Oregon Pay Equity Law – Many of The Old Exemptions are Gone!

Some have observed that the Oregon Pay Equity Law goes farther than Federal and other state regulations, and they are correct. This is no more clearly seen than in the elimination of some of the old exemptions that make many pay equity regulations not particularly equitable.

Gone is the day when market differentials rule. Different market rates are not included in the list of  “bona fide” exceptions. This is very important for health centers, typically dominated by women in jobs that are traditionally paid less than occupations dominated by men (which comparable character of work is considered).

If you have a market-data-based compensation program (i.e., you assign jobs to pay grades based primarily on their market rates), you will not be compliant.

If you rely on any market data provider, or subscribe to any system that is based solely on market rates, you will need to change your approach.  This does not mean that market data can’t be used in establishing pay ranges – in fact it needs to be in order to ensure you are competitive – but that market data is NOT the determinant of which jobs are paid comparably.

Another factor that is no longer an exception is the existence of a union contract.  In other states with pay equity legislation (and of course Federal laws and regulations) a collectively bargained pay scale is typically exempt from scrutiny.

If you have a collective bargaining agreement in place, you will eventually have to renegotiate the pay structure to ensure that it meets the requirements of the pay equity law.

It is not clear what the impact is on existing agreements; although the rules do not provide for any grace period, they also do not call for immediate negotiation. It is likely this is simply something that the regulators did not consider.

There are still legitimate exceptions to pay differentials, such as a bona fide merit system, or systems based on quality and and quantity of production.  Seniority systems (which actually perpetuate pay inequity) also provide an exception, although we do not recommend them except in situations where the distrust between labor and management is so pronounced that a performance-based system cannot be used.

All Oregon employers should ensure that their programs, even if they comply with Federal law and regulations, comply with the Oregon rules. Many practitioners used to the market and union-contract exemptions will need to embrace other techniques more likely to actually achieve pay equity.