On July 25, the Department of Labor issued an all agency memorandum announcing an increase in the fringe rate contribution required under the Service Contract Act (SCA). The rate will increase from $4.27 to $4.41 per hour, effective August 1, 2017. The SCA sets prevailing wages and benefits that federal contractors who provide certain services to the federal government must pay to their employees.
The memorandum also reminds federal contractors of their obligations under Executive Order 13706, which requires covered contractors to provide employees with up to 56 hours of paid sick leave annually. Executive Order 13706 applies to new contracts with the federal government arising out of solicitations issued on or after January 1, 2017. Sick leave paid to comply with Executive Order 13706 may not be credited to satisfy contractor obligations under the SCA.
In response to court challenges to the federal overtime rule that was scheduled to go into effect on December 1, 2016, the Department of Labor (DoL) has decided not to advocate for the minimum weekly salary ($913) required by the final rule. Instead, the DoL plans to issue a Request for Information (RFI) to aid in formulating a proposal to revise the current overtime regulations contained in CFR Part 541. In response to President Trump's Executive Order 13777, entitled "Enforcing the Regulatory Reform Agenda," the RFI is directed at reducing regulatory burden. The RFI, which is scheduled to be published on July 26, 2017, asks for comment on the following questions:
Interested employers are encouraged to weigh in on all of these important questions.
The Oregon legislature recently enacted an expanded Equal Pay Act designed to eliminate discriminatory pay practices based on race, color, religion, sex, sexual orientation (as defined in ORS 174.100), national origin, marital status, veteran status, disability, or age.
Section 2 of the Act (amending ORS 652.220) prohibits discrimination in the payment of compensation based on protected class for work of "comparable character," defined as work requiring “substantially similar knowledge, skill, effort, responsibility and working conditions in the performance of work, regardless of job description or job title.” To insure that employers do not perpetuate the effect of other employers' past discriminatory pay practices, the law precludes employers from screening applicants based on current or past compensation, determining compensation for a position based on an applicant’s current or past compensation, or seeking a salary history of an applicant until an offer of employment has been made.
Differentials in pay for work of comparable character are permissible only when they are based solely on one or more of the following factors: (1) a seniority system; (2) a merit system; (3) a system that measures earnings by quantity or quality of production, including piece-rate work; (4) workplace locations; (5) travel, if travel is necessary and regular for the employee; (6) education; (7) training; and (8) experience. Amounts owed to an employee because of the failure of the employer to comply with the Act are defined as “unpaid wages.”
Individuals may address violations of Section 2 by filing a complaint with the Commissioner of BOLI under ORS 659A.820, a civil action under ORS 652.230, or a civil action under 659A.885. Violations of Section 4 of the Act, which makes it unlawful under Chapter 659A to request a salary history of an applicant, may also be addressed under ORS 659A.885. Each of these options affords a prevailing plaintiff a different remedy:
The potential ramifications of Oregon’s Equal Pay Act are significant. An employer’s inability to substantiate a pay differential based exclusively on permissible factors may be sufficient to establish liability without the need to prove discriminatory intent. This means that employers who have never intentionally discriminated, but historically set compensation by relying on salary history or other factors made impermissible under the Act could face monumental financial exposure. Employers may not reduce the compensation of an employee to comply with their obligations under Section 2, so employers who wish to correct the results of past practices will presumably need to raise salaries of all of the employees who were negatively impacted. Also, it is unclear whether a violation of ORS 652.220 may also result in a late payment penalty under Oregon’s final pay law, or whether an individual must elect between the available statutory remedies.
The good news is that employers who want to get ahead of this issue have some time to comply. The prohibition on requesting salary histories of applicants goes into effect 91 days after the end of the current legislative session, but the private right of action to enforce it does not go into effect until January 1, 2024. The rest of the Act's provisions go into effect on January 1, 2019.
Employers who need help analyzing their pay practices and complying with the Equal Pay Act may contact Ater Wynne's employment group for assistance.