SB 123, just passed by the legislature and signed by Governor Brown, makes several amendments to Oregon’s pay equity law. Most notable are the revisions to the limited affirmative defense available to employers in litigation. The law previously provided employers a “safe harbor” from emotional distress and punitive damages if a lawsuit is filed, if the employer had conducted a pay equity audit within the last three years that related to the plaintiff’s protected class, and if the employer had eliminated any unlawful wage gaps for the plaintiff. As amended, the law protects employers from emotional distress and punitive damages if they have conducted a pay equity audit within the last three years that is calculated to – and makes – “reasonable and substantial” progress towards closing wage gaps generally, even if those efforts do not address a particular plaintiff’s wage gap. While the safe harbor is not a complete defense (prevailing plaintiffs can still recover back pay and attorney fees), the amendment offers broader protection and provides additional incentive to conduct at least a limited pay equity analysis for employers who have not done so already.

SB 123’s other (mostly minor) amendments include:

• Explicitly providing that an employer can pay employees differently if they are on light duty related to a workers’ compensation claim or otherwise temporarily performing modified work as a result of a medical condition.
• Clarifying that any wage increases an employer makes in response to a pay equity audit may not be viewed as an admission of liability in a pay equity lawsuit.
• Defining “system” (which, in the context of a seniority or merit system, is a lawful reason to justify a pay disparity) as a “consistent and verifiable method” that is in place to evaluate employees at the time a pay equity violation is alleged.