Oregon’s bold Equal Pay Act will have a negative impact on employees because it prohibits them from negotiating benefits to meet their individual needs. Currently, when an employee needs extra vacation time to care for a disabled child or an ailing parent and agrees to take less pay in exchange for the additional time off, an employer can accommodate that. If an employee reaching retirement wants more money in their 401(k) and less vacation time, an employer can make that deal.
But the new rules published by the Bureau of Labor and Industries (“BOLI”) impose a rigidity on employers that was never intended by the statute and strip employers from being able to offer any flexibility in benefits and compensation. The legislature should clarify in the 2019 session that as long as employees’ total compensation packages are equal, each component of that package need not be exactly the same.
The Oregon Equal Pay Act precludes employers from paying one employee more “wages or other compensation” than that paid to another employee in a protected class who performs comparable work. “Compensation” is defined to include “wages, salary, bonuses, benefits, fringe benefits and equity-based compensation.” Therefore, under the statute, an employer is prohibited from offering a total “compensation” package that is less generous to persons in a protected class. BOLI’s new rule, OAR 839-008-0020, signals that each separate component of a compensation package must be equal. This is not consistent with the statute.
OAR 839-008-0020 states that an employer may provide different benefits to employees performing work of a comparable character if the employer offers the same benefit options to all employees performing that work and the employee declines the benefit. The statute, however, does not require the employer to provide the same benefit options to all employees performing comparable work. Rather, it requires only that the total compensation package be equivalent.
This is extremely important to employees. For example, a mother with a disabled child may need six weeks of vacation, but in exchange is willing to take less pay. Under OAR 839-008-0020, it appears that the employer would be required to offer everyone performing comparable work six weeks of vacation if it offered six weeks to her. If an employer could not afford that, it may be forced to refuse to accommodate the mother’s request for a compensation package that suits her family’s needs. And the employer would lose a valuable candidate.
The statute was not intended to create rigid compensation rules such that employees cannot ask for and receive the accommodations they need as individuals. Rather, it was intended to ensure that employers were paying overall compensation equitably across the protected classes. OAR 839-008-0020 reaches far beyond both the language and intent of the statute and will have a negative impact on both employees and employers that have lost a valuable tool to attract talent.
