Oregon’s far-reaching new pay equity law kicks in 10 days from now, opening the door to a raft of pay increases for employees or a clutch of complaints — and potential lawsuits — against employers.

For employers, that’s not an empty threat. Statistics indicate that pay inequity is systemic, with Oregon women still earning 79 cents for every dollar a man earns. One of the state’s largest employers, Nike, recently became the focus of a class-action lawsuit, filed by four women alleging unequal compensation and promotional opportunities.

Many small businesses, meanwhile, have no structured compensation system and may not even be aware of the new legislation, much less that it vastly expands the scope of existing law and who can sue.

Even the state, which has been analyzing its own salaries, has identified disparities in as much as 10 percent of the positions surveyed. Whether that figure can be extrapolated to public and private employers around the state is an open question. But Gov. Kate Brown, at least, has aside $15 million in her proposed 2019-2021 budget for pay raises related to implementation of the law.

Business groups are no longer pushing back on the law per se. But they are loudly complaining the Bureau of Labor and Industries hasn’t given them enough time to absorb the law and ensure compliance. Though the legislation was approved in early 2017, BOLI published the rules two days before Thanksgiving.

“There’s a lot of worry about what this is going to look like on January 1,” said Anthony Smith, Oregon director for the National Federation of Independent Business. “There’s a difference between being aware of the law and being prepared for it.”

Judging by a hearing last week of the Senate Workforce Committee, where lawmakers rebuked labor regulators for tardy rulemaking and lack of outreach to employers, there is some sympathy for that position.

“The execution on this bill did not go the way I hoped it would,” Sen. Kathleen Taylor, D-Portland and committee chair, told the agency staffers. “This has left a lot of people rather frustrated. Unfortunately, I didn’t hear any justifiable reason why it didn’t happen earlier.”

The outgoing labor commissioner, Brad Avakian, didn’t attend the hearing and sent three relatively inexperienced employees to explain the agency’s actions. His successor says she’ll be taking a different tack.

Val Hoyle, a former Democratic state representative from Eugene, will be sworn in Jan. 7. Hoyle says BOLI will focus on education and outreach for the first six months of her tenure, rather than investigation and enforcement. She said the agency doesn’t have adequate resources for technical assistance to employers and that she will be asking the Legislature for more.

“I am not the commissioner yet,” she said, “but it is my intention to focus on outreach and education, specifically to small businesses and businesses off the I-5 corridor … rather than bringing the hammer down.”

BOLI does have discretion on whether to investigate claims filed with the agency. But employees can also take their complaints to circuit court as of Jan. 2, and some human resources managers worry that plaintiff’s attorneys are waiting to do exactly that. Consequently, business groups are asking the Legislature for a six- to 12-month delay in implementing employees’ rights to legal action under the law.

“It’s not a question of the goal. It’s making sure people are adequately prepared to achieve the goal in the best possible way,” said Sandra McDonough, chief executive of Oregon Business & Industry, the state’s largest business organization. “It’s a huge rule. It came out really late with hardly any time to prepare before the effective date. We’d like to see some more time for implementation.”

NEW TERRITORY

The Oregon Equal Pay Act of 2017 dramatically expands protections against pay inequity. The guts of the bill are that employers can’t discriminate by paying some staffers lower wages for work of “comparable character.” That’s defined as work requiring “substantially similar knowledge, skill, effort, responsibility, and working conditions in the performance of work,” regardless of job description or title. Pay, it should be noted, includes benefits.

Moreover, the law added 10 protected classes beyond gender, including race, color, religion, sex, sexual orientation, national origin, marital status, veteran status, disability and age.

It also broadened the definition of compensation to include bonuses, stock awards and other forms of payment. And it prohibits employers from asking job applicants about their salary history.

BOLI could order violators to pay as much as two years’ back pay. If a worker opts to go through the court system, punitive damages would also be on the table.

Laura Salerno Owens, an employment lawyer at Markowitz Herbold in Portland, said the legislation is among the most expansive in the country. She also says it’s clunky enough that even the best-intentioned employers may have difficulty complying. It asks employers to analyze for possible discrimination, for example, based on factors they’re not supposed to be tracking in the first place, she said.

Sen. Kathleen Taylor questions state labor regulators at a recent meeting of the Senate Workforce Committee.

Another potential pitfall from employers’ perspective: The definition of pay is so broad that it could hinder an employer’s ability to attract new talent without putting itself in violation of the law. Say a company paid a signing bonus to a new recruit for compensation they were leaving on the table at their old job. That would require them to raise all comparable existing employees’ pay to match.

The legislation does allow employers to make exceptions for different pay levels if the difference is based on a “bona fide factor,” such as a seniority or merit system, education, training, experience, workplace locations, or a handful of other factors cited in the legislation.

The law also offers employers a “safe harbor” provision, extending some protection from compensatory or punitive damages in lawsuits if they have completed a pay equity analysis within three years of a complaint.

Sen. Tim Knopp, who co-sponsored the law with Taylor, says the pay analysis may be the most important lever in the legislation.

“I really believe it’s the equal pay analysis that was Chair Taylor’s idea that will lead to equalization of pay,” the Bend Republican said. “It’s not mandatory, but I think it’s very prudent for business to do. A lot of businesses think they don’t have a problem, and I think it’s critically important for them to verify that…before they face any punitive action.”

Christine Thelen, a Portland employment lawyer with Lane Powell, said the problem is that the Bureau of Labor and Industries has declined to provide comprehensive guidance on what a pay equity analysis should look like, how exhaustive it should be or how much it should cost.

“It doesn’t help if you don’t know exactly what you have to do to get this safe harbor, and we won’t know until these things get challenged what some of those parameters are going to look like,” she said “Just doing the audit isn’t enough. You need to take steps to redress the pay differential for the individual suing and have made substantial progress addressing it for everyone else in the same protected class.”

Nevertheless, a variety of large businesses contacted by The Oregonian/OregonLive said they did their homework and are confident they will be in compliance.

Melanie Erdmann, a spokeswoman for Portland General Electric, said the utility completed its pay equity analysis in May. It wasn’t an especially heavy lift, as it’s something the company already does regularly, she said. Still, PGE did take the extra step of bringing in an outside consultant this year to beef up the analysis.

“We were pleased with the outcome,” she said. “The results showed that employees in the same role, with comparable work experience in the same location, on average earn a near-perfect dollar-for-dollar pay.”

Nike, which is facing a class-action suit alleging pay and gender bias, said it wouldn’t comment on the litigation. But Greg Rossiter, a company spokesman, said “pay equity is a critical component of our diversity and inclusion strategy. We believe that women, men and all races/ethnicities who undertake the same work at the same level, experience and performance should be equitably compensated.”

According to the company’s 2017 analysis, for every $1 earned by men, women globally earned 99.9 cents, and for every $1 earned by white employees in the U.S., people of color earned $1.

“We are monitoring this data, doing supplemental focused analysis, and adjusting where appropriate, driving with 1:1 as our goal for both groups, every year,” Rossiter said.

Large corporations, with internal human resources, legal counsel and the wherewithal to bring in outside help, may indeed be well-positioned to comply with the law. But it’s a tougher climb for small businesses, which employ the majority of Oregon’s workforce.

Smith, of the National Federation of Independent Businesses, said his organization has about 7,000 members in Oregon. About 90 percent have fewer than 25 employees and 70 percent have less than 10 employees.

Thelen, the lawyer, says the smaller the company, the less likely it is to have jobs that are of comparable character. The flipside, she said, is that the smaller you are, the less likely you are to have a structured compensation approach thought out by a human resources professional. Maybe they look on Craigslist for comparable jobs or ask prospective workers what they’re earning and tack on a few percent.

“You can’t take that approach,” she said. “You have to approach it in a far more structured way under this law.”

EMPLOYEES GAIN

The hope for workers, legislators and employee advocates say, is that the Equal Pay Act will force businesses to address institutionalized inequity, and adopt performance measures, pay and promotion policies that are less amorphous and subjective.

Knopp noted that federal equal pay laws have been on the books since the 1960s and that Oregon statutes date to the ‘70s, but that the issues remain.

“I think it’s going to be a significant topic of conversation over the next couple years, and as it goes into effect employees will start to make inquiries,” he said. “Women weren’t necessarily aware of what their male colleagues were making that had similar experience, and as people become more aware, it will lead to some soul-searching discussions among businesses about what is fair and what is equal.”

From a practical standpoint, the Equal Pay Act prohibits employers from cutting anyone’s pay in order to comply, but it does allow them to freeze an employee’s compensation while increasing others to bring them into alignment.

It also specifies that an employer cannot retaliate against an employee who files a complaint under the Equal Pay Act, or an employee who participates or who the employer thinks will participate in an investigation.

“We’ll see what this law does,” said Salerno Owens. She is handling the Nike class-action suit and says pay discrimination is an undeniable fact in this country, supported by statistics about who is coming out of graduate school, versus who ends up in the executive suite and garnering the biggest portion of the salary bonus pool a couple decades later.

She points to figures in the Nike lawsuit attributed to the company: During its 2017 fiscal year, 71 percent of the company’s vice presidents were men and 62 percent of directors and senior directors were men. Men make up significantly more than 62 percent of senior directors, the suit said.

“Perhaps things will become a little more transparent,” she said, “and people will be allowed to move up without being judged by who I want to go golfing with.”

-Ted Sickinger

tsickinger@oregonian.com

503-221-8505; @tedsickinger