Oregon recently enacted the Oregon Equal Pay Act of 2017 (H.B. 2005) (the “Act”). The Act broadly expands Oregon’s existing equal pay protections and imposes new restrictions on Oregon employers’ use of salary histories in recruiting employees and setting compensation.

Key Elements of the Act:

Currently, Oregon requires only equal pay between “the sexes.” Under the Act, employers will be prohibited from compensating employees differently on the basis of any “protected class.” Protected class is defined to include race, color, religion, sex, sexual orientation, national origin, marital status, veteran status, disability, and age. Moreover, the Act prohibits discrimination not only in terms of “wages,” but also “other compensation.” Compensation is defined to include “bonuses, benefits, fringe benefits and equity-based compensation.”

The Act also broadens the type of work that will be deemed comparable. Under existing law, Oregon employers are only required to pay employees equally for work that requires “comparable skills.” Now, employers must provide equal compensation for “work of comparable character.” The Act makes clear that whether work is considered of “comparable character” is based on more than merely the skills used to perform that work. Employers must now also take into account the knowledge, effort, responsibility and working conditions required to perform the task. The Act does, however, allow employers to base differences in compensation on “bone fide factor[s] … related to the position” including seniority, merit, or production. However, this exemption applies only if the employer can show that the entire difference in compensation is due to bona fide factors.

The Act applies broadly to any employer that employs one or more employees. It specifies that employers may not reduce an employee’s current compensation to achieve compliance with the Act.

The Act also prohibits employers from seeking current or historical pay information from job applicants or their employers, at least until an offer of employment is extended to the employee that includes compensation terms. However, the Act is clear that employers can consider an existing employee’s compensation “during a transfer, move or hire of the employee to a new position with the same employer.”

The Act will also require employers to post notice of its protections. The Oregon Bureau of Labor and Industries will provide a template that meets the Act’s required notice provisions.

The Act will allow employees to file complaints alleging violations with the Commissioner of the Bureau of Labor and Industries or to bring a private civil cause of action. Remedies for a violation of the Act will include compensatory and punitive damages, as well as attorneys’ fees and costs. Maximum back pay relief provided under the Act is two years from the date the complaint is filed.

Oregon employers may have a partial defense to any action brought under the Act if they can show that they performed a pay equity analysis meeting particular statutory requirements within three years of the filing of the suit. In that instance, the employer can seek to disallow compensatory or punitive damages in any case brought under the Act. Even in that case, however, the employer could still be responsible for up to two years back-pay and attorneys’ fees. In addition, although an employer that successfully defends a claim brought under the Act can recover attorneys’ fees and expert witness fees, such relief is only available if a court determines that the plaintiff had “no objectively reasonable basis” for asserting a claim.

Effective Dates

The provision of the Act prohibiting employers from seeking salary history information takes effect on October 9, 2017. The equal compensation and posting requirement take effect January 1, 2019. The provisions allowing those who believe they have been the subject of a salary history inquiry to file a complaint will not take effect until January 1, 2024.

Key Take Aways

Although certain provisions of the Act do not take effect until 2024, Oregon employers should not ignore the Equal Pay Act. First, as noted above, the salary history inquiry prohibitions go into effect later this year. Employers should make sure that their recruiting and hiring forms are compliant with this requirement and that those involved in the recruiting process are aware of the Act’s prohibitions.

Second, it can take time to discover and correct pay inequities in a workforce. For that reason, Oregon employers should take steps now to assess their compensation practices and should conduct a pay equity audit – both of which should involve counsel to provide a basis to assert privilege over the results.