As employers grapple with labor shortages, many are turning to increased compensation – salary increases, bonuses and other pay perks – to recruit candidates. Improving wages and other compensation may indeed fill open positions, but employers also must keep in mind the implications for internal pay equity. Pay equity is not only important for workplace culture and fairness, but Oregon requires comparable work to be paid equally, unless the entirety of the compensation differential is based on a bona fide factor related to the position.

What is pay equity?

Prior to the pandemic, recent studies showed a slow but steady narrowing of the difference in pay between men and women. For example, a recent study found that the gender pay gap in the U.S., comparing working women and men overall, had narrowed by 6 cents between 2017 and 2020. In 2017, a typical woman earned 77 cents for every dollar earned by a typical man; in 2020, that amount was 83 cents. The pandemic erased some of that progress, however.

Additionally, a 2019 study found black or African American men have the largest uncontrolled pay gap relative to white men. They earn $0.87 for every dollar a white man earns. Pressure to increase wages, like labor shortages, risks exacerbating these disparities.

What are the legal obligations?

The Oregon Equal Pay Act was signed into law on June 1, 2017 by Gov. Kate Brown. This makes it unlawful for any Oregon employer:

• to discriminate between employees, in wages and other compensation for “work of a comparable character,” on the basis of a protected class;
• to seek or use the salary history of an applicant before an employment and salary offer has been made;
• to screen applicants on the basis of current or past compensation; or
• to determine compensation for a position based on current or past compensation of a prospective employee.

Oregon defines “compensation” broadly to include not only wages, but also salaries, benefits, bonuses, fringe benefits and even equity-based compensation. As discussed below, pay differentials for comparable work must entirely be based on “bona fide factors.” Oregon defines bona fide factors as: 1, a seniority system; 2, a merit system; 3, a system measuring earnings by quantity or quality of production (e.g., piece-rate work); 4, workplace locations; 5, travel (if necessary and regular for employees); 6, education; 7, training; and/or 8, experience.

Steps for Oregon employers

1. Create transparent compensation systems

Employers should ensure they have transparent compensation systems and objective metrics around recruitment, performance, advancement and compensation to help ensure consistency. For example, consider implementing standard pay ranges or guidelines for each position or job classification. Hiring managers and compensation decision-makers must be trained in regard to the compensation system and taught how to properly document decisions. Additionally, they must communicate regularly and honestly with employees about metrics and progress in order to build trust within the entire organization.

2. Have a verifiable system for pay differences

Any pay differences for positions performing comparable work must be justified if all of the difference is based on a bona fide factor or factors. What this means for employers is that having good systems in place ensures they are legally compliant. In particular, employers will want to review and make any necessary improvements to current seniority, merit or other systems in place to make sure they account for current compensation distinctions between employees who perform work of comparable character. Moreover, the seniority and merit systems should apply across the organization.

3. Update your job descriptions

Another best practice for employers is to keep job descriptions up-to-date to ensure that the work being done and the skills required to do the work are accurately reflected. Oregon law requires equal pay for “work of comparable character.” That is defined as work that requires substantially similar knowledge, skill, effort, responsibility and working conditions in the performance of work, regardless of job description or job title. Making sure a job description accurately reflects the work performed in the role makes it easier for employers to compare which employees are performing comparable work and identify any pay discrepancies.

4. Perform a pay equity analysis

If an employee sues for violation of the pay equity law, the law does provide a partial safe harbor if the employer has performed an equal pay analysis within the past three years. Specifically, the law allows an employer to move for no award of compensatory and punitive damages to the employee. This defense is attractive to many because it should significantly limit the employer’s economic exposure in the event of a lawsuit. However, to qualify for this defense, the employer has to show that the equal pay analysis it performed was reasonable in detail and scope in light of the size of the employer; 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.

With potential for pay equity disparities heightened by today’s post-pandemic environment and compensation increases intended to offset labor shortages, it is more important than ever for employers to implement effective pay equity policies and practices. Furthermore, there are many considerations as to the extent of analysis required to satisfy a pay equity safe harbor defense. With a multitude of factors in play, consultation with legal counsel may be advantageous.

Sarah Hale is a partner at Barran Liebman LLP. She advises and represents employers in a wide array of employment and labor law matters. Contact her at 503-276-2111 or shale@barran.com.

The opinions, beliefs and viewpoints expressed in the preceding commentary are those of the author and do not necessarily reflect the opinions, beliefs and viewpoints of the Daily Journal of Commerce or its editors. Neither the author nor the 91��Ƶ guarantees the accuracy or completeness of any information published herein.

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As the opioid epidemic rages throughout the country, the fallout is increasingly noticeable in the workplace. The U.S. Bureau of Labor Statistics reports a 25 percent increase from 2012 to 2017 in the number of workers fatally overdosing on the job. A stunning 70 percent of employers reported that their businesses have been affected by prescription drug abuse, including absenteeism, positive drug tests, injuries, accidents and overdoses. Yet according to recent national surveys, fewer than one in five companies feel extremely well-prepared to combat the opioid crisis.

In construction and trade industries, the impact has been severe. According to a national survey, the construction industry has the second-highest rate of pain medication and opioid misuse. An estimated 15 percent of construction workers have a substance abuse disorder, compared to the national average of 8.6 percent (according to the National Survey on Drug Use and Health by the National Safety Council). Researchers estimate that in the construction industry, each worker with an untreated substance abuse disorder costs an employer $6,800 per year in excess health care expenses, absenteeism and turnover costs.

Although there is no one-size-fits-all approach to address the crisis, employers should revisit drug policies, drug testing protocols and medical emergency preparedness in order to keep their employees and workplace safe:

1. Build a culture of safety and awareness of prescription drug abuse
Build foundational awareness of safety by proactively training employees. In the context of the opioid crisis, this means educating employees about the harmful impacts of abusing painkillers as well as providing resources to support employees facing addiction issues. Ideally, such training would be incorporated into safety meetings and would disseminate information about the workplace consequences of prescription drug abuse, doctor shopping and alternatives for pain relief. Inform employees that because of the impairing nature of opioids, even “legitimate” uses of opioid medications pose risks to the workplace. Although any communication with employees about medical conditions should be approached with caution due to potential legal issues posed by the Americans with Disabilities Act (ADA) or Health Insurance Portability and Accountability Act (HIPAA), encourage employees to ask their physicians how the use of a prescription may affect their workplace. Offer to provide a job description to facilitate these conversations. Supervisors should also be trained to spot the first signs of drug misuse and withdrawal symptoms. After consulting legal counsel, be sure to use fitness for duty and drug testing where there is objective evidence of impairment and/or use of prescription or other drugs.  Be proactive in bringing safety-related concerns to employees.

2. Adopt strong drug policies
Employers should adapt policies to the opioid crisis by prohibiting the abuse of prescription medication. For example, a policy may stipulate that it is a violation for workers to use, possess, sell, trade or offer for sale alcohol, illegal drugs or intoxicants. Nothing in this provision would address an employee’s abuse of prescription drugs. Working with legal counsel, employers should adopt policies that prohibit the illegal or unauthorized use of prescription drugs; empower employees to consult with their health care provider when taking prescription and over-the-counter medications that could interfere with safe performance of their job duties; and require employees to use appropriate personnel procedures (e.g., call in sick, use leave, request change of duty, notify supervisor) to avoid unsafe workplace practices.

Update drug-testing policies and procedures to include testing for a robust panel of drugs, including opioids. Rethink zero-tolerance policies for positive tests to provide for flexibility based on the circumstances of the test and whether the employee is in a safety-sensitive position. In such instances, employers can require substance abuse counseling and “last chance agreements” before allowing the employee to return to work.

3. Provide health insurance that covers substance abuse and mental health treatment
Now is also the time to re-evaluate company health care coverage and enhance its provision of drug counseling and mental health programs. Employee Assistance Programs (EAPs) can be an effective first step for employees to initiate support for nonmedical prescription drug problems and receive counseling and referral services. EAPs can also monitor employees’ participation in, and compliance with treatment, as well as return-to-work recommendations. Joining an EAP and encouraging employees to use its services confidentially may prevent further drug abuse. Employers should also ensure their health insurance provides necessary tools to deal with opioid addiction by ensuring coverage of at least 30 days of substance abuse treatments. Also consider discussing with the health insurer limits on opioid prescriptions to seven days.

4. Develop an emergency response plan

Many employers in industries with high risks of opioid use and prescription drug abuse are developing emergency response plans to address on-the-job overdose deaths. Surgeon General Jerome Adams has suggested that every employer should have Naloxone on hand and train employees on its use. Naloxone, also called “Narcan,” can very quickly restore normal breathing for a person whose breathing has slowed or stopped because of an overdose of prescription opioids or heroin. In Oregon, anyone can obtain Naloxone directly from a pharmacist. However, employers should provide training to employees and evaluate risks before introducing Naloxone into the workplace.

Despite the resources dedicated to help people struggling with opioid misuse, the epidemic is far from over. It is important for employers to take proactive steps to address opioid use and misuse in the workplace.

Sarah Hale is a partner at Barran Liebman LLP. She advises and represents employers in a wide array of employment and labor law matters. Contact her at 503-276-2111 or shale@barran.com.

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