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On June 1, Gov. Kate Brown signed into law Oregon’s Equal Pay Act of 2017. The act requires employers to compensate employees based on their current skill, responsibilities, knowledge and working conditions. Specifically, the act prohibits differences in pay because an employee is a woman, a minority or a member of certain other protected classes. It also seeks to disrupt the cycle of pay inequity based on past discriminatory pay practices by prohibiting employers from seeking or using past pay history as a factor in setting compensation.

Equal pay requirements

The Equal Pay Act makes it an unlawful employment practice for an Oregon employer to discriminate between employees on the basis of race, color, religion, gender, sex, sexual orientation, national origin, marital status, veteran status, disability or age in the payment of wages or other compensation for work of comparable character. Work of comparable character means work that requires substantially similar knowledge, skill, effort, responsibility and working conditions (including work environment, hours, time of day, physical surroundings and potential hazards encountered by an employee) in the performance of work, regardless of the job description or job title. Compensation includes wages, salary, bonuses, benefits, fringe benefits and equity-based compensation.

Despite these restrictions, an employer may pay employees for work of comparable character at different compensation levels if the difference in compensation is based entirely on a seniority system, a merit system, a system that measures earnings by quantity or quality of production (including piece-rate work), workplace locations, travel (if travel is necessary and regular for the employee), education, training, experience, or any combination of these factors. However, these factors must account for the entire compensation differential.

Employees who believe they have been discriminated against in violation of these equal pay restrictions will have a private right of action beginning Jan. 1, 2019. Employees may recover up to two years of back pay and may seek additional compensatory and punitive damages.

However, an employer may assert a limited affirmative defense to avoid compensatory and punitive damages. To prevail in the affirmative defense, the employer must prove that, in the three years before the employee files a lawsuit, it completed an equal pay analysis of its pay practices in good faith that was reasonable in detail and scope in light of the size of the employer, related to the protected class asserted by the plaintiff in the lawsuit, and eliminated the wage differentials for the plaintiff and has made reasonable and substantial progress toward eliminating wage differentials for the protected class asserted by the plaintiff. If the employer prevails in asserting the affirmative defense, the employee may only recover back pay for the two-year period immediately preceding the filing of the lawsuit and his or her costs and reasonable attorney fees.

Salary history restrictions

The Equal Pay Act also prohibits employers from screening job applicants based on current or past compensation, to determine compensation for a position based on current or past compensation of a prospective employee, or seek the salary history of an applicant or employee. However, an employer may consider the compensation of a current employee during a transfer, move or hire of the employee to a new position with the same employer. An employer also may confirm prior compensation after the employer makes an offer of employment to a prospective employee that includes an amount of compensation. The restriction on seeking salary history goes into effect on the 91st day after the Legislature adjourns – so by Sept. 9, 2017. BOLI will have authority to enforce this provision and issue civil fines for violations. On Jan. 1, 2024, employees will have their own private right of action if employers seek pay history information.

Both the equal pay requirements and restrictions on relying on salary history apply to all employees who perform work in whole or in part in Oregon. When work is performed by the employee only partly in Oregon, these restrictions apply if there is an employment contract entered into in Oregon or if payment is ordinarily made (or will be made) within Oregon.

Time to act

Employers should immediately cease seeking pay history from applicants so that no inquiries are made about pay history beginning Sept. 1, 2017. Because the rest of the law does not go into effect until Jan. 1, 2019, employers have time to review and adjust current pay practices to comply with the act. Employers should strongly consider performing an equal pay analysis and correcting any practices that are not in compliance with the act. Should an employer find that it needs to make adjustments in compensation for current employees to comply with the act, the employer may not reduce the compensation of a higher-paid employee but instead must increase the compensation of the lower-paid employee.

The Equal Pay Act and practical steps for employers will be specifically addressed at Barran Liebman’s breakfast seminar on July 11. Anthony Kuchulis will discuss this and other key employment laws from Oregon’s 2017 legislative session. Space is limited and people interested in attending should visit www.barran.com to learn more and register.

Amy Angel is a partner at Barran Liebman LLP in Portland. She handles employment litigation in state and federal courts, and provides employers with advice and solutions. Contact her at 503-276-2195 or [email protected].