The first significant employment bill of the 2017 Legislative session has been passed by both chambers of the Oregon Legislature and is headed to the Governor who has publicly announced that she will sign the bill into law. House Bill 2005 (2017), known as the Oregon Equal Pay Act of 2017, was introduced to reduce pay disparities and expand protections for employees who are subject to discriminatory pay practices.

The current equal pay provision, ORS 652.220, prohibits discrimination “between the sexes in the payment of wages for work of comparable character, the performance of which requires comparable skills.” HB 2005 expands the protections of the equal pay provision beyond gender to prohibit discrimination on the basis of a “protected class,” defined as “a group of persons distinguished by race, color, religion, sex, sexual orientation, national origin, marital status, veteran status, disability or age.” It also expands the law to apply to compensation beyond just payment of wages or salary to include bonuses, benefits, fringe benefits and equity-based compensation.

HB 2005 makes it an unlawful employment practice to discriminate on the basis of a protected class in the payment of wages and other compensation for work of comparable character; to pay wages or other compensation to any employee at a rate greater than that which the employer pays to employees of a protected class for work of a comparable character; to screen job applicants based on current or past compensation; or to determine compensation based on current or past compensation of a prospective employee. There is no specific carve-out for differences in compensation based on a collective bargaining agreement. The bill does provide for exceptions for different compensation levels if the difference is based on a bona fide factor that is related to the position in question and is based 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 factors if the combination of factors accounts for the entire compensation differential.

The bill also makes it an unlawful employment practice for an employer or prospective employer to seek the salary history of an applicant or employee from the applicant or employee or from a current or former employer of the applicant or employee.
 
Violation of the new provisions may be enforced by the Oregon Bureau of Labor and Industries (BOLI) or in an action in civil court. The bill provides that a one-year statute of limitations begins to run each time compensation is paid pursuant to a discriminatory compensation decision or other practice. It also extends the notice period for a claim against a public body under the Oregon Tort Claims Act from 180 to 300 days. Remedies include two years of back pay, compensatory damages, and punitive damages if it is proved by clear and convincing evidence that an employer has engaged in fraud, acted with malice, acted with willful and wanton misconduct or has repeat violations.

The bill also incentivizes employers to proactively examine their own pay practices by limiting the types of recovery that may be awarded if employers have conducted an equal-pay analysis and taken steps to correct pay disparities.  In a civil action alleging violation of the equal pay provision, an employer may file a motion to disallow an award of compensatory and punitive damages. The court shall grant the motion if the employer demonstrates, by a preponderance of the evidence, that the employer completed, within three years before the date of the action, an equal-pay analysis of the employer’s pay practices. The equal-pay analysis must be shown to have been completed in good faith, reasonable in detail and in scope, related to the protected class asserted by the plaintiff in the action, eliminated the wage differentials for the plaintiff and have made reasonable and substantial progress toward eliminating wage differentials.

An employer cannot eliminate wage disparities by reducing the compensation level of an employee. The bill provides that evidence of an equal-pay analysis is inadmissible in any other proceeding and that information that an employer has not completed an equal-pay analysis may not be used as evidence of a violation of the equal pay provision.

Most provisions of the bill do not go into effect until January 1, 2019 in order to give employers time to identify and correct pay disparities.

Here is a summary of the key provisions and their effective dates:
 

Expands equal pay provision of ORS 652.220 to include protections for employees on the basis of a “protected class,” including race, color, religion, sex, sexual orientation, national origin, marital status, veteran status, disability or age.	January 1, 2019
Expands equal pay provision of ORS 652.220 to include compensation beyond wages, to include wages, salary, bonuses, benefits, fringe benefits and equity-based compensation.	January 1, 2019
Makes it an unlawful employment practice: To discriminate on the basis of a protected class in the payment of wages or other compensation for work of comparable character. To pay wages or other compensation to 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. To screen job applicants based on current or past compensation. To determine compensation for a position based on current or past compensation of a prospective employee. This does not apply to internal hiring practices.	January 1, 2019
Provides that employer may pay employees for work of comparable character at different compensation levels if all of the difference in compensation levels is based on a bona fide factor that is related to the position in question and is based 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 factors if the combination of factors accounts for the entire compensation differential.	January 1, 2019
Makes it an unlawful employment practice for a prospective employer to seek salary history of an applicant or employee from the applicant or employee or from a current or former employer of the applicant or employee.	The law takes effect 91 days after 2017 Legislature adjourns, however, the ability to file a civil action for such a violation does not take effect until January 1, 2024
Mandates that employers post a notice of the new requirements in their workplaces.	January 1, 2019
Provides that one-year statute of limitation for claims for violation of equal pay provision begins to run each time compensation is paid pursuant to a discriminatory compensation decision or practice.	January 1, 2019
Extends Oregon Tort Claims Act notice for claims for violation of equal pay provision against a public body from 180 days to 300 days of discovery of the alleged loss or injury.	January 1, 2019
Provides that where BOLI commissioner issues a final order in favor of the employee on an equal pay violation, the commissioner shall require the employer to pay an award of back pay for the lesser of:  two years preceding filing plus time during BOLI complaint proceeding; or period of time the compensation was subject to unlawful wage differential plus time during BOLI complaint proceeding.	January 1, 2019
Provides that in a civil action alleging violation of equal pay provision, a court may award punitive damages if it is proved by clear and convincing evidence that the employer has engaged in fraud, acted with malice, acted with willful and wanton misconduct, or where there is a prior adjudicated finding of an equal pay violation against the employer.	January 1, 2019
Allows the employer to file motion to disallow award of compensatory and punitive damages. Court shall grant if the employer demonstrates by a preponderance of the evidence that the employer completed within three years prior an equal-pay analysis. Evidence of equal pay analysis is inadmissible in any other proceeding. The fact that an employer has not completed an equal-pay analysis may not be used as evidence of violation of equal pay provision.	January 1, 2019

Conclusion

The final version of the bill enjoyed bipartisan support, passing the House and Senate with no opposing votes.  It is likely here to stay. The bill gives employers a significant amount of time to prepare before coming into effect. Employers should begin to examine their pay practices in order to limit liability for possible violations of the equal pay provision and to provide a bar to the recovery of compensatory and punitive damages.