Each time a new labor law is passed or rule approved, there’s typically some ominous warning from the Department of Labor about the dramatic $10k fines as a consequence of inaction or not remaining current. Could that really happen? Technically, yes. Is it likely the Department of Labor is going to kick in your door tomorrow and demand and validate your compliance? No. However, there’s one important issue you don’t want to ignore. The Equal Pay Act (EPA).
The Equal Pay Act (EPA) was passed by Oregon in mid 2017, and for many it appears a far away concern given that most of the key elements don’t take effect until January 1st, 2019. That would be a mistake because the financial consequences of not being prepared to comply with this law will catch many businesses off guard. It has specific penalties, that make it highly tempting to litigate for any attorney who plays the odds – and has little downside for them.
Bottom line: listen to your inner chicken and read on.
Oregon’s EPA prohibits employers from paying ANY compensation (including fringe benefits like vacation) to any employee at a greater rate than to employees of a protected class for work of “comparable character.” While protected classes and comparable character have defined meanings, proceed with caution – a role doesn’t have to have the same title nor does the employee have to be in the same department to be considered “comparable character”.
Add to that, there are only specific reasons why you can pay someone differently (note – this is just a partial list):
- A seniority or merit system
- A system measuring earnings by quantity or quality of production (including piece rate)
- Education, training or experience
- A combination of these factors, if they account for the entire pay discrepancy
And if you think you’re paying people based on these standards – that’s great – but now you have to define, document and justify it. If you can’t – then an attorney only has to make a claim and you’ll have no defense beyond your good intentions. If this happens, you’ll lose big!
No Intent or Bad Faith Required
Just because the word “discrimination” is used doesn’t mean that someone has to prove bad intent on your part. They simply need to point out that you can’t justify pay differences based on any allowable standard. From there they can claim attorney fees and you’ll likely be compelled to close the pay gap for all affected employees.
Tough Negotiation? Hot Market?
Sorry. While that’s a reality, even in today’s labor market – it’s not an acceptable reason for a pay difference. So as of January 1st, 2019 if this work hasn’t been done, you could easily be on the hook for tens of thousands of dollars.
What Can an Employer Do?
If you don’t know how this law will affect you, it’s time to read up on it now because the budget implications could be significant. Employers are in a tough spot and will be hit hard if they don’t have HR basics in place to support and justify their pay practices – specifically:
- Job Descriptions that reflect the workplace reality
- A documented performance review process (if there is such a process)
- A current Employee Handbook – that at least defines your pay philosophy
If you don’t have any of the three key resources noted above, or they haven’t been updated in over 18 months with this law in mind, it’s time to bring in an outside resource.
Could you do this yourself? Maybe. But this is not a basic administrative task and if you don’t review your actual situation with a fresh viewpoint and expertise, someone could easily exploit a weakness and cost you thousands, if not tens of thousands of dollars. The specific penalties outlined are that specific, so again, some attorney somewhere and some employee, are likely to take that bet at some point.
Bottom line: There’s much detail in this law that we didn’t cover here, potential risks and ways that others can take advantage of you and your business. Now is the time to listen to your inner chicken and call us to fill in the gaps. Give your business the protection it deserves.