Oregon Updates Equal Pay Law for 2020

Oregon employers looking to evaluate their pay equity picture in 2020 should be aware of a handful of updates to the state’s equal pay law that went into effect on January 1.

Oregon overhauled its law in 2017, expanding its coverage beyond sex-based pay differentials and modifying the standard for comparators whose pay must be equal absent a legitimate business justification.  SB123 makes a handful of small but potentially significant changes:

• Existing law provided that pay differentials can be justified based on a seniority system, merit system, or system that measures earnings by quantity or quality of production. The amendment adds a statutory definition of “system”: “a consistent and verifiable method in use at the time that a violation is alleged.”  Correspondingly, the more onerous definition of “system” that had appeared in OAR 839-008-0015 was repealed.
• Existing law included a limited statutory safe harbor provision (ORS 652.235), which authorizes a motion to disallow compensatory and punitive damages in suits under the state’s equal pay law if an employer has completed a good faith “equal-pay analysis” within three years pre-suit. That provision was revised to require that a qualifying equal-pay analysis include “a review of practices designed to eliminate unlawful wage differentials.”  The revision also requires an employer attempting to avail itself of the safe harbor to show that it has “made reasonable and substantial progress toward eliminating unlawful wage differentials for the employer’s employees.”  The revision eliminates reference to the specific protected class asserted by a particular plaintiff and instead addresses unlawful wage differentials more generally.
• The new law provides that evidence that an employer increased an employee’s pay as a result of conducting an equal-pay analysis may not be considered as an admission of liability in an equal pay case under state law.
• The law authorizes pay differences where an employee performs modified work due to a compensable injury or medical condition, alleviating concerns employers might have had about pay disparities in such circumstances.
• Finally, the amendment expressly addresses unionized workforces, providing that pay differences can be justified if one or more of the enumerated statutory defenses is contained in a collective bargaining agreement. This amendment may represent an effort to address concerns previously expressed by Oregon employers who employ both non-unionized employees and members of unions that bargain for pay rates along with other conditions of work.  But it is unclear what impact it will have given that the amended law continues to require that the pay differences be tied to one of the previously enumerated defenses.

We will continue to monitor developments and amendments in Oregon and report on them here.