Holy BOLI! The Impact of Final BOLI Rules on Employer Equal Pay Analyses

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Dan Lawler

From our Winter 2019 e-newsletter

In November of 2018, the Oregon Bureau of Labor and Industries (BOLI) issued administrative rules to explain your duties as an employer under the Equal Pay Law, which, among other things, offers some protections from liability for employers who conduct an “equal pay analysis.” This means that you could protect your city or district from liability for damages if you carefully evaluate your employees’ compensation and begin the process to correct any compensation differences that are due solely to differences in gender, race, national origin, or other protected classes.

How do I determine if our compensation violates the new law?

Under the Equal Pay Law, employees who perform “work of comparable character” must be paid the same unless “bona fide factors” justify a difference in pay. Although the law defines the term “work of comparable character” as “work that requires substantially similar knowledge, skill, effort, responsibility and working conditions in the performance of work, regardless of job description or title,” many employers sought further guidance from BOLI regarding this definition. As a result, BOLI issued OAR 839-008-0010 to provide employers with examples of what constitutes skill, effort, responsibility, and working conditions. For example, an employee’s precision and creativity can factor into whether she has a particular “skill,” while a difference in two employees’ working hours and physical surroundings can factor into the employees’ “working conditions.” The new rule’s examples of knowledge, skill, effort, responsibility, and working conditions include:

  •  Knowledge:

o Certifications, licenses, certificates, education, experience, or training.

  •  Skill:

o Ability, agility, coordination, creativity, efficiency, experience, or precision.

  •  Effort:

o Amount of physical or mental exertion needed, amount of sustained activity, or complexity of job tasks performed.

  •  Responsibility:

o Accountability, amount of decision-making discretion, degree of significance of job tasks, amount of employee autonomy, extent of employer supervision over employee, or the extent that employee’s work exposes employer to risk or liability.

  • Working conditions:

o Work environment, hours worked, time of day of work, physical surroundings, or potential hazards.

 

The above list is not-exhaustive; you may use other reasonable and non-discriminatory considerations as well. When doing an analysis, you should always discuss and document your decision-making process and carefully cite these types of “work of comparable character” considerations to help avoid unlawful pay discrimination.

What do I do if I discover pay differences?

The Equal Pay Law requires employers to pay employees who perform work of comparable character the same amount, unless “bona fide factors” justify a difference in pay. The law identifies “bona fide factors” as factors which are based on:

  • A seniority system;
  • A merit system;
  • A system that measures earnings by quantity or quality of production, including piece-rate work;
  • Workplace locations;
  •  Necessary and regular travel;
  •  Education;
  •  Training;
  •  Experience;
  •  Any combination of the factors described above.

Although the law lists bona fide factors, it does not provide examples of or describe the factors. To address this, BOLI issued OAR 839-008-0015, which provides examples of the bona fide factors and explains the factors in greater depth. For example, the rules now identify an employee’s performance rating scale as an example of a merit-based system and specifically lists the completion of a certificate or degree program as an example of education considerations that would allow a pay differential. The rule also recognizes cost of living, desirability of worksite location, and minimum wage zones as examples of workplace location considerations that might justify a pay differential, as well as on-the-job trainings and formal training programs. Thus, if you have employees who perform work of comparable character, but receive different pay, you must show in your equal pay analysis that there are good and justifiable reasons for the pay difference. To do this, you must use the above-listed “bona fide factors” and document your reasoning.

Where can I get assistance to do an Equal Pay Analysis?

Equal Pay Analysis can get complicated very quickly. If you believe you would benefit from expert assistance, there are consultants who specialize in such work. Our firm has not used any of these consultants and cannot vouch for their competency, however, we’ve learned that the Local Government Personnel Institute and HR Answers are both offering such services.

If you have any further questions about the new Equal Pay Law or other employment matters,
please feel free to call us.

HB 2016 Post Janus, MORE OR LESS?

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Diana Moffat

From our Summer 2019 e-newsletter

On June 20, the Governor signed into law HB 2016.

The Freedom Foundation, a staunch support group for cases like Janus and limits on public employer union rights and privileges, called HB 2016 the “Unions’ Latest Love Note to Themselves.” And a love note, it is! The Freedom Foundation claims that “Post-Janus membership losses, not surprisingly, have been massive for Oregon public-sector unions. SEIU 503, for example, has seen 26 percent of its members defect, while OSEA has lost 31 percent.” I cannot confirm, nor deny those claims. But I can tell you that public sector unions are fighting hard to keep employees from being able to opt-out of union membership.

Let’s see what the legislature agreed to, and what is NOT (despite union opinion) contained in this new legislation.

Employee time to conduct union business:

The law requires public employers to:

“grant public employees who are designated representatives reasonable time to engage in the following activities during the public employee’s regularly scheduled work hours without loss of compensation, seniority, leave accrual or any other benefits:

(a) Investigate and process grievances and other workplace-related complaints on behalf of the exclusive representative;

(b) Attend investigatory meetings and due process hearings involving represented employees;

(c) Participate in or prepare for proceedings under ORS 243.650 to 243.782, or that arise from a dispute involving a collective bargaining agreement, including arbitration proceedings, administrative hearings and proceedings before the Employment Relations Board;

(d) Act as a representative of the exclusive representative for employees within the bargaining unit for purposes of collective bargaining;

(e) Attend labor-management meetings held by a committee composed of employers, employees and representatives of the labor organization to discuss employment relations matters;

(f) Provide information regarding a collective bargaining agreement to newly hired employees at employee orientations or at any other meetings that may be arranged for new employees;

(g) Testify in a legal proceeding in which the public employee has been subpoenaed as a witness; and

(h) Perform any other duties agreed upon by a public employer and an exclusive representative in a collective bargaining agreement or any other agreement.”

Well that is certainly a mouthful. What does it mean? It means that your employees, who are union representatives, WILL be given paid time to do union business. That business will include grievance work – all the way from investigation to the hearing; attend and likely to prepare for collective bargaining of your CBA; and, attend new employee orientation.

But, and this a big but, the statute does say that it is “reasonable” time. That term is not defined. The employer should be able to take into consideration things such as operational needs, etc.

Release Time:

The new legislation also allows for what is called “release time.” Release time is defined as: “the period of time when a public employee who is a designated representative takes a leave of absence from the employee’s

regular public employment to conduct labor organization business.” It provides that:

“a public employer and an exclusive representative may negotiate and enter into written agreements whereby:

(a) The public employer shall provide a reasonable term of release time for public employees to serve as designated representatives of the exclusive representative or an affiliated labor organization.

(b) The public employer and the exclusive representative may agree to…”

The statute then goes on to talk about the ins and outs of having an employee away from the work site while on release time, to serve union business.

Despite this part of the statute seeming to be negotiable, it does provide that any current CBA can now be reopened to negotiate this type of release time.

I have a handful of CBAs with this type of provision. In essence, the employee ceases to do their job and now just does union work, whether on site or away at some union training. It can be difficult to temporarily fill their position, and to coordinate the repayment to the employer, required by the union, for wages and benefits.

Union access to employees: The law now provides that a public employer shall provide the union with “reasonable” access to employees within the bargaining unit. This will include the right to meet with new employees, while on paid leave time, “within 30 calendar days from the date of hire for a period of at least 30 minutes but not more than 120 minutes, during new employee orientation or, if the public employer does not conduct new employee orientations, at individual or group meetings.” In addition, for current employees, the union must be given “reasonable access” to those employees to include: “the right to meet with employees during the employees’ regular work hours at the employees’ regular work location to investigate and discuss grievances, workplace-related complaints and other matters relating to employment relations”; and “the right to conduct meetings at the employees’ regular work location before or after the employees’ regular work hours, during meal periods and during any other break periods.”

Union Meetings:
Public employers must now permit the unions to “use the public employer’s facilities or property, whether owned or leased by the employer, for purposes of conducting meetings with the represented employees in the bargaining unit . . . at a time and place set by the exclusive representative, provided that the meetings do not interfere with the employer’s operations.”

Information disclosure:
The public employer “shall” provide to the union, “in an editable digital file format” the following information for each employee in an appropriate bargaining unit: “(A) The employee’s name and date of hire; (B) Contact information including: (i) Cellular, home and work telephone numbers; (ii) Any means of electronic communication, including work and personal electronic mail addresses; and (iii) Home address or personal mailing address; and (C) Employment information, including the employee’s job title, salary and work site location.” This information must be provided within “10 calendar days from the date of hire for newly hired employees” and “every 120 calendar days for employees in the bargaining unit who are not newly hired employees.”

Use of employer email:
The union representative “shall have the right to use the electronic mail systems or other similar communication systems of a public employer to communicate with the employees in the bargaining unit regarding: (a) Collective bargaining, including the administration of collective bargaining agreements; (b) The investigation of grievances or other disputes relating to employment relations; and (c) Matters involving the governance or business of the labor organization.”

Union Dues Deductions:
And now we get to Janus!

The new law provides that your employee “may enter into an agreement with a labor organization” to provide authorization for a public employer to make a deduction to pay dues, fees and any other assessments. It also provides that the public employer “shall deduct the dues, fees and any other deduction authorized by a public employee under this section and remit payment to the designated organization or entity.” The statute also provides that a “public employee’s authorization for a public employer to make a deduction under [this law] shall remain in effect until the public employee revokes the authorization in the manner provided by the terms of the agreement. If the terms of the agreement do not specify the manner in which a public employee may revoke the authorized deduction, a public employee may revoke authorization for the deduction by delivering an original signed, written statement of revocation to the headquarters of the labor organization.”

The unions have a deductions form which only allows employees to “opt-out” during a very small window of time – usually for about a 30-day period, once a year. If the employee signs the union’s authorization form with that limiting opt-out language, they will be stuck to those terms. Such forced union membership is not within the scope and vision of the Janus ruling. Already we have lawsuits being filed in Oregon, and elsewhere, regarding these union tactics. “Three Oregon school employees sued their union in federal court Tuesday, arguing it’s unfair that the union only lets members drop out and stop paying dues during the month of September.”

(https://www.oregonlive.com/education/2019/06/3-oregon-school-employees-sue-their-union-for-not-letting-them-drop-out.html)

Alteration of mandatory bargaining?
Under the Public Employees Collective Bargaining Act (PECBA), “employment relations” are a mandatory subject of bargaining for public employers with their unions. This new law, however, changes the definition of “employment relations”: “Employment relations” includes, but is not limited to, matters concerning direct or indirect monetary benefits, hours, vacations, sick leave, labor organization access to and communication with represented employees, grievance procedures and other conditions of employment.” I am not sure that this really changes anything, as we have always bargained about such topics. But this new law definitely erases any doubt!

And, just to further erase any doubts, the new law adds that it is an Unfair Labor Practice for a public employer to “Attempt to influence an employee to resign from or decline to obtain membership in a labor organization” or to “Encourage an employee to revoke an authorization for . . . deductions.”

If you have any questions or concerns as to how to proceed, feel free to give one of us a call or send an email.

Demand to Bargain over SB 1049
Are you one of the lucky ones?

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Diana Moffat

From our Summer 2019 e-newsletter

Since the 11th of June, 2019, when Governor Brown signed SB 1049 into law, numerous public employers have received Demands to Bargain (DTBs) filed by their unions over the impacts anticipated to employee benefits and compensation because of the new law. What should you do?

First, these DTBs are usually filed under ORS 243.698 – known as the midterm bargaining statute for public sector, unionized employees. Under that statute, a union has 14-days, from notice, to file a demand to bargain “anticipated changes” in “employment relations.” “Employment relations” includes, but is not limited to, matters concerning direct or indirect monetary benefits, hours, vacations, sick leave, grievance procedures and other conditions of employment. ORS 243.650 (7). However, it does not include what are known as permissive subjects of bargaining or prohibited subjects of bargaining. Also, “Employment relations” does not include subjects that have an insubstantial or de minimis effect on public employee wages, hours, and other terms and conditions of employment.

If you are in the midst of bargaining a successor Collective Bargaining Agreement (CBA) with one of your unions and they file a DTB over this PERS legislation, it would not go through ORS 243.698, but rather it would go under ORS 243.712, which requires the full 150-days of bargaining, rather than the 90-days expedited process of ORS 243.698.

But let’s just cut to the chase!
Do you have a duty to bargain over the likely financial impacts to your unionized employees because of the passage of SB 1049? The answer to that question is an unknown. But I can tell you a few things:

  1. The Local Government Law Group (LGLG) is hosting a state-wide management meeting for employer labor lawyers from all around the State in the next week to fully discuss the various approaches.
  2. If you receive a DTB from your union, you should acknowledge receipt of the DTB, and immediately send a copy to your management labor representative.
  3. Once received, we will send you a draft response that states that we don’t believe that we have any obligation to bargain over the impacts of a change to the PERs legislation, as that is not anything that the employer has initiated or has any control over.
  4. We will also look at your particular CBA language to be sure that you have not, somehow, promised to provide more in PERs benefits than the law requires.
  5. We will send any needed follow-up to the union to ask them to more specifically state why they think that you have an obligation to bargain

Now, to be sure, there is likely to be a lot of litigation in the near future over this new law. The unions, for the most part, are just trying to make sure that they don’t miss that 14-day DTB deadline under ORS 243.698. But, in the same vein, you should be sure not to miss the fact that you need to respond and determine your game plan.

Nothing PERSonal, It’s Business… An Update on SB 1049

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Dan Lawler

From our Summer 2019 e-newsletter

On June 11, 2019, Governor Kate Brown signed SB 1049, which aims to reduce unfunded liability in the Public Employees Retirement System (PERS), which currently sits at over $25 billion dollars. The law introduces a number of measures to help fund the system, including changes to PERS member contributions that will begin taking place in 2020. In response, public sector unions claim that the bill unfairly saddles public employees with the cost of supporting PERS and some have even issued demands to bargain over the impacts of the bill. Cities, counties and districts should familiarize themselves with the changes that SB 1049 makes to PERS to prepare for and respond to these demands as they become more frequent. However, cities, counties and districts should also be aware that litigation over the measure’s constitutionality is likely to occur, potentially delaying or preventing its implementation.

Summary of Changes under SB 1049

Individual Account Program (IAP) Redirect

SB 1049 creates Employee Pension Stability Accounts (EPSAs) that PERS will draw from to help reduce the system’s unfunded liability. Starting on July 1, 2020, PERS members shall contribute to an EPSA in the following manner:

  • Tier One/Two: All active Tier One and Tier Two members whose salaries exceed $2,500 per month shall contribute 2.5% of their salaries to an EPSA. The 2.5% salary redirect will be drawn from the 6% of salary that employees already contribute to their IAP accounts[1], while the remaining 3.5% of salary will go to the IAP accounts. However, members can make voluntary, after-tax contributions of the 2.5% into their IAP accounts to achieve the full, 6% contribution.
  • OPSRP: All active OPSRP members that earn at least $2,500 per month must make contributions in the manner described above, except that their EPSA contribution is only 0.75% of salary taken from the full, 6% IAP contribution.

SB 1049’s IAP Redirect does not affect money deposited in employees’ IAP accounts prior to July 1, 2020, but is still expected to reduce a 30-year employee’s overall retirement income by 1 to 2 percent. SB 1049 also provides that the IAP Redirect will cease if the system achieves 90% funding.

Work After Retirement Changes

SB 1049 will remove the 1,039-hour and 600-hour Work After Retirement limits for Tier One/Two and OPSRP retirees, respectively, for the years 2020 through 2024. These members can work and continue their current pension benefits without an hour limitation, but they may not accrue any new pension benefits beyond those they already receive. However, members that retired earlier than normal retirement age may only work and continue their benefits without an hour limitation if the date of their employment is more than six months after their retirement date. Cities, counties, and districts should be aware that under SB 1049’s work-back program, they must contribute the percentage of the retired member’s wages that would be contributed if the member were an active member of PERS starting January 1, 2020. The Board will then apply these contributions to the public employer’s liabilities.

Miscellaneous Changes

In addition to the changes detailed above, SB 1049 also does the following.

  • Section 20 allows PERS employers making lump sum payments to accounts under ORS 238.229 to choose the year in which to begin using the payments to offset PERS contributions that the employer would otherwise be required to make for the liabilities against which the lump sum payment is applied.
  • Section 23 requires employers to seek an independent financial analysis before issuing new pension obligation bonds under ORS 238.694.
  • Section 28 extends the amortization period and minimum payment schedule for unfunded liability to a total of 22 years, generating short-term cost savings by reducing required annual PERS contributions. This action is expected to account for about three quarters of the total savings per budget cycle that SB 1049 is intended to generate.
  • Sections 39 and 40 cap the final average salary that an employee’s benefit can be based on at $195,000.
  • Sections 43 through 45a direct the Oregon State Lottery Commission and Department of Administrative Services to transfer proceeds from sports betting games to the Employer Incentive Fund to help provide a 25% match for contributions to PERS that exceed the employer’s required contribution.
  • Sections 58 and 59 appropriate $100 million dollars from the General Fund to the PERS Employer Incentive Fund to help provide a 25% match for employer contributions to PERS that exceed the employer’s required contribution.

Litigation Looms

Opponents of SB 1049 have been vocal about challenging the measure in court and may target the provisions that redirect members’ IAP contributions to EPSAs. To expedite the potential challenge and review, Section 65 of SB 1049 confers jurisdiction on the Oregon Supreme Court (the Court) to determine whether the law breaches any contracts between PERS members and employers or whether the law violates any provisions of the Oregon or U.S. Constitutions. Section 65 allows any person who is or will be adversely affected by the law to file a petition for review with the Court and requires the Court to allow PERS employers to intervene in the proceeding. SB 1049 also prioritizes the proceedings authorized in Section 65 over all other matters that the Court will hear. Despite the provisions for expedited review, public employers can expect resolution of the contract and constitutionality issues to take years, though the law and its requirements will remain in effect until and unless the Court rules otherwise.

Legislator Walkout Threatens SB 1049 Funding

On June 20, 2019, the Oregon House of Representatives passed HB 5032, which would limit and direct PERS Limited Budget expenditures for the implementation of SB 1049. If the Oregon Senate passes the measure, PERS will be able to spend the following amounts on personnel and resources from 2019 to 2021 to implement SB 1049 and its Core Retirement Systems Applications program:

1) Project management and administration:                     $2,500,000

2) Quality assurance and testing:                                         $2,500,000

3) Information technology applications:                           $25,992,000

4) Operational implementation:                                           $7,567,714

5) Contingency reserve:                                                            $500,000

Though the Senate was likely to pass HB 5032, eleven senators walked out of the Legislature on June 20 and left the state to protest HB 2020’s cap and trade program. Until the legislators return, the Senate will not have the quorum required to conduct official business and will not be able to pass any bills. With the 2019 Regular Session scheduled to end on June 30, legislators and citizens worry that the Legislature will not be able to pass budget measures and funding directives, including HB 5032, that state agencies need to operate. Though Governor Brown sent state police to retrieve the legislators and threatened to convene a special legislative session if they do not return by June 30, the walkout could prevent passage of HB 5032. If the Legislature does not pass HB 5032, PERS will likely experience significant strains on the funding, staffing, and capacity to implement SB 1049, stretching the PERS General Fund even more thin and exacerbating the system’s issues with unfunded liability.

We hope this article provides a helpful primer for cities, counties and districts on SB 1049 and the changes it makes to employer and employee obligations under PERS. If you have any further questions about SB 1049 or other employment matters, please feel free to call us.

[1] In most jurisdictions, PERS employers already pay the full 6% IAP contribution on behalf of their employees.