On June 1, 2017, Oregon governor Kate Brown signed into law House Bill 2005, also called the Equal Pay Act. Do you know what this new law covers and how it could affect your organization?
The common name for the law is a bit misleading because it addresses equal compensation, not just pay, for members of protected classes. This includes wages, salary, bonuses, benefits, fringe benefits, and equity-based compensation.
The new legislation expands on existing federal law that provides protections explicitly for women, to include race, color, religion, sexual orientation, national origin, marital status, disability, age, and veteran status. It also encourages companies to examine their compensation practices.
The Equal Pay Act requires that differences in compensation among employees must be based on job-related reasons such as merit, seniority, quantity or quality of production, workplace locations, travel, education, training, or experience.
Although it’s currently illegal throughout the U.S. for companies to pay employees differently for the same work based on factors such as gender, race, and religion, unequal compensation still occurs regardless.
According to an ECONorthwest analysis, for every dollar that Oregonian men earned in 2014, Hispanic women in Oregon made just 53 cents, Native American women earned 69 cents, black women earned 77 cents, Asian women earned 79 cents, and white women earned 83 cents.
How the Equal Pay Act Could Affect Your Organization
Under the new law, employers are no longer allowed to:
· Screen applicants on current or past compensation.
· Determine new employee compensation based on current or past compensation.
· Ask applicants about their salary history or seek it from former employers.
· Base compensation on comparable character.
· Consider seniority, merit, measurement of quality, measurement of quantity, production rate, locations, travel, education, training, experience, or any combination of these while setting compensation.
· Ask employees what their desired salary would be.
What You Should Do Stay in Compliance
The screening and compensation discrimination provisions within the law will take effect on January 1, 2019. But the prohibition on seeking salary history becomes effective sooner, 91 days after the close of the 2017 legislative session on July 10. Legal actions alleging violations of the salary history provision are allowed beginning January 1, 2024.
Employers who violate the Equal Pay Act could be held liable for unpaid wages, compensatory damages, punitive damages, and attorneys’ fees. You might avoid having to pay compensatory or punitive damages if you’re able to show that you completed an equal-pay analysis of your pay practices within the three years before the date the employee filed the action, and if you eliminated the compensation gap.
This means that now is a good time to analyze your compensation structures and make any necessary changes.
Here are the key documents you should be reviewing:
· Hiring policy, training, practice, process and forms
· Application form
· Screening questions
· Interview questions
· Internal memos justifying pay placement (what questions are asked and answered)
· Offer letter form and pay supporting justification
· Compensation policy, training practice, process and forms
· Written policy language defining how jobs are compared
· Written internal equity or evaluation processes that use job characteristics for comparison
If you’re prepared beforehand, the Equal Pay Act of 2017 should be a win-win for everyone, helping to foster more equitable, inclusive workplaces that boost morale and reward a high standard of work.
For more information about how this law will affect your business, get in touch with the Aliat HR Team.