With so many new and changing COVID-related employment laws, it is easy to lose sight of your less glamorous compensation compliance obligations. For Oregon employers, these obligations arise mostly out of Oregon’s Equal Pay Act (OEPA) that took effect in 2019. Understandably, OEPA compliance can seem like a 2019 concern - a pre-pandemic issue that, like standing in long lines, is an annoying, hazy memory that you want to forget. OEPA compliance, unfortunately, cannot fade into the past. And it, along with an intentional compensation philosophy, are important issues that employers should think through as they work to build a compliant and healthy workplace. Because nothing causes more tension in the workplace than perceived inequities in pay and neither your workforce nor the OEPA will give you grace if you cannot lawfully explain why employees doing the same work are being paid differently.
High level overview of the law:
1. The OEPA prohibits compensation differences between comparable positions unless those differences in pay can be entirely explained by a bona fide factor. Think of the law as a three-part test that asks:
Are the positions the same?
If the positions are the same, are the people in the positions the same?
If yes to one and two, they should be paid the same.
2. Comparable positions are positions that have substantially the same knowledge, skill, effort, responsibility and working conditions.
3. Bona fide factors that explain differences in pay between people in comparable positions are:
System of merit
Experience (outside work experience)
Training
Geographic location
Education
System of seniority (years with the company)
System that measures earnings by quantity or quality of production, including piece rate work.
4. System is defined as a consistent and verifiable method.
5. Compensation includes wages, fringe benefits, bonuses, benefits and equity-based compensation (does not include tips or reimbursement for costs).
6. The OEPA also prohibits employers from asking about, relying on or seeking out salary history from an applicant. Note: you can ask applicants for their desired salary.
OEPA compensation and culture tips:
1. Review your job descriptions to ensure that it is clear from the titles and job duties which positions are comparable and which positions are not comparable. The OEPA only prohibits differences in pay between comparable positions so it is important that your documentation accurately reflects how positions compare to one another. In making updates to your job descriptions, review the comparable position factors so that you are highlighting those duties that reflect effort, responsibility, and skill.
2. Create check lists for new searches and new hires:
For new hires, the checklist should indicate whether there is a comparable position to the new hire and, if there is, what bona fide factors under the OEPA explain differences in pay between the people in those positions. Reminder: you cannot rely on the fact that the market is changing or the person’s negotiations skills to explain differences in pay between comparable positions.
For new search checklists, include OEPA’s prohibitions against reviewing, relying on or asking about salary history so that there is there is a written reminder of these rules every time you do a search.
3. Create a high-level compensation philosophy and process that states your principles in determining compensation broadly and creates a “system” for determining pay differences related to merit, seniority (if applicable) and other OEPA bona fide factors relied upon by your company. Consider getting employee input as you put these principles in place. Communicating about these principles and your compensation process ensures that you have a verifiable “system” in place for purposes of the OEPA but also creates transparency with your workforce, helping build trust and a sense of fairness and ensuring consistent decision making.
If you would like more information on this topic, please contact Jaclyn Rudebeck or Dan Olson at Watkinson Laird Rubenstein, P.C.