The new year brings a whirlwind of new legislative changes and internal resolutions that employers hope to implement. Although the new year is a great time to focus on new changes, it is equally important to ensure your workplace is keeping up with new trends in “old news.”
The Oregon Equal Pay Act (OEPA) was first effectuated in 2017, setting forth strict standards for compensating employees. A recent uptick in OEPA claims has shown that, despite the legislation’s age, employers are still struggling to implement policies that protect them from potential litigation. As your workplace sets its goals for 2025, consider implementing compensation policies and procedures that minimize risk and prepare you for a successful 2025 and beyond.
An Overview of OEPA
The OEPA prohibits employers from compensating employees who perform “work of a comparable character” differently because of a protected class. There are ten protected classes defined in the OEPA: race, sex, veteran status, disability, age, color, religion, national origin, marital status, and sexual orientation. Given the breadth of these protected classes, the OEPA essentially requires equal pay for all employees who perform work that requires substantially similar knowledge, skill, effort, responsibility, and working conditions in the performance of work, regardless of job description or job title.
Of course, there are exceptions to this rule. Differences in compensation which are based entirely on seniority or merit systems, for example, are acceptable. Other “bona fide factors” for which employers may support differences in pay include education, training, experience, workplace location, necessary and regular travel, or systems for measuring the quantity or quality of production. Any or all of these factors can support a difference in compensation for employees, so long as the difference is based solely on bona fide factors.
It is important to note that compensation covered by the OEPA does not merely include wages and salaries. Bonuses, benefits, fringe benefits, and equity-based compensation are also forms of compensation which will be considered in an equal pay analysis, so employers must ensure they are taking a holistic view in setting and evaluating compensation.
Unfortunately, the case law interpreting the OEPA has been and remains minimal. What little case law exists shows a willingness of the courts to interpret “work of comparable character” in potentially very broad terms, and the exact boundaries of the acceptable bona fide factors are still unknown. Accordingly, it is essential that employers proceed with extreme caution and intention when making decisions about compensation.
New Year, New Policies
Many employers fail to address equal pay concerns until it is too late; the truth of the matter is that in many instances employers do not have documentation to support how compensation was set in sufficient detail, forcing a reliance on ad hoc justifications and witness testimony that adds significant risk to a pay equity claim. Here are some proactive steps you can take to minimize risk:
Draft your job descriptions deliberately. Although differing job descriptions or job titles will often not be sufficient on their own to show that employees perform distinct work, they can be helpful tools for indicating components of a position which warrant additional compensation. Job descriptions should reflect the level of knowledge, skill, and effort required to perform the position as well as detail the level of responsibility and working conditions of the role.
Audit your internal compensation policies. Employers should ensure that their policies for setting compensation rates for both new hires and existing employees consider the OEPA. Some employers may want to consider establishing new policies, such as an equity increase program, to ensure that employees have internal avenues for addressing equal pay concerns.
Consider conducting a pay equity study. Employers who perform an equal pay analysis at least once every three years and who have made reasonable and substantial progress toward eliminating any unlawful wage differentials exposed by that analysis are able to file a motion to disallow compensatory and punitive damages in litigation. Accordingly, employers who choose to conduct an equal pay analysis are decreasing their risk of future pay equity issues arising, as well as the total cost of damages in potential litigation.
Document, document, document. Above all, it is essential that you maintain documentation of all compensation-related decisions. In addition to keeping records of job descriptions and compensation rates, employers should also be careful to document any changes in compensation. For example, it is essential that a change in compensation based on a bona fide factor is documented sufficiently, as any changes in compensation not based solely on bona fide factors may run afoul of OEPA.
Employer Takeaways
It is easy for “old news” to get lost in the shuffle of the new year. But, when it comes to the Oregon Equal Pay Act, it is crucial that employers think and act proactively to ensure that they are adequately equipped to defend against potential claims by employees when the time comes. Employers will be well-served by taking a proactive and holistic approach to their organization-wide compensation practices and developing a defensible set of policies prior to receiving any complaint.
Wilson Jarrell is a partner at Barran Liebman LLP, where he represents employers on a wide range of employment issues. For questions, contact him at 503-276-2181 or wjarrell@barran.com.
Lex Shvartsmann is a law clerk with Barran Liebman LLP, where she partners with attorneys in client trainings, legal research, and the drafting of employment policies and handbooks.
