On November 19, the Bureau of Labor and Industries (BOLI) published the final rules for Oregon’s Equal Pay Act which will take effect on January 1, 2019. The final rules have relatively few changes from the proposed rules which were published late this summer. Below is a summary of the changes from the proposed rules which we discussed early this fall.
Language regarding seeking and screening job applicants based on compensation was slightly modified, removing language regarding compensation for a current employee.
The proposed rules differentiated between current employees and job applicants. The Act prohibits employers from inquiring about an applicant or employee’s current or past compensation or using it as a basis for determining current compensation or screening applicants. The proposed rules explained that – regardless of how the information is obtained – an applicant’s past or current compensation may not be used to determine:
- An applicant’s suitability for employment to group, sort, or select at any stage of the hiring process; or
- A current employee’s eligibility for an internal transfer, move or hire to a new position with the same employer.
This second bullet point was one of the more interesting things we found in the proposed rules, and while the wording was not completely clear, it appeared to be saying that you must first determine whether a current employee is eligible for an internal promotion/transfer without any regard to current compensation. Current compensation can then be “considered” after eligibility is determined.
The final rules remove references to current employees and only refer to job applicants. Presumably, the intent is that the same rules apply to current employees and external applicants meaning it is an unlawful practice to screen all applicants based on current or past compensation, including using information “however obtained, about a job applicant’s current or past compensation to determine a job applicant’s suitability for employment.”
Importantly, ORS 652.220 (1)(d) states it is also unlawful to “Determine compensation for a position based on current or past compensation of a prospective employee. This paragraph is not intended to prevent an employer from considering the compensation of a current employee of the employer during a transfer, move or hire of the employee to a new position with the same employer.”
Put together, the current or past compensation of current employees must not be used as an initial screening tool, but can be considered after suitability and eligibility is determined. For the new job, the employee will still need to be paid equitably compared to individuals who perform work of a similar character, and disparities can be justified only by the factors outlined in the law. Compensation in an employee’s prior position cannot be used to justify a disparity.
In determining work of a comparable character, two items were added to the examples of “skill.”
Among the various items listed for evaluating similar skill, the final rules added “creativity” and “precision.”
Change in how “necessary and regular travel” is defined for justifying differentiations.
Amongst the bona fide factors for justifying pay differentials for employees performing work of a comparable character is travel. The proposed rules included, “Necessary and regular travel, which does not include normal travel between home and work.” The final rules removed the language “which does not include normal travel between home and work.”
With this language removed, it suggests that normal travel between home and work could be considered as a differentiator under workplace location.
Rules regarding an equal pay analysis and surveying employees.
The proposed rules were not particularly helpful or insightful on conducting an equal pay analysis and the final rules were unchanged defining it as “An evaluation process to assess and correct wage disparities among employees who perform work of a comparable nature.”
However, the proposed rules also included language that stated employers that survey their employees in order to conduct an Equal Pay Analysis have to inform employees of the purpose of the survey and give them the ability to complete the survey without including their name. All of the language regarding Equal Pay Analysis surveys has been removed from the final rules.
Of course conducting these types of surveys present various challenges and we recommend getting guidance before conducting a survey of your employees in order to conduct an Equal Pay Analysis.
We know this can be confusing and overwhelming and January 1 is not that far away. We will explore this more in our Annual Compliance Update and of course, if you’d like assistance making sure you’re in compliance, please give us a call.