United States: Oregon's Pay Equity Law: Bureau Of Labor And Industries Issues Permanent Administrative Order And Rules

On November 19, 2018, Oregon's Bureau of Labor and Industries (BOLI) issued its administrative order and rules implementing the Oregon Equal Pay Act of 2017 (the "Pay Equity Law"), which includes restrictions on salary history inquiries, expands existing remedies available to employees, and provides a safe harbor for employers that have voluntarily assessed their pay practices to identify and eliminate discriminatory pay practices.¹ The administrative rules, summarized below, provide guidance on a number of issues arising under the Pay Equity Law, which takes effect on January 1, 2019.

OAR 839-008-0005: Seeking and Screening Job Applicants Based on Compensation

It is an unlawful practice under the Pay Equity Law for an employer or prospective employer to seek salary history information from job applicants, employees, or their current or former employers. The administrative rules further clarify that an applicant may not be screened for a job based on his or her current or past compensation – this includes "using information, however obtained" about the applicant's current or past compensation to determine eligibility for employment. Subsection (3) of the rules, however, provides that an "unsolicited disclosure" of an applicant's current or past compensation will not constitute a violation of the Pay Equity Law so long as the information disclosed "is not considered by [the] employer," in determining the applicant's suitability for the position.

OAR 839-008-0010: Work of a Comparable Character

Under the Pay Equity Law, employers cannot "in any manner discriminate between employees on the basis of a protected class in the payment of wages or other compensation for work of comparable character" (emphasis added). This administrative rule provides detailed guidance regarding considerations related to an employee's (1) knowledge, (2) skills, (3) effort, (4) responsibilities, and (5) working conditions, which must be considered in evaluating whether work is of a "comparable character."

OAR 839-008-0015: Bona Fide Factors

The Pay Equity Law allows employers to compensate employees differently for work of a comparable character if the pay differential is based one or more bona fide factors. OAR 839-008-0015 provides a list of bona fide factors that may be considered in determining the compensation differential between individual employees. As long as one or more of the following bona fide factors account "for the entire compensation differential," an Oregon employer may compensate employees at different levels for work of comparable character: (1) a seniority system; (2) a merit system; (3) a system measuring earnings by quantity or quality of production (e.g., piece-rate work); (4) workplace locations; (5) travel (if necessary and regular for employees); (6) education; (7) training; and/or (8) experience.

OAR 839-008-0020: Determining Benefits as Part of Compensation

An employer may provide different benefits as a part of compensation to employees performing work of comparable character if the same benefits options are offered to all such employees. For example, an employer may provide and pay for a more expensive health care policy which covers an employee and his/her spouse and dependent children, as compared to an employee performing work of comparable character who does not have a spouse or dependent children; the Pay Equity Law is not violated if both employees are provided the same health care options.

This rule also clarifies that the cost of a bona fide benefit offered by the employer, but declined by an employee, may be considered as part of the total amount of compensation paid to the employee.

OAR 839-008-0025: Reductions in Employee Compensation

While the Pay Equity Law makes clear that "an employer may not reduce the compensation level of an employee" in an effort to comply with its provisions, the administrative guidance specifically provides that "red circling, freezing or otherwise holding an employee's compensation constant as other employees come into alignment are not considered reductions in the compensation level for the employee whose compensation is being held constant."

Other Guidance

OAR 839-008-0030 provides posting and notice requirements for the Pay Equity Law. Employers may comply by displaying the poster provided by BOLI. If poster display is not feasible, employers may distribute notice in writing to each employee by regular mail, email, or included with a paycheck; incorporate the written notice into a handbook made available to employees either in print or digitally; or post an electronic copy of the notice in a conspicuous and accessible location.

OAR 839-008-0035 clarifies that an "employer commits an unlawful compensation practice each time an employee is remunerated in violation of ORS 652.220."

In addition to ensuring compliance with the above administrative rules, employers should also consider availing themselves of the Pay Equity Law's voluntary equal-pay analysis safe harbor, which protects employers against potential compensatory and punitive damages if they can show that they conducted a good-faith equal-pay analysis and have made progress toward eliminating wage differentials.

Footnote

1. For more information on Oregon's Pay Equity Law, see Cody Emily Schvaneveldt, Oregon Enacts New Equal Pay Law that Includes Salary History Inquiry Restrictions, Littler ASAP (June 1, 2017).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.