Oregon’s new pay history inquiry ban becomes effective on October 6, 2017. This new prohibition, which is part of Oregon’s Equal Pay Act of 2017, restricts employers from obtaining or using pay history of applicants and employees until after making a job offer that includes compensation. This prohibition will radically change the way most Oregon employers recruit and hire. Below are Lane Powell’s best practices for avoiding pay discrimination claims:

  • Revise Handbook Policies. Employers would be wise to revise handbook policies to expressly state that the company prohibits any inquiry into an applicant or employee’s pay history at former jobs. EEO policies should state that the company sets compensation based on bona fide factors related to the position. Under Oregon’s law, bona fide factors mean a seniority system; a merit system; a system measuring earnings by quantity or quality of production; workplace locations; travel if necessary and regular; education; training; experience; or a combination of the same factors that accounts for entire compensation differential.
  • Modify Job Applications and Related Hiring Forms. Traditionally, job applications and/or related new hire packets require candidates to list past employers, positions held and supervisors, along with previous pay. Employers must modify applications and other forms to remove questions tied to pay history.
  • Provide Training to HR and Hiring Managers. Employers should inform all employees involved in the recruitment and hiring process about the prohibition on inquiries related to pay history. This prohibition prevents recruiters and managers from asking applicants, their references and prior employers about pay history.

    The Oregon law contains a limited exception: Once the employer makes a job offer that includes compensation, the employer may confirm pay history if the applicant provides written authorization.

  • Consider Implementing Similar Policies and Practices in Other States. Salary history bans and pay equity laws are sweeping the country. Other states and cities, including Massachusetts, Delaware, Philadelphia, New York City and San Francisco, have already enacted similar pay history bans, and other states (e.g. California, Illinois, New York, New Jersey and Pennsylvania) are in the process of drafting and passing them. Given the shifting legislative tide, employers with multistate workforces should seriously consider amending their policies and practices beyond Oregon.

Potential Exposure for Noncompliance. Employees do not have a private right of action for violations of the pay history inquiry ban until January 1, 2024. In addition, the Oregon Bureau of Labor and Industries (BOLI) has stated that it will not enforce this provision until January 1, 2019. Nevertheless, an employer’s noncompliance with the pay history inquiry ban can be used as evidence to prove alleged pay discrimination in a subsequently filed claim. Accordingly, employers should act now to immediately comply with the Oregon pay history ban.