United States: BOLI Issues Final Rules On Oregon's Equal Pay Law

On November 19, 2018, the Oregon Bureau of Labor and Industries (BOLI) issued its final administrative rules relating to the state's Equal Pay Law, which prohibits pay discrimination on the basis of protected class, as well as screening job applicants based on current or past compensation. 

The rules establish definitions for several key words in the law, provide more concrete guidance on how to meet the law's posting requirements, and seek to clarify certain provisions of the law related to screening job applicants based on salary history, determining whether employees perform work of comparable character, establishing bona fide factors that may justify paying employees performing work of comparable character at different compensation levels, explaining benefits as a component of compensation, and "red-circling" or freezing employee compensation in order to bring the pay of employees performing work of comparable character into alignment. Finally, the rules establish that an employer commits an unlawful compensation practice each time an employee is paid in violation of the Equal Pay Law.

Key Takeaways

• Oregon Administrative Rule (OAR) 839-008-0005 provides that the Equal Pay Law's prohibition on screening job applicants based on current or past compensation includes a prohibition on using any information about an applicant's past compensation, regardless of how the information was obtained, to determine a job applicant's suitability or eligibility for employment. However, unsolicited disclosure of a job applicant's past compensation (whether by the applicant or former employer) does not constitute a violation of the law, so long as the information is not considered by the employer making the hiring decision.
• OAR 839-008-0010 expands upon the Equal Pay Law's criteria for evaluating whether employees perform "work of comparable character" and thus should be paid the same absent the existence of one or more bona fide factors justifying any disparity. The rule provides that "work of comparable character" means work requiring substantially similar knowledge, skill, effort, responsibility, and working conditions in the performance of work, regardless of job description or title. BOLI's new rule provides non-exhaustive lists of factors that may be considered in determining whether employees have substantially similar knowledge, skill, effort, responsibility, or working conditions. For example, the rule provides that "skill" considerations "may include, but are not limited to, ability, agility, coordination, creativity, efficiency, experience, or precision."
• OAR 839-008-0015 establishes criteria that may be used to evaluate whether bona fide factors explain pay differentials that would otherwise violate the Equal Pay Law. The law already broadly delineates what constitutes a "bona fide factor" (i.e., a seniority system; a merit system; a system measuring earnings by quantity or quality of production; differing workplace locations, travel, education, training, experience, or any combination of those factors). While the rule seeks to further explain and provide examples of those factors. For example, the rule provides that education considerations "may include, but are not limited to, substantive knowledge acquired through relevant coursework, as well as any completed certificate or degree program." Training considerations "may include, but are not limited to, on-the-job training acquired in current or past positions as well as training acquired through a formal training program." 
• OAR 839-008-0020 seeks to clarify benefits as a component of compensation under the Equal Pay Law. Specifically, the rule provides that (1) employees performing work of comparable character may be provided different benefits so long as the same benefit options are offered to all employees performing work of comparable character; and (2) if an employee declines a benefit, the full cost of the benefit offered to the employee may be used to calculate the total amount of compensation paid to the employee under the Equal Pay Law.
• OAR 839-008-0025 clarifies that "red circling," freezing, or otherwise holding an employee's pay constant as other employees performing work of comparable character are brought into alignment is not considered a reduction in pay for the employee whose pay is frozen.

Questions Remain Unanswered

While the rules clarify some aspects of the Equal Pay Law, many questions remain unanswered for employers. This is particularly true when it comes to performing an equal pay analysis to (1) determine and rectify any pay disparities among comparable employees and (2) take advantage of the law's affirmative defense to compensatory and punitive damages. No guidance is given, for example, as to how to account for the protected classes that are not self-evident or self-reported. And, while the rules provide some information as to what amounts to a "bona fide factor" justifying a pay disparity, the list remains exclusive and vaguely defined at best.

Next Steps for Employers

Oregon employers that have not yet done so may want to perform equal pay analyses of their workforces as soon as possible. While the Equal Pay Law has been in effect since October 2017, employees will be able to bring claims beginning January 1, 2019, which carry the possibility of economic, compensatory, and punitive damages, as well as attorneys' fees. 

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