Vigilant Blog

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Jun 08, 2017

OREGON: Equal pay act restricts wage history use & expands employer liability

Wage and Hour 

On June 1, 2017 Governor Kate Brown signed HB 2005, Oregon’s groundbreaking pay equity bill. The bill greatly expands the Oregon Equal Pay Act in both the scope of protections for workers and the degree of liability for employers.

As of the 91st day after the legislature adjourns this summer, employers are prohibited from asking applicants or employees for their salary history. The only exception is that employers may verify prior compensation as long as they first make an offer of employment that includes an amount of compensation and they obtain the worker’s written permission. Initially, enforcement will be handled solely through complaints to the Oregon Bureau of Labor and Industries (BOLI). As of January 1, 2024, workers may file a civil lawsuit.
The remainder of the new law takes effect on January 1, 2019. Here are some key points to be aware of:

  • The number of protected classes is expanded to a total of 10: race, color, religion, sex, sexual orientation, national origin, marital status, veteran status, disability, and age. No other state in the nation has such a broad array of protected classes in its equal pay act. A handful of states recently expanded their equal pay acts, but all but California confined the coverage to sex, gender, or gender identity. As we previously reported, effective January 1, 2017, California became the first in the country to expand its equal pay act to include race and ethnicity. Now Oregon is leaping ahead to cover a total of 10 protected classes.
  • Differences in pay between members of a protected class who are employed in work of “comparable character” are illegal unless an employer can justify the entire difference based on a factor that is job-related and based on any combination of the following: a seniority system; a merit system; a system that measures earnings by quantity or quality of production; workplace location; travel (if a necessary and regular requirement); education; training; or experience. This means that even if you can explain 99 percent of any difference in pay based on those legitimate factors, you are still liable for discrimination.
  • Workers have one year to complain of an unlawful pay practice. However, in reality this statute of limitations may extend far longer because if an employer makes a discriminatory pay decision, every subsequent paycheck built on that decision is a fresh violation of the law.
  • Violations of the Oregon Equal Pay Act are not only unlawful practices under the state’s civil rights statutes, but also are the basis for filing a wage claim.
  • Employees may collect back pay for up to the two-year period prior to filing a complaint plus the subsequent period of time it takes for BOLI to issue a final order in favor of the employee.
  • A court may award punitive damages if the employer is a repeat offender or if the employer “has engaged in fraud, acted with malice or acted with willful and wanton misconduct.” There is no cap on the length of time for determining that the employer has previously violated the equal pay law.
  • An employer may ask a court to disallow an award of compensatory and punitive damages if the employer conducted a good faith equal-pay analysis within the three years before the lawsuit was filed. The analysis must be reasonable in detail and scope, and it must relate to the protected class asserted by the worker. Also, the employer must have eliminated the wage differences for the complaining employee and made reasonable and substantial progress toward eliminating those differences for others in that protected class. This affirmative defense is of limited usefulness since employers don’t (and shouldn’t) collect demographic data on most of the protected classes covered by the new law.

Tips: Pay discrimination on the basis of a protected class is already prohibited under Oregon and federal employment law. What’s different about the Oregon Equal Pay Act is that historically it focused purely on pay comparisons of men versus women. Also, unlike Title VII of the Civil Rights Act and corresponding Oregon state law, the Oregon Equal Pay Act is almost a strict liability statute. A worker doesn’t have to prove discriminatory intent for individual claims, and employers cannot defend themselves from adverse impact claims by showing their standards are job-related and consistent with business necessity. Currently if males are paid differently than females who perform comparable work which requires comparable skills, the employer is liable under the Oregon Equal Pay Act unless it can show the difference is due to a nondiscriminatory seniority or merit system or some other difference based in good faith on factors other than sex. The expansions to this strict law will significantly increase employers’ exposure to pay equity claims.

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This website presents general information in nontechnical language. This information is not legal advice. Before applying this information to a specific management decision, consult legal counsel.