With Oregon’s ever-changing workplace laws, it’s hard to keep up. That’s why Suzi Wear and Luke Reese recorded a webinar to help employers understand Oregon’s pay equity law and avoid violations and lawsuits.
Suzi Wear is the vice president of people development and culture at Xenium, and Luke Reese is an employment law attorney with Garrett Hemann Robertson. If you missed or didn’t have time to watch the full webinar, then here are 12 of the most critical things Reese and Wear strongly suggest employers know and do about Oregon’s pay equity law.
- Review the Basics
On a basic level, Oregon’s pay equity law makes it illegal for an employer to discriminate against an employee in total compensation because of the employee’s race, color, religion, sex, sexual orientation, marital status, veteran status, disability, or age.
- The Law Only Applies to Oregon-Based Employees
In the pay equity law, “employee” means only those employees physically based in Oregon. If an Oregon-based company has employees working exclusively in other states, those employees are not covered by the law.
- Size Doesn’t Matter
The Oregon pay equity law applies to all businesses, regardless of size.
- Some Factors Enable Pay Disparity
It is now impossible for an employee to negotiate a pay raise or higher starting salary without proving that they offer a higher level of experience or expertise. If an employee gets a raise, then all employees with the same comparable characteristics should also get that raise, regardless of who asked for it.
The law allows employers to consider the following factors when differentiating pay:
- An established seniority or merit system
- Quality or quantity of production
- Workplace location
- Travel
- Level of education
- Level of experience
- Additional training
There must be a formal system in place for an employer to pay an employee more because of any one of these factors. According to Oregon’s Bureau of Labor and Industry (BOLI), a “system” is “a coherent, consistent, verifiable and reasonable method.” Employers must establish a method that makes salary and position differentiations clear and within the law.
- Conduct an Immediate Pay Equity Analysis & Make Adjustments
The law requires that all employers conduct a complete pay equity analysis to identify and alleviate discrepancies. They cannot wait for an employee to complain to begin the process, and companies that do nothing or play dumb won’t make it very far and will likely spend a lot of time and money in court.
Conducting a timely and efficient pay equity analysis qualifies a company for safe harbor protections and establishes a level of good faith. To be clear, just because an organization conducts a pay equity analysis it doesn’t mean it isn’t liable if there is a violation; however, it will serve them well if there is a lawsuit.
Employers should consider hiring outside experts to lead and document the analysis. If it’s done quickly and efficiently, before there are employee complaints, then it will be well worth the investment.
- Pay Must Go Up, Not Down
If an employer identifies a discrepancy, then they must correct it by raising pay so that employees paid less make as much as those who paid the most. In other words, it is illegal for an employer to equalize pay by lowering an employee’s compensation; they must now pay up to meet pay equity standards.
- Compensation Means Everything Offered, Not Everything Received
In Oregon’s pay equity law, “compensation” means everything that is offered to an employee, and includes the following benefits:
- Base salary
- Hourly wages
- Bonuses
- Fringe benefits
- Equity grants
- Hiring bonuses
- Any other benefit of monetary value to an employee
Overtime and commissions are not included in the compensation unless there are unique variable pay plans for the same or like positions.
It’s important to understand that the law does not apply to employees who refuse compensation. For example, if an employee refuses medical benefits because their spouse covers them, then that employee waives pay equity protection regarding that benefit. Furthermore, that employee is not entitled to a pay raise or other benefit to compensate for the one that they turned down.
- Update Job Descriptions & Applications
According to the law, an employee’s job title or description isn’t enough to prove that they deserve more or less pay; however, employers should understand how the law defines “work of comparable character” as work that requires “substantially similar knowledge, skill, effort, responsibility, and working conditions.”
With this in mind, employers should use language from the law in job descriptions and performance reports. Although a job description isn’t enough to waive liability, descriptions that align with the law’s guidelines will hold more weight and make the process easier if there are legal complications.
See the end of this post for a link to BOLI’s complete list of pay equity administrative rules and definitions.
- Establish a Clear Compensation Process
With a clearly defined and structured compensation process that aligns with pay equity regulations, there is less room for communication errors and legal issues. This process should include a system for establishing starting pay and a method for adjusting compensation. These pay systems should be documented, use the same language as the equity law, and be the same for all employees. Pay system documents should be available to all employees so that they know exactly where they stand and why.
The compensation philosophy and process is another area where employers may benefit from consulting outside experts.
- Regularly Review Company Compensation Systems
Once in place, employers should regularly review their compensation systems to make sure that they continue to align with pay equity requirements and best support their employees. Companies should also keep up on current pay equity lawsuits to learn from other companies and avoid their mistakes.
- Make Information Transparent & Accessible
In an age when anyone can access compensation information, and employees feel more comfortable talking about pay, employers should embrace this shift by promoting positive and productive communication about compensation. Miscommunication and distrust are significant factors that lead to employee complaints. Employees should feel comfortable asking questions, and employers should provide candid and timely responses.
Transparency isn’t a one-size-fits-all practice, and companies should decide how transparent they want to be about compensation. In general, the more open and inclusive a company can be, the more employees will feel informed and supported; however, a significant shift in transparency could negatively impact a company’s culture. Employers should set goals and then ease into them depending on their current levels of transparency.
When employees trust their employers, they are less likely to question the pay process and will feel more empowered and supported by it. Unless advised by an attorney not to do so, employers should always open and maintain a transparent dialogue with their employees about pay, even when employees are upset or making threats.
Along these lines, employers are required to post materials for employees to see, including Oregon’s Equal Pay poster. The poster is available in English and Spanish. Other required materials and helpful handouts are also available.
- Train Hiring Staff & Managers to Talk About Compensation
All employees involved in employment and compensation decisions should understand and be on board with their company’s level of transparency and pay practices, and they should know what they can and cannot share with others.
For example, although it is illegal to ask an employee for previous salary information, an employer is not in violation of the law if an employee volunteers that information. Employers must be incredibly careful not to ask veiled questions or conduct interviews with a tone that may suggest that they are trying to solicit the information.
Oregon’s pay equity laws are new and require businesses to adopt new compensation practices. By staying in the know and ahead of the game, employers can proactively comply with the latest standards and avoid employee complaints and lawsuits. Considering these 12 things to know and do about Oregon’s pay equity law is a great way to start.
For more details about Oregon’s pay equity law, here are FAQs from Oregon.gov and BOLI. You can also checkout BOLI’s free best practices guides for employers.
If you’d like even more details, you can review BOLI’s most recently published administrative rules and regulations regarding pay equity.