Small-business owners urged to check their compliance
The U.S. Court of Appeals for the Ninth Circuit recently issued a ruling, which affects businesses throughout the west coast. In Rizo v. Yovino, the Ninth Circuit determined that the federal Equal Pay Act bars employers from relying on past wage or salary history as a justification for pay disparities.
Although Rizo is a federal case, equal pay is also state level issue. Last year, the Oregon State Legislature passed House Bill 2005, the Oregon Equal Pay Act, which Gov. Kate Brown signed into law.
“The new Oregon law includes a prohibition on employers asking for the salary history of job applicants – a provision that NFIB vehemently opposed, but one that is consistent with Rizo,” recalled NFIB Oregon State Director Anthony Smith.
“Most of the law will take effect on January 1, 2019, however the provision allowing a civil action against an employer alleged to have sought the salary history of an applicant becomes operative January 1, 2024. One more thing to note, an employer can ask applicants for a ‘desired salary’ on an application or during an interview. This was expressly part of the legislative intent as the bill was making its way through the legislative process, so be sure to update your job application forms and interview questions.”
In his analysis of the Rizo decision rendered by the Ninth Circuit Court, Luke Wake, NFIB senior staff attorney, concurs with Smith about the importance of keeping current on the issue of equal pay. “Even if an employer no longer asks applicants about wage and salary history, previous pay decisions might have relied on this sort of information,” writes Wake. “So Rizo should encourage employers to reexamine existing employees’ salaries to ensure that legitimate business reasons – absent information about past wages or salaries – justify any pay differentials. In any event, employers should consult with outside legal counsel to determine whether it makes sense to conduct an internal audit for illegal pay disparities.”
Smith also notes that the Oregon Equal Pay Act added a new feature to state law that employers may want to consider implementing.
“Discrimination in pay based on gender, race, religion, etc. has been illegal for a long time, however, employers had limited options for defending themselves against a pay discrimination lawsuit,” said Smith. “Under the new rules laid out in the bill, Oregon employers can now perform an ‘equal pay analysis’ to demonstrate that their pay differentials are based on bona fide business reasons (specifically defined in the bill) and so long as they do this every three years and provide this evidence to a judge in a pre-trial motion, the chances of having to go to trial would be minimal considering the financial incentives for plaintiffs and their attorneys would be significantly restricted.”
More information about the equal pay analysis process is expected to be available to businesses once Oregon’s Bureau of Labor and Industries completes rulemaking, which is scheduled to occur this summer.