Oregon Expands Effort to Achieve Equal Pay

This month, Oregon joined a number of other states, including California, Massachusetts, Maryland, and New York by strengthening existing equal pay laws. The new law, the Oregon Equal Pay Act of 2017 (“OEPA”), has three (3) central components:

  • Applying equal pay protections to disparities based on race, color, religion, sex, sexual orientation, national origin, marital status, veteran status, disability or age;
  • Curbing an employer’s ability to obtain or rely upon an applicant’s prior compensation to determine his or her current compensation; and
  • Changing and substantially limiting the defenses available to employers sued for alleged equal pay violations.

The bulk of the OEPA’s substantive provisions is effective January 1, 2019.

Broadening Scope of Equal Pay Protections

The OEPA prohibits disparities in “wages or other compensation” between employees performing work of a “comparable character” based on race, color, religion, sex, sexual orientation, national origin, marital status, veteran status, disability or age. Work is of a “comparable character” if it requires “substantially similar knowledge, skill, effort, responsibility and working conditions [.]” This is a substantial expansion of prior law, which only applied to sex-based pay disparities.

The OEPA also limits an employer’s ability to rely upon prior compensation by:

  • Making it unlawful to seek information about an applicant’s or employee’s compensation history; and
  • Prohibiting employers from screening job applicants or determining compensation based on a prospective employee’s current or past compensation.

However, these pay history restrictions do not apply “during a transfer, move or hire of [an] employee to a new position with the same employer.”

Limited Defenses to Equal Pay Claims

Under prior Oregon law, an employer could defend a sex-based pay disparity by demonstrating that it was based on (a) a seniority or merit system, or (b) good faith factors other than sex.

However, under the OEPA an employer can only pay differential wages for work of a comparable character if the disparity is attributable to “a bona fide factor that is related to the position in question and is based on” one or more of the following:

  • A seniority system;
  • A merit system;
  • A system that measures earnings by quantity or quality of production;
  • Workplace locations;
  • Travel, if travel is necessary and regular for the employee;
  • Education;
  • Training; or
  • Experience.

The employer must also demonstrate that the factor(s) creating the pay disparity account for the entirety of the differential.

Potential Limits on Remedies

In addition to back wages, employees bringing claims under the OEPA may also seek compensatory and punitive damages. However, the law limits remedies against employers that take specified steps to achieve pay equality.

Under the OEPA, a court “shall” disallow an award of compensatory or punitive damages if the employer shows that within three (3) years of the employee bringing the OEPA claim, the employer conducted a good faith equal pay analysis that: (a) was “[r]easonable in detail and scope in light of the size of the employer”; (b) related to the protected class at issue in the action (e.g., sex, age, race, etc.); and (c) “[e]liminated the wage differentials for the plaintiff and [] made reasonable and substantial progress toward eliminating wage differentials for the protected class asserted by the plaintiff.”

What This Means for Employers

Because the bulk of the OEPA changes are not yet effective, now is the time for employers to commence their compliance efforts including:

  • Reviewing job applications to ensure they do not seek prior compensation information;
  • Auditing compensation data to identify protected class-based disparities, if any. If this analysis reveals disparities, employers can avoid or limit future claims and damages by eliminating any identified differentials;
  • Training managers and human resources professionals regarding the permissible considerations when making compensation decisions, and how to document such decisions;
  • Revising employee job descriptions to ensure they reflect the substantive distinctions between positions – i.e., the fact that jobs are not of a “comparable character” is reflected in job descriptions; and
  • Revising employee reviews on which compensation decisions are based to ensure they reflect the considerations that are permissible grounds for a pay disparity under OEPA.
This post was written by Brian K. Morris of Polsinelli PC.

 

Proceed with Caution: Pay Differential Based on Prior Salary Can Be Lawful

pay differentialEqual Pay litigation continues to cause angst for employers doing business in California. In addition to the federal Equal Pay Act, employers operating in California must comply with laws requiring equal pay for men and women for substantially similar work unless a statutory defense applies. The landscape of the equal pay protections is ever-changing, having been recently expanded in California to include not only sex but also race and ethnicity. Additionally, the new amendments to the California Fair Pay Act preclude employers from using prior salary as the sole justification for a pay differential. State and local jurisdictions are also considering and passing more legislation prohibiting prospective employers from even asking applicants about salary history as a way to minimize historical pay disparities.

Despite legislative efforts to curb inquiries into salary history, employers may be feeling more confident after a recent win in Rizo v. Yovino, where the Ninth Circuit confirmed that prior salary can be a “factor other than sex” under the Equal Pay Act for pay differences, provided that the employer shows that prior salary “effectuate[s] some business policy” and the employer uses prior salary “reasonably in light of [its] stated purposes as well as other practices.” However, the employer has the burden of proof on this defense. They also must exercise caution on whether they can inquire about prospective or current employees’ prior salaries depending on the application of local and/or state laws that preclude such an examination. And under California’s amended Fair Pay Act, relying on prior salary history alone to justify a pay differential is prohibited.

In Rizo v. Yovino, a female math consultant for a school district sued the superintendent, claiming a violation of the Equal Pay Act because she was paid less than the other math consultants in the School District, all of whom were male. The superintendent argued that the School District’s pay schedule was based on the previous salaries of the employees, and the difference in pay between Rizo and her male counterparts was based on a factor other than sex. The District Court denied the superintendent’s Motion for Summary Judgment and concluded that “when an employer bases a pay structure ‘exclusively on prior wages,’ any resulting pay differential between men and women is not based on any other factor other than sex.”

On appeal, the Ninth Circuit found that the superintendent offered four business reasons for using a standard pay structure that was based primarily on salary history. Indeed, the superintendent contended the policy to use prior salary (1) was objective; (2) encouraged candidates to seek employment with the County because they would receive a 5% pay increase over current salary; (3) prevented favoritism and ensured consistency in application; and (4) was a judicious use of taxpayer dollars. Upon remand, the superintendent would have the burden of proving the business reasons articulated and that the use of prior salary was reasonable.

Despite this recent ruling in Rizo v. Yovino, employers doing business in California should continue to be vigilant in their compensation practices to ensure that they are not paying employees differently based on sex, race, or ethnicity, or basing the new compensation solely on prior salary. Keeping up to date on the hot issue of whether and how employers can ask about and use prior salary information is critical to compliance.

ARTICLE BY Anne Cherry Barnett & Michele Haydel Gehrke of Polsinelli PC

Puerto Rico Enacts Equal Pay Law, Prohibits Employers from Inquiring about Past Salary History

Puerto Rico Equal PayAlmost two months after signing sweeping employment law reform, Governor Ricardo Rosselló has signed Puerto Rico Act No. 16 of March 8, 2017, known as the “Puerto Rico Equal Pay Act.” Act 16 is effective immediately.

Although modeled after the federal Equal Pay Act, Act 16 goes further, limiting instances in which employers can inquire into an applicant’s salary history, among other key provisions.

Pay Discrimination Prohibition. Like the federal Equal Pay Act, Act 16 establishes a general prohibition of pay discrimination based on sex among employees in jobs that require equal skill, effort, and responsibility, and that are performed under similar working conditions, except where such payment is made pursuant to (i) a seniority system; (ii) a merit system; (iii) a system which measures earnings by quantity or quality of production; or (iv) a differential based on any other factor other than sex.

Past Salary History Inquiries Prohibited. Act 16 prohibits employers from inquiring into an applicant’s past salary history, unless the applicant volunteered such information or a salary was already negotiated with the applicant and set forth in an offer letter, in which case an employer can inquire or confirm salary history.

Pay Transparency. Act 16 forbids employers from prohibiting discussions about salaries among employees or applicants, with certain exceptions for managers or human resources personnel. It also contains an anti-retaliation provision protecting employees who disclose their own salary or discuss salaries with other employees, object to any conduct prohibited by the law, present a claim or complaint, or participate in an investigation under Act 16.

Remedies and “Self-Evaluation Mitigation.” Available remedies for victims of pay discrimination include back pay and an equal amount as a penalty. Double compensatory damages also are available as remedies. The additional back pay penalty can be waived if the employer demonstrates that, in the year prior to the presentation of a salary claim, the employer voluntarily undertook a “self-evaluation” of its compensation practices and made reasonable efforts to eliminate pay disparities based on sex. The self-evaluation or mitigating measures cannot be used as evidence of violation of the law for events that take place within six months after the self-evaluation’s completion or within one year of the self-evaluation if the employer has commenced reasonable and good faith mitigating measures. The Puerto Rico Secretary of Labor is tasked with preparing and distributing uniform guidelines for employer self-evaluations.

The Department of Labor is authorized to prepare interpretive regulations and must commence a statistical study into pay inequality among men and women. The federal EPA and its regulations will be used as reference in interpreting Act 16.

The penalty provisions of Act 16 will not be effective until March 8, 2018, to permit employers to take any mitigating measures.

Jackson Lewis P.C. © 2017

Maryland Expands State Equal Pay Act

Equal PayAlso Broadens Employees’ Right to Discuss Wages

Maryland has now joined New York and several other states that have recently passed legislation expanding state equal pay laws and/or broadening the right of employees to discuss their wages with each other (often called “wage transparency”). The Equal Pay for Equal Work Act of 2016 (“Act”), signed by Governor Hogan on May 19, 2016 and set to take effect October 1, 2016, amends Maryland’s existing Equal Pay law (Md. Code, Labor and Employment, §3-301, et seq.), which applies to employers of any size, in several significant aspects.

First, as to the equal pay provisions, the Act:

  • Extends the protections of the law to differentials based on gender identity as well as sex.

  • Bars discrimination not only by paying less for work at the same establishment of comparable character or on the same operation, but also by ‘providing less favorable employment opportunities.”

  • Defines “providing less favorable employment opportunities” to include assigning or directing an employee into a less favorable career track; failing to provide information about promotions or advancement in the full range of career track offered by the employer; or otherwise limiting or depriving an employee of employment opportunities that would otherwise be available but for the employee’s sex or gender identity

  • Expands the definition of “same establishment” to include any workplace of the same employer located in the same county.

  • Adds a new exception for a system that measures performance based on quality or quantity of production.

  • Explicitly allows an employee to demonstrate that an employer’s reliance on one of the now seven exceptions is a pretext for discrimination.

Second, on the apparent theory that if employees gather more information on wages, employers will be more likely to decrease or eliminate wage disparities, the Act adds an entirely new provision that bars employers from prohibiting any employees from inquiring about, discussing, or disclosing the employee’s wages or those of another employee, or requesting that the employer provide a reason for why the employee’s wages are a condition of employment. It also bars any agreement to waive the employee’s right to disclose or discuss the employee’s wages. In particular, an employer may not take any adverse employment action against an employee for:

  • Inquiring about another employee’s wages;

  • Disclosing the employee’s own wages;

  • Discussing another employee’s wages if those wages have been disclosed voluntarily;

  • Asking the employer to provide a reason of the employee’s wages; or

  • Aiding or encouraging another employee’s exercise of rights under this law.

However, an employer may in a written policy provided to each employee establish reasonable workplace limitations on the time, place and manner for inquiries relating to employee wages, so long as it is consistent with standards adopted by the Commissioner of Labor and Industry and all other state and federal laws. (For example, under the National Labor Relations Act, rules limiting discussions to non-working time have been held valid). For example, a limitation may include prohibiting discussion or disclosure of another employee’s wages without that employee’s prior permission, except where the employee has access to that information as part of the employee’s essential job functions and uses it to respond to a complaint or charge, or in furtherance of an investigation, proceeding, hearing or action under the Act. Violation of such a policy may be a defense for adverse action.

The Act expressly does not, however, require an employee to disclose his or her wages; diminish employees’ rights to negotiate the terms and conditions of their employment, or the rights provided under any other provision of law or collective bargaining agreement; create an obligation on any employer or employee to disclose wages; permit disclosure without written consent of an employer’s proprietary information, trade secret information, or information otherwise subject to a legal privilege or protected by law; or permit disclosure of wage information to a competitor.

These provisions enlarging employee sharing of wage information are similar to rules that have long existed under the National Labor Relations Act for employees other than managers and supervisor, and recently promulgated by Executive Order 13665 (April 8, 2014) as to employees of federal contractors. These rights are now expanded to all Maryland employees.

The Act further expands the remedies for violation of the equal pay provisions to include injunctive relief and creates a cause of action under the disclosure provisions for injunctive relief and both actual damages and an additional equal amount as liquidated damages. Existing law allowing recovery of attorney’s fees and costs apply to both types of claims. Finally, similar to the provisions of federal Title VII law, the Act now extends the statute of limitations to three years after discovery of the act which a lawsuit is based, rather than just three years after the act itself.

Maryland employers should review any rules they have regarding employee discussions about their wages for compliance with the Act’s protections for such discussions.

©2016 Epstein Becker & Green, P.C. All rights reserved.