Bonus Exemption Lifted from Equal Pay Act in Oregon

Disclaimer: We are not lawyers and this is not legal advice. This blog is written by an Experienced HR and Recruiting professional, however, you should always consult an employment lawyer before you offer hiring bonuses or change your business’s compensation structure.

You may have heard some recent buzz around hiring bonuses in Oregon State – “Oregon’s pay equity law prohibits hiring incentives, like bonuses, unless current, comparable employees are given the same amount of money”. But what does this all mean?

Turns out, the buzz around offering bonuses getting more tricky in Oregon is actually a conversation about Oregon’s Equal Pay Act, not just hiring bonuses. Last year, hiring and retention bonuses and vaccine incentives were exempted from the Oregon Equal Pay act in response to the pandemic and the challenges employers faced in recruiting talent. The exemption was set to expire on March 1, 2022, but the Governor recently extended that and it expired on September 28th, 2022 instead.

So, this is not new news, but like us you’ve got a busy schedule and it’s hard to keep up with all of it!

Here’s what you need to know when considering offering Hiring Bonuses in the State of Oregon after September 28th, 2022:

Bonuses are a form of compensation: Comparable Work = Same Pay

Your employees performing “comparable work” must be paid equally, and pay includes sign-on bonuses, with few exceptions for different pay. Simply put, if you offer a sign-on bonus to new hires, you must be prepared to pay out your current employees performing similar work the equivalent of that bonus.

What is ‘Comparable work?”

Different titles are not enough to say two people are performing different jobs. The law states that “Work of comparable character is work that requires substantially similar knowledge, skill, effort, responsibility, and working conditions in the performance of work, regardless of job description or job title.”

Are there exceptions to the equal pay act?

Yes, but you must have a consistently applied and verifiable system to justify the differential in pay. The following are acceptable reasons for differential pay according to the BOLI website:

  • seniority system
  • a merit system
  • a system that measures earning by quantity or quality of production (such as piece rate)
  • workplace location (geographical differential)
  • travel (if regular and necessary for the employee)
  • education
  • training
  • and/or experience

What about Washington Employers?

Washington State has a similar Equal Pay act that employers must follow, and it also includes “bonuses” as a form of compensation. So, if you’re a Washington Employer you may also need to offer your current employees performing comparable work the same bonus amount.

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