The Oregon Bureau of Labor and Industries (“BOLI”) recently issued proposed rules implementing the Oregon Equal Pay Law, most provisions of which take effect on January 1, 2019. The full text of the proposed rules is available on the BOLI web site here.
The Equal Pay Law prohibits employers from compensating any employee at a rate greater than that at which the employer pays wages or other compensation to employees of a protected class for work of comparable character.
BOLI’s proposed rules define “work of comparable character” as work that includes “substantially similar knowledge, skill, effort, responsibility and working conditions.” E.g., “knowledge considerations may include, but are not limited to: certifications, licenses and certificates; education; experience; or training.”
Clearly employers may consider a wide range of factors to decide whether work is comparable, but they must be able to point to specific considerations that go to knowledge, skill, effort, responsibility or working conditions.
The proposed rules also contain the caveat that, “minor differences” will not prevent jobs from being comparable.”
Bona fide exception
Employees may be paid differently for comparable work if the difference in pay is based on a “bona fide factor.”
Of particular interest, the rules define how a “merit system” may justify pay differences. The rules would allow a merit system as a bona fide factor if it: “provides for variations in pay based upon employee performance as measured through job-related criteria, for example, a written performance evaluation plan or policy that measures employee performance using a set numerical or other established rating scale, such as from “unsatisfactory” to “exceeds expectations,” and takes employees’ ratings into account in determining employee pay rates.
The implication is that for employers to justify pay differences based on merit, they will need to have a system in place to measure employee performance — and make sure that that those measurements correspond to pay differences and are consistently applied in determining pay rates.
As you know, provisions of the law already in effect asking job applicants about salary history. The proposed rules place further restrictions on employers’ ability to consider salary history. Under the proposed rules, “to screen job applicants based on current or past compensation” will include “using information however obtained, about a job applicant’s current or past compensation.”
The proposed rules also provide that an “unsolicited disclosure of a job applicant’s current or past compensation by a job applicant, employee or a current or former employer of the applicant or employee that is not considered by an employer does not constitute a violation of ORS 659A.355 or ORS 652.220(1)(c).” Notably, the implication is that if an employer considers an unsolicited disclosure, this would constitute a violation.
Individual Acts of Remuneration as Distinct Violations
The proposed rules make it an unlawful practice each time an employer is “remunerated in violation of ORS 652.220.” In other words, this rule provides that each time an employee is paid, this constitutes a distinct violation.
Equal-Pay Analysis Surveys
The law provides a safe harbor defense against awards of compensatory and punitive damages employers who conduct an equal pay analysis within three years before the date that the employee files a civil action. The proposed rules clarify that an employer who surveys employees for an equal pay analysis to elicit protected class information must:
Inform employees of the purpose of the survey and;
Must give employees the means and option to complete the survey without including their name.
Unfortunately, the rules do not shine much light into what steps employers should take to take advantage of the safe harbor provisions. The rules include a definition for the equal pay analysis as “an evaluation process to assess and correct wage disparities among employees who perform work of comparable character.” However, there is no rule to clarify any specific requirements for the process itself, other than the required disclosures to employees.
BOLI is taking public comments on the rules through 9/28/18. If you have any questions or feedback for the agency, you can contact Legislative Director Christine Lewis, or 971-673-0841. If you have any questions regarding how the proposed rules may affect your business, please do not hesitate to contact the attorneys at Sather, Byerly & Holloway with questions.