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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.

What Was Your Prior Salary? No Longer Question You Can Ask When Hiring in New York City

Last month, the New York City Council approved legislation that bars employers from asking prospective hires to disclose their past salary. In passing the measure, New York City joins Massachusetts (see our post here), Puerto Rico and the city of Philadelphia in banning the question from job interviews and on applications. (Also see our post here regarding a recent Ninth Circuit decision addressing pay history.) The law, known as Introduction 1253-A, makes it illegal for any employer or employment agency in New York City to ask about an applicant’s salary history, including benefits, or search any publicly available records to obtain any such information. The measure, aimed at tackling pay inequity, is intended to stop perpetuating any discrimination that women or people of color may have faced in the past and to end wage disparities between men and women. A study released earlier this month by the National Partnership for Women & Families, a Washington, DC-based advocacy group, shows that women in New York State earn 89 cents for every dollar that men are paid. The pay gap is wider among minority women, the study found. African American women in New York earn 66 cents for every dollar paid to non-Hispanic white men. Latina women earn 56 cents for every dollar.

The measure only applies to new hires, not to internal job candidates applying for a transfer or promotion given that their salary information may already be on file. It also excludes public employees whose salaries are determined by collective bargaining agreements. There are certain exceptions built into the bill whereby employers can consider salary history, including the hiring of internal candidates for different positions, workers who are covered by a collective bargaining agreement or employees who voluntarily give their salary history during an interview.

New York City Public Advocate Letitia James, who co-sponsored the bill last year, said the primary focus of the bill is to promote greater transparency in the hiring process. Although it doesn’t require employers to do so, James said the bill suggests to businesses that they post salaries for jobs instead of relying on workers’ past salary.

The City’s Commission on Human Rights will investigate and enforce the measure, imposing a civil penalty of no more than $125 for an unintentional violation or up to $250,000 for an intentional malicious violation. Those figures are in line with other forms of discrimination — including race, disability and sexual orientation bias — for which the commission issues fines.

Fatima Goss Graves, president-elect of the National Women’s Law Center, said in an email that the measure “stands to transform the way that companies operate around the country,” she said. “So many companies operate in multiple jurisdictions. If a company changes its practices in New York, it is likely to also make changes around the country.” I think what we’ll see is companies that do business in New York City just eliminate that from their applications entirely,” she said. “This will have wide-ranging influence.” Meanwhile, nearly 20 states, the District of Columbia and two cities (San Francisco and Pittsburgh) have introduced legislation that includes a provision against salary history information, according to data from the NWLC.

The new legislation is expected to go into effect later this year, or 180 days after Mayor de Blasio signs the bill. Employers in New York City need to review their applications and standard job questions to ensure they remove any questions about past salaries.

Los Angeles Enacts ‘Ban the Box’ Legislation

Los Angeles is the latest in a growing list of jurisdictions to adopt an ordinance restricting employers from asking a job applicant about his or her criminal history during the application process also known as “Ban the Box”. Under the Ordinance, private employers with at least 10 employees will be barred from inquiring about a job applicant’s criminal history until a conditional offer of employment has been made.

The “Los Angeles Fair Chance Initiative for Hiring (Ban the Box),” signed by Mayor Eric Garcetti on December 9, 2016, goes into effect on January 22, 2017.

Los Angeles has taken a different approach than San Francisco, the other California city to have adopted a “ban the box” ordinance affecting private employers. For example, the San Francisco ordinance, enacted in 2014, restricts questions about applicants’ criminal records on applications for employment and generally prohibits any type of criminal history inquiry until after the initial job interview. (For details, see our article, San Francisco Enacts ‘Ban the Box’ Law.) The Los Angeles ordinance prohibits employers from inquiring about criminal histories until a conditional job offer has been made.

Applicant

An applicant for employment is broadly construed to include any individual who submits an application or other documentation for employment for work performed in the City, whether for full- or part-time work, contracted work, contingent work, work on commission, temporary or seasonal work, or work through an employment agency. It also includes any form of vocational or educational training, with or without pay.

Employer

An employer is defined as any individual, firm, corporation, partnership, labor organization, group of persons, association, or other organization that is located or doing business in the City and employs at least 10 employees.

The Ordinance does not apply to the City of Los Angeles or another local, state, or federal government unit.

Prohibitions

Under the Ordinance, employers are prohibited specifically from inquiring into or seeking a job applicant’s criminal history before a conditional offer has been made. This broadly precludes employers from:

asking any question on a job application about an applicant’s criminal history;
asking about or requiring disclosure of the applicant’s criminal history during a job interview; or
independently searching the internet for criminal conviction information or running a criminal background check before a conditional offer of employment has been made.

Criminal history is defined as information regarding any felony or misdemeanor conviction from any jurisdiction for which the person was placed on probation, fined, imprisoned, or paroled.

Exceptions

The four common-sense exceptions to the prohibitions are where:

an employer is required by law to run a criminal background check on an applicant to obtain information on an applicant’s conviction;
the job sought requires the possession or use of a gun;
a person who has been convicted of a crime is prohibited by law from holding the position sought; and
an employer is prohibited by law from hiring an applicant who has been convicted of a crime.

Fair Chance Process

If, after a conditional offer of employment has been made, an employer enquires into an applicant’s criminal history and determines the information warrants an adverse action, it must follow a “Fair Chance Process.”

Prior to taking any adverse action against an applicant, the employer must:

perform a “written assessment” that links the specific aspects of the applicant’s criminal history with the risks inherent in the duties of the position sought. In performing the assessment, an employer must “at a minimum,” consider the factors identified by the Equal Employment Opportunity Commission (e.g., conduct an individualized assessment) and follow any rules and regulations that may be issued by the Designated Administrative Agency (“DAA”) responsible for enforcement;
provide the applicant with written notification of the proposed action, a copy of the written assessment, and any other information or documentation supporting the employer’s proposed adverse action;
wait at least five business days after the applicant is informed of the proposed adverse action before taking any adverse action or filling the employment position; and
if the applicant provides the employer with any information or documentation pursuant to the Fair Chance Process, the employer must consider that information and perform a “written reassessment” of the proposed adverse action. If the employer still elects to take the adverse action after such reassessment, it must notify the applicant of the decision and provide the applicant with a copy of the written reassessment.

Employers using a consumer reporting agency to conduct their criminal background checks, should proceed with the Fair Chance Process concurrently with the pre-adverse and adverse action requirements of both federal and state Fair Credit Reporting Act laws.

Recordkeeping, Notice

Employers must retain documents related to applicants’ employment applications and any written assessment and reassessment performed for three years.

The Ordinance’s notice and posting requirements provide that employers must state in all job advertisements and solicitations for employment that they will consider for employment qualified applicants with criminal histories “in a manner consistent with the requirements of this [Ordinance].”

To notify applicants of the Ordinance, an employer must post a notice about the law in a conspicuous place at every workplace, job site, or other City location under the employer’s control and visited by applicants. In addition, a copy of the notice must be sent to the appropriate labor unions.

Retaliation

The Ordinance makes it unlawful for an employer to take any adverse employment action against any employee for complaining to the City about the employer’s compliance or anticipated compliance with the Ordinance, for opposing any practice made unlawful by the Ordinance, for participating in proceedings related to this Ordinance, or for seeking to enforce or assert his or her rights under the Ordinance.

Civil and Administrative Enforcement

The law allows an individual to bring a civil action for violation of the Ordinance. However, as a prerequisite to pursuing a civil action against an employer, the individual first must report an administrative complaint to the DAA (Department of Public Works, Bureau of Contract Administration) within one year of the alleged violation.

Beginning July 1, 2017, the DAA may fine employers up to $500 for the first violation, up to $1,000 for the second, and up to $2,000 for the third and subsequent violations of the law. However, fines for violations of the record-retention and notice and posting requirements are capped at $500 for each violation. Prior to July 1, 2017, the DAA will not issue any monetary penalties. Instead, it will issue written warnings to employers that violate the Ordinance.

A civil lawsuit may be brought against the employer, but only after the alleged violation has been reported to the designated administrative agency and the administrative enforcement process has been completed or a hearing officer’s decision has been rendered, whichever is later. The DAA still needs to establish rules governing the administrative process for investigation and enforcement of alleged violations.

All covered Los Angeles employers should communicate and train their managers who are involved in the hiring process about the Los Angeles Fair Chance Initiative for Hiring (Ban the Box) ordinance and take steps to ensure compliance with its restrictions

ARTICLE BY Jamerson C. Allen, Susan M. Corcoran, Richard Greenberg &Alexandra Gilinsky of Jackson Lewis P.C.

DOJ, FTC Announce New Antitrust Guidance for Recruiting and Hiring; Criminal Enforcement Possible

Many companies—and the HR professionals and other executives who worked for them—have found out the hard way that business-to-business agreements on compensation and recruiting can violate the antitrust laws and bring huge corporate and personal penalties.

Last week, the Federal Trade Commission (FTC) and the Department of Justice Antitrust Division (DOJ) jointly issued antitrust guidance for anyone who deals with recruiting and compensation. The guidance is written for HR professionals, not antitrust experts. It avoids jargon and applies antitrust basics in plain English. It expands on those basics by providing short and direct answers to real-life questions.

The guidance comes in the wake of several actions in recent years by the federal antitrust agencies against so-called “no-poaching” or “wage-fixing” agreements entered by companies competing for the same talent. It announces that DOJ will prosecute criminally some antitrust violations in this space. While the new guidance is explicitly aimed at HR professionals, senior executives should understand it as well.

The guidance starts with the basics: The antitrust laws establish the rules for a competitive marketplace, including how competitors interact with each other. From an antitrust perspective, firms that compete to recruit or retain employees are competitors, even if they do not compete when selling products or services. Therefore, agreements among employers not to recruit certain employees (no-poaching) or not to compete on various terms of compensation (wage-fixing) can violate the antitrust laws.

To be illegal, these agreements need not be explicit or formal. Evidence of exchanges of information on compensation, recruiting, or similar topics followed by parallel behavior can lead to an inference of agreement. Intent to lower a company’s labor costs is no defense. Also, there is no “non-profit” defense: while they might not compete to sell services, non-profits are considered competitors for the staff they hire.

The potential costs of antitrust violations are huge: fines by the agencies; treble damages for injured actual or potential employees; and intrusive regulation of basic company operations from consent decrees and judgments. In addition, the DOJ used this guidance to announce that it will now prosecute criminally any naked wage-fixing or no-poaching agreements. According to DOJ, these naked agreements—“separate from or not reasonably necessary to a larger legitimate collaboration between the employers”—harm competition in the same irredeemable way as hardcore price-fixing cartels. So now, any executives involved in such agreements—whether HR professionals or not—face personal consequences, including threats of potential jail time.

Even unsuccessful attempts to reach an anticompetitive agreement on these topics can be illegal in the eyes of the regulators. As the guidance makes clear, so-called “invitations to collude” have been and will continue to be pursued by the FTC as actions that might violate the Federal Trade Commission Act.

Some of these information exchanges and agreements do not automatically violate the antitrust laws and there is nothing in this new guidance that suggests otherwise. If the agreements are reasonably necessary to an actual or potential joint venture or merger, legitimate benchmarking activity, or other collaboration that might help consumers, their net effect on competition would need to be judged. In prior actions, the agencies also have recognized as legitimate certain no-poaching clauses in agreements with consultants and recruiting agencies. Even such common uses as employment or severance agreements might not run afoul of the antitrust law’s prohibitions.

The guidance does not—and really cannot—go into all the detail necessary to determine when any particular effort will pass antitrust muster. It does refer readers to the earlier Health Care Guidelines but those helpful tips relate only to information exchanges. The guidance also provides links to the many prior civil actions taken by the agencies on these types of matters. It is accompanied by a two-sided index card entitled Antitrust Red Flags for Employment Practices that could be part of an effective compliance program.

ARTICLE BY Steven J. Cernak of Schiff Hardin LLP

OFCCP Reduces Veteran Hiring Benchmark

On June 16th, Office of Federal Contract Compliance Programs, OFCCP, announced that, effective March 4, 2016, the annual hiring benchmark for veterans pursuant to Vietnam Era Veterans’ Readjustment Assistance Act, VEVRAA,regulation is 6.9%. This is a slight decrease from last year’s 7.0% benchmark.

As part of the release OFCCP clarified that

“Contractors who adopted the previous year’s national benchmark of 7 percent after March 4, 2016, but prior to this announcement may keep their benchmark at 7 percent.”

The agency noted that going forward the effective date for the annual benchmark will match the date the Bureau of Labor Statistics publishes the data from which OFCCP calculates the benchmark. This usually takes place in March every year.

ARTICLE BY Laura A. Mitchell of Jackson Lewis P.C.

Tag: Hiring

Oregon Expands Effort to Achieve Equal Pay