Employers: What you need to know about the Equal Pay Act of 2017

What Oregon’s expanded version of the Equal Pay Act of 2017 means for employers

Ater-Wynne: NW Business Litigation

by Stacey Mark

The Oregon legislature recently enacted an expanded Equal Pay Act designed to eliminate discriminatory pay practices based on race, color, religion, sex, sexual orientation (as defined in ORS 174.100), national origin, marital status, veteran status, disability, or age.

Section 2 of the Act (amending ORS 652.220) prohibits discrimination in the payment of compensation based on protected class for work of “comparable character,” defined as work requiring “substantially similar knowledge, skill, effort, responsibility and working conditions in the performance of work, regardless of job description or job title.” To insure that employers do not perpetuate the effect of other employers’ past discriminatory pay practices, the law precludes employers from screening applicants based on current or past compensation, determining compensation for a position based on an applicant’s current or past compensation, or seeking a salary history of an applicant until an offer of employment has been made.

Differentials in pay for work of comparable character are permissible only when they are based solely on one or more of the following factors: (1) a seniority system; (2) a merit system; (3) a system that measures earnings by quantity or quality of production, including piece-rate work; (4) workplace locations; (5) travel, if travel is necessary and regular for the employee; (6) education; (7) training; and (8) experience. Amounts owed to an employee because of the failure of the employer to comply with the Act are defined as “unpaid wages.”

Individuals may address violations of Section 2 by filing a complaint with the Commissioner of BOLI under ORS 659A.820, a civil action under ORS 652.230, or a civil action under 659A.885. Violations of Section 4 of the Act, which makes it unlawful under Chapter 659A to request a salary history of an applicant, may also be addressed under ORS 659A.885. Each of these options affords a prevailing plaintiff a different remedy:

In a private action under ORS 652.230, an individual may recover up to one year of back pay, an equal amount as liquidated damages, attorney fees and costs.
If the individual files an administrative complaint under ORS 652.820, the BOLI Commissioner is empowered to award the lesser of (1) two years’ back pay plus back pay for the period during which the complaint is pending, or (2) pay for the period the individual is subject to an unlawful wage differential plus the period during which the complaint is pending.
Under ORS 659A.885, the remedies available are injunctive and equitable relief, including reinstatement or hiring with or without back pay, up to two years’ back pay, the greater of compensatory damages or $200, attorney fees, and costs. In addition, punitive damages are available if it is shown by clear and convincing evidence that the employer (1) engaged in fraud, acted with malice or with willful and wanton misconduct, or (2) was previously found to have violated ORS 652.220 in a proceeding under ORS 659A.885 or ORS 659A.850. An employer may avoid liability for compensatory and punitive damages by showing that it completed an appropriate equal-pay analysis of its pay practices in good faith that related to plaintiff’s protected class, eliminated the wage differentials for the plaintiff, and made reasonable and substantial progress toward eliminating wage differentials for plaintiff’s protected class. Evidence of such an analysis is not admissible in any other proceeding.
The potential ramifications of Oregon’s Equal Pay Act are significant. An employer’s inability to substantiate a pay differential based exclusively on permissible factors may be sufficient to establish liability without the need to prove discriminatory intent. This means that employers who have never intentionally discriminated, but historically set compensation by relying on salary history or other factors made impermissible under the Act could face monumental financial exposure. Employers may not reduce the compensation of an employee to comply with their obligations under Section 2, so employers who wish to correct the results of past practices will presumably need to raise salaries of all of the employees who were negatively impacted. Also, it is unclear whether a violation of ORS 652.220 may also result in a late payment penalty under Oregon’s final pay law, or whether an individual must elect between the available statutory remedies.

The good news is that employers who want to get ahead of this issue have some time to comply. The prohibition on requesting salary histories of applicants goes into effect 91 days after the end of the current legislative session, but the private right of action to enforce it does not go into effect until January 1, 2024. The rest of the Act’s provisions go into effect on January 1, 2019.

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