In Oregon, Employers Await Guidance as New Equal Pay Law’s January 1, 2019 Effective Date Looms

The Oregon Bureau of Labor and Industries (BOLI) has issued proposed regulations interpreting the provisions of the new Oregon Equal Pay Act of 2017, which will become effective January 1, 2019.  Although the prohibition against “seek[ing]” salary history from applicants already is in effect, many of the law’s most significant provisions go into effect on January 1. 

As we explained previously, the Oregon Equal Pay Act’s key provisions include that it:

  • Extends “protected class” beyond sex and gender to also include race, color, religion, sexual orientation, national origin, marital status, veteran status, disability, or age;
  • Defines work of “comparable character” in nearly the same way as the Title VII standard, as requiring “substantially similar knowledge, skill, effort, and responsibility”; and
  • Authorizes pay differentials only if one or more of eight specifically enumerated factors—including include education, training, and experience—if the factor(s) account(s) for the “entire compensation differential.”

The comment period on the proposed regulations closed earlier this month, and final regulations are expected soon.  Among notable provisions, the proposed regulations would:

  • Provide examples of what might constitute the “knowledge, skill, effort, [and] responsibility” to be considered in determining whether two employees perform “substantially similar” work. BOLI opines, for example, that “[r]esponsibility considerations” could include “[a]ccountability, decision-making discretion, or impact of an employee’s exercise of their job functions on the employer’s business.”  “Effort considerations” could include the “[c]omplexity of job tasks performed.”  And “[s]kill considerations” could include “[e]fficiency” or “[e]xperience.”  These definitions underscore the fact-intensive, case-specific inquiry that will be required to determine whether any two individuals truly perform work “of a comparable character” within the meaning of the statute.
  • Clarify that, while an employer cannot reduce any employee’s compensation in order to achieve compliance, “[r]ed circling, freezing, or otherwise holding an employee’s salary constant, as other salary positions come into alignment, are not considered reductions in compensation level for the employee whose wage is being held constant.”
  • Suggest that any “merit system” cited to justify a pay differential should be “a devised coherent, consistent, verifiable and reasonable method that was in use at the time of the alleged violation to identify, measure and apply appropriate variables in an orderly, logical and effective manner.” While this additional regulation would provide some guidance, employers would still be left to grapple with plenty of ambiguity in determining what phrases such as “verifiable and reasonable” and “logical and effective” would mean in this context.

We will continue to monitor the progress of these proposed regulations and any changes incorporated before they become final.  In the meantime, Oregon employers would be well-advised to reach out to experienced counsel about proactive steps to ensure compliance with the new law, including but not limited to the advisability of a privileged internal pay audit.