Dive Brief:

• Oregon became the latest state to outlaw pay discrimination on the basis of protected class and on past pay history, the National Law Review reports. On June 1, Gov. Kate Brown signed into law a bill that bars employers from paying employees who perform comparable work different pay rates because of their race, color, religion, sex, sexual orientation, national origin, marital status, veteran status, disability or age.
• The law also bars Oregon employers from determining job candidates' compensation based on their previous pay history. Employers can ask about candidates' pay history only after making a job offer that includes a wage amount.
• The law also gives employers some reprieve from punitive and compensatory damages if they can: 1) demonstrate that, three years before a lawsuit is filed, they completed in good faith an equal pay analysis of their pay practices with reasonable detail and scope relative to their size; and 2) eliminated wage disparities for the plaintiff and made reasonable and substantial progress toward eliminating wage disparities for the protected class that the plaintiff claimed.

Dive Insight:

Oregon's new law, like all pay equity mandates, means more compliance responsibilities for employers. However, those that conduct a periodic equal pay analysis are on the right track. A good-faith effort to eliminate pay discrepancies and keep detailed, up-to-date records on the results can give employers an advantage if sued.

Furthermore, such studies may be an increasingly essential HR function going forward, especially as more states and municipalities pass pay equity laws.

Employers must know when pay disparities are lawful. Under Oregon's law, pay differences for comparable work are justifiable if factors such as merit, seniority, education, travel needs, training, experience and/or production-related systems are pay factors.

In some cases, variable pay such as bonuses might justify pay differentials, as long as the extra pay is doled out fairly. For example, merely assigning employees additional duties an increasing their pay might violate the federal Equal Pay Act.  

In Philadelphia, the first U.S. city to approve a pay equity bill (followed by New York), a court denied a request for injunction brought forth by the Chamber of Commerce of Greater Philadelphia's to block the bill. Judge Mitchell S. Goldberg failed to see where the bill would have harmed businesses, as the chamber claimed. Expect at least some pro-business advocates to file similar motions against future bills.