Oregon employers say provisions of the state’s 2017 equal pay law are hurting their recruiting by effectively prohibiting sign-on bonuses.
Backed by both public and private employers, House Bill 3205 aims to amend Oregon’s Equal Pay Act to exempt certain bonuses from equity considerations. But some worker advocates say it would open a loophole that would promote pay disparities.
The state’s current equal pay laws prohibit employers from paying an employee a higher rate than a coworker for similar work unless the pay disparity is justified by nondiscriminatory factors such as seniority, education, training or experience.
Under the existing law, all types of compensation, including bonuses and benefits, are considered in determining whether there is a pay disparity. That means if a new hire receives a sign-on bonus but a current employee doesn’t, employers must justify the difference in pay with one of those nondiscriminatory factors.
HB 3205, introduced by Sen. James Manning Jr., D-Eugene, and Reps. Janelle Bynum, D-Clackamas, and Jeff Helfrich, R-Hood River, would exempt hiring and retention bonuses from equal pay calculations. A number of public and private employers, including TriMet, Washington County, Oregon State University and UPS, who say they’ve had difficulty hiring or retaining employees, have endorsed the bill.
They say it would help them combat the staffing shortages that have plagued Oregon employers since shortly after the pandemic hit. They argue that Oregon is the only state in the country that includes bonuses in its equal pay calculations, and point to the value of bonuses in hiring and keeping workers in the wake of the pandemic, when the state temporarily allowed the practice.
In 2021, state lawmakers temporarily amended Oregon’s Equal Pay Act and exempted hiring and retention bonuses from pay equity considerations in response to the COVID-19 pandemic. Those changes, however, expired on Sept. 28, 2022.
Roberta Altstadt, spokesperson for TriMet, said the transit agency’s ability to offer sign-on bonuses during the pandemic was “pivotal in helping us attract new bus operators.”
“As businesses and agencies across most industries still struggle with a worker shortage, the change that HB 3205 would make to the Oregon Equal Pay Act would allow us the opportunity to look at other bonuses for new and existing workers in other areas of our agency, should there be a need,” Altstadt said.
The agency said hiring transit operators has been challenging, in part because the job has become less safe for workers because of increasingly aggressive passengers. TriMet raised starting wages for operators in December 2021 to over $27 per hour to address a wave of retirements and resignations.
However, the agency said it wasn’t until it started offering a $7,500 hiring bonus in April 2022 that it began to see a spike in applications and new hires.
Altstadt and other supporters of HB 3205 said the state could lose skilled workers to bordering states such as Washington and Idaho, which do not include bonuses in equity pay considerations.
Mark Schmelz and Heather Horn, the top human resources officers at the University of Oregon and Oregon State University respectively, submitted a joint letter in support of the bill.
They wrote that offers of higher compensation “is common practice for universities to seek premier faculty from other institutions, their research teams and associated federal research dollars, particularly research-active faculty.”
They said that women and people of color in STEM fields are highly sought after and at the most risk of being poached by another university that can offer higher compensation.
“The additional flexibility around hiring and retention bonuses provided by HB 3205 would enable our universities to keep high-value, nationally and internationally in-demand faculty and programs,” Schmelz and Horn wrote. “The inability to compete is a strategic disadvantage to the universities which may impact the student experience and advancements discovery research provide the state.”
But some unions and community organizations have raised questions about the bill’s implications for equal pay.
Catie Theisen, on behalf of the AFL-CIO union in Oregon, testified against HB 3205, writing that research suggests that implicit bias plays a significant role when employers offer bonuses to workers.
Theisen pointed to a study conducted by the payroll company ADP that found that the average bonus amount offered to women was less than two thirds of the amount paid to men with comparable based pay, age and seniority.
“Without clear sideboards that hiring and retention bonuses be paid equitably and universally, (this bill) leaves the door wide open for implicit bias and the wage gap for women and people of color to worsen in Oregon,” Theisen wrote in her testimony. She added that the bill would benefit from “additional clarifying language on discriminatory intent or impact.”
Family Forward Oregon, a nonprofit that advocates for greater workplace flexibility for parents and caregivers, also opposes HB 3205.
Courtney Veronneau, political director for the nonprofit, said in written testimony that the bill, as written, would “effectively create a massive loophole in Oregon’s pay equity law that would allow both unconscious bias and overt acts of pay discrimination against Oregonians in one or more protected classes.”
For example, Veronneau wrote, an employer under HB 3205 could legally offer hiring bonuses only to a male candidates, or offer a larger one, despite a female candidate’s equivalent education and experience.
“Regardless of similar education, experience, seniority, and job duties, an employer routinely gives larger retention bonuses to white employees over employees of color,” Veronneau wrote.
On Tuesday, a new report by the Secretary of State’s Office found even among employees of the state government, white and male workers out-earned workers of color and women, and that raises given in 2019 and 2022 under the state’s equal pay law passed in 2017 had widened the racial pay gap rather than narrow it.
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The report found that the disparity in pay stems from a provision of the law that allows differences in pay based on education, experience, training and seniority. But the report found that women and people of color who work in state government tend to have less experience than their white and male counterparts.
CORRECTION: An earlier version of this article included an incorrectly affiliation for Mark Schmelz. He is chief human resources officer and vice president at the University of Oregon. Also, the article incorrectly referred to ADP as the payroll provider for the AFL-CIO. The union cited a study by the payroll company but is not a client. The article has been updated.
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