veteran status
Differing Compensation Levels
If an employer is paying employees differently for work of comparable character, the difference in compensation levels must be based on “a bona fide factor that is in relation to the position in question.” These factors are specified in Section 2 of the Equal Pay Law:
- A seniority system
- A merit system
- A system that measures earnings by quantity or quality of production
- Workplace locations
- Travel, if travel is necessary and regular for the employee
Any combination of the above factors may also be relied upon, provided the “combination of factors accounts for the entire compensation differential.”
Complaints Filed Regarding the New Law
An employer may be required to pay an employee back pay for two years prior to the employee complaint filing date if the employer is found in violation of the new law. After an employee complaint, the court will look for evidence of equal (or justified) pay based on an equal-pay analysis completed within three years of the date the action was filed by the employee.
The equal-pay analysis of the employer’s pay practices must be:
- Completed in good faith,
- Reasonable in both detail and scope based on the size of the employer, and
- Related to the protected class asserted by the plaintiff in the action.
You Should Complete an Equal-Pay Analysis Now
Companies with employees performing standard job functions should seriously consider performing a formal compensation study now. Our model will help identify which employees may be receiving unequal pay. Companies and their counsel can then analyze whether the difference in pay is justified or inequitable.
Here are some of the benefits to performing an equal-pay analysis before January 1, 2019:
- Understand if there is pay inequity within the workforce now and if your company faces potential liability,
- Ability to proactively adjust pay levels to mitigate risk of future inequity claims,
- An equal-pay analysis performed now is admissible in court for the next three years if claims do arise.
The Oregon Equal Pay Law is just around the corner and being prepared will be critical!
If you’d like to discuss whether an equal-pay analysis makes sense for your company, give me a call at 503-467-7904.
For additional information, Barran Liebman has compiled a helpful list of the Top Ten Things Every Employer Should Know about pay equity.