SOLUTION: Guangdong University Wage Discrimination Discussion

SALARY. — Oregon Equal Pay Act of 2017, 2017 Or. Laws ch. 197, H.B.
2005 (to be codified in scattered sections of OR. REV. STAT.).
In 2016, women working full time earned on average nineteen percent less than men.1 For decades, policymakers have tried to narrow
this “pay gap.”2 Between 1980 and 2016, the gap fell by one-half,3 but
substantial differences in earnings remain. States and cities have begun
to experiment with new equal pay laws to try to close the gap.4 Recently,
Oregon enacted the Oregon Equal Pay Act of 2017,5 which bans employers from asking about or using prior salary in hiring decisions.6 The
Oregon Equal Pay Act of 2017 goes further than the federal Equal Pay
Act of 19637 (EPA) and other state and local laws in preventing employers from justifying an otherwise unlawful pay disparity on the basis of
prior salary. However, the complete ban on asking about or using prior
salary carries a risk — by limiting the information available to employers, it may encourage discrimination based on gender.
The gender pay gap in Oregon — at twenty-one percent8 — is
slightly higher than the national average. To try to close the gap, Democrats in the Oregon House of Representatives introduced H.B. 2005,9
content/dam/Census/library/publications/2017/demo/P60-259.pdf []. This
statistic compares the median earnings of full-time, year-round workers. Id. at 10. Gender differences in median earnings may reflect differences in human capital, including, for example, schooling
and work experience; differences in occupations, industries, and firms; discrimination; and selection
bias. See Francine D. Blau & Lawrence M. Kahn, The Gender Wage Gap: Extent, Trends, and
Explanations, 55 J. ECON. LITERATURE 789, 809–23, 825–36 (2017). Experimental evidence confirms the existence of gender-based discrimination in the labor market. See id. at 833–36.
2 Unequal wages motivated several major pieces of federal legislation, such as the Equal Pay
Act of 1963, 29 U.S.C. § 206(d) (2012), and Title VII of the Civil Rights Act of 1964, 42 U.S.C.
§§ 2000e-2 to -17 (2012). For an overview of empirical findings about the effects of antidiscrimination laws, see John J. Donohue, Antidiscrimination Law, in 2 HANDBOOK OF LAW AND ECONOMICS 1387, 1439–50, 1454–55 (A. Mitchell Polinsky & Steven Shavell eds., 2007).
3 See SEMEGA ET AL., supra note 1, at 10 fig.2.
4 See, e.g., CAL. LAB. CODE § 1197.5 (West Supp. 2017); MASS. GEN. LAWS ch. 149, § 105A
(2016); N.Y.C., N.Y., ADMIN. CODE § 8-107(25) (2017).
5 2017 Or. Laws ch. 197, H.B. 2005 (to be codified in scattered sections of OR. REV. STAT.).
6 Id. secs. 2, 4.
7 29 U.S.C. § 206(d).
8 Table S2419: Class of Worker by Sex and Median Earnings in the Past 12 Months (in 2016
Inflation-Adjusted Dollars) for the Full-Time, Year-Round Civilian Employed Population 16 Years
xhtml [] (select “S2419” as table name and “Oregon” as state).
9 H.R. 2005, 79th Leg. Assemb., Reg. Sess. (Or. 2017).
[Vol. 131:1513
a bill to ban employers from asking about or using prior salary in hiring
decisions.10 The ban aims to address the following concern: if a woman
is initially paid less than a man for comparable work in her first job and
subsequently transitions to a second job in which her new employer
bases her pay on her previous salary, then her lower pay will persist. A
floor letter introduced by Oregon State Representative Ann Lininger
summarized this rationale: “[The ban] will help break the cycle of pay
disparity that traps workers from aspiring to earn higher wages because
they have previously worked at a lower wage.”11
Initially, the proposal was contentious. Republicans opposed the
House bill because it interfered with otherwise innocent business practices and lacked adequate protection for employers.12 The bill passed
the House along party lines, with only one Republican voting in favor.13
However, the Senate produced a separate version of the bill that attracted bipartisan support, in part because it included a partial safe harbor for employers that conduct an “equal pay analysis.”14 The Senate
bill passed both chambers of the Oregon legislature unanimously.15 Its
Republican cosponsor, Oregon State Senator Tim Knopp, opined that
“the next generation of women . . . will earn more for their entire working career because of our efforts here today.”16 On June 1, 2017,
Governor Kate Brown, a Democrat, signed the Act into law.17
The Act regulates employers’ acquisition and use of salary history
information. Employers may not “seek the salary history of an applicant . . . from the applicant . . . or a current or former employer of the
Id. sec. 2.
Floor Letter, Or. Rep. Ann Lininger, Fair Pay for All — HB 2005-A (Mar. 28, 2017), [].
12 Floor Letter, Or. Reps. Jodi Hack & Greg Barreto, Pay Equity Shouldn’t Be a Partisan Issue:
Oppose HB 2005 (Mar. 28, 2017),
[] (“[The bill] may limit our ability as employers to financially reward
the star performers in our companies while simultaneously exposing us to punitive damages without
adequate defense.”).
13 Anna Marum, Oregon Democrats (and One Republican) Pass Equal Pay Bill out of the House,
OREGONLIVE (Mar. 29, 2017),
bill.html [].
14 See Floor Letter, Or. Sen. Tim Knopp, YES on HB 2005B — The Oregon Equal Pay Act of
[] (“Employers want to do the right thing and [this bill] allows
[them] . . . to identify the problem (if they have one) before they are sued . . . .”). The statute defines
“equal-pay analysis” to be “an evaluation process to assess and correct wage disparities among employees who perform work of comparable character.” Oregon Equal Pay Act of 2017 sec. 1,
§ 652.210(1)(4).
15 See HB 2005 Enrolled: Overview, OR. ST. LEGISLATURE,
liz/2017R1/Measures/Overview/HB2005 [].
16 Anna Marum, Oregon Senate Passes Equal Pay Act of 2017; What It Means for You, OREGONLIVE (May 18, 2017),
equal_pay_act.html [].
17 HB 2005 Enrolled: Overview, supra note 15.
applicant”;18 they may not “[s]creen job applicants based on current or
past compensation”;19 and they may not “[d]etermine compensation for
a position based on current or past compensation.”20 An employer found
to have violated these provisions is potentially liable for back pay and
for compensatory and punitive damages.21 However, the Act contains
a safe harbor provision. If an employer has completed an “equal-pay
analysis” — an internal audit, essentially — within three years before
the complaint, eliminates the pay differential for the plaintiff, and makes
“substantial progress toward eliminating wage differentials for the protected class asserted by the plaintiff,” a court must grant a motion by
the employer to limit an award to two years of back pay and reasonable
attorney fees and cannot award further compensatory or punitive
The Act’s implementation is staggered. Most of its provisions, such
as the ban on determining pay based on current or past pay, do not take
effect until January 1, 2019.23 The ban on seeking information about
salary history took effect on October 6, 2017,24 but civil actions for violating the ban may not begin until January 1, 2024.25 Until then, enforcement of the ban is up to the Commissioner of the Oregon Bureau
of Labor and Industries.26
The Oregon Equal Pay Act of 2017 is not the first of its kind. It is
part of a proliferation of equal pay laws that take aim at the use of prior
salary in hiring decisions. In 2016, Massachusetts became the first state
to enact such a law.27 Within one year, California, Delaware, Oregon,
Oregon Equal Pay Act of 2017 sec. 4.
Id. sec. 2, § 652.220(1)(c).
Id. sec. 2, § 652.220(1)(d). The Act provides that this provision does not apply to transfers or
promotions with the same employer. Id. Because the provision bars employers from using salary
history, one may wonder why the ban on asking about salary history is even necessary. Presumably,
it is an additional safeguard to prevent employers from using the information, which may be difficult to detect.
21 Id. secs. 7, 9, 10. If an employee files a complaint with the Commissioner of the Oregon
Bureau of Labor and Industries and the Commissioner finds for the employee, the Commissioner
must award back pay equal to the time necessary to resolve the complaint plus either two years or
the time the employee was subject to an unlawful wage differential, whichever is less. See id. sec. 7,
§ 659A.870(4). In a civil action, a court may exercise discretion to award back pay. See id. sec. 10,
§ 659A.885. The Act limits punitive damages to cases in which an employer engages in fraud, acts
with malice or engages in willful and wanton misconduct, or is a repeat offender. See id. sec. 9,
§ 659A.885(4).
22 Id. sec. 12(1).
23 Id. sec. 14.
24 See id. sec. 15.
25 Id. sec. 13.
26 See OR. REV. STAT. § 659A.800 (2015).
27 MASS. GEN. LAWS ch. 149, § 105A(c)(2) (2016); see Stacey Cowley, Illegal in Massachusetts:
Asking Your Salary in a Job Interview, N.Y. TIMES: DEALBOOK (Aug. 2, 2016), https:// [].
[Vol. 131:1513
Puerto Rico, New York City, and Philadelphia followed.28 Salary history legislation is under consideration in at least twenty states and the
District of Columbia,29 and on May 11, 2017, members of the U.S. House
of Representatives introduced the Pay Equity for All Act of 2017,30 a
bill to amend the Fair Labor Standards Act of 193831 to disallow employers to “request or require . . . that a prospective employee disclose
previous wages or salary histories.”32
By preventing employers from raising a prior salary defense, the
Oregon Equal Pay Act of 2017 strengthens the hands of discrimination
claimants. The Act goes further than the EPA, as interpreted by the
circuit courts of appeals, and other recent state and local equal pay laws
in preventing employers from justifying an otherwise unlawful pay disparity on prior salary. However, the overall effect of the new ban on
asking about or using prior salary is uncertain. Although similar bans
have been described as a “sea change,”33 as a practical matter they may
not alter the information available to or used by employers. Or worse,
they may risk doing so in a way that encourages gender-based
The EPA prohibits discrimination “on the basis of sex by paying
wages to employees . . . at a rate less than the rate at which [the employer] pays wages to employees of the opposite sex . . . for equal work
on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions.”34 An employer may assert as an affirmative defense to a claim
under the EPA “(i) a seniority system; (ii) a merit system; (iii) a system
28 See CAL. LAB. CODE § 1197.5(b)(3) (West Supp. 2017); DEL. CODE ANN. tit. 19, § 709B
(2017); P.R. LEYES AN. tit. 29, § 254 (2017); Oregon Equal Pay Act of 2017; N.Y.C., N.Y., ADMIN.
CODE § 8-107(25) (2017); PHILA., PA., CODE § 9-1131(2) (2017). Most of the laws do not go into
effect immediately. The earliest to take full effect was the New York City ban, which began on
October 31, 2017. See N.Y.C., N.Y., ADMIN. CODE § 8-107(25). In contrast, the Massachusetts
ban comes into force on July 1, 2018, MASS. GEN. LAWS ch. 149, § 105A, and the Oregon Equal
Pay Act of 2017 takes full effect on January 1, 2024, Oregon Equal Pay Act of 2017 sec. 13.
Philadelphia’s ban is the subject of a legal challenge: the Chamber of Commerce for Greater
Philadelphia alleges in part that the ban violates the First Amendment. See First Amended Complaint at 22, Chamber of Commerce for Greater Phila. v. City of Philadelphia, No. 17-1548 (E.D.
Pa. June 13, 2017).
29 See Yuki Noguchi, Proposals Aim to Combat Discrimination Based on Salary History, NPR
(May 30, 2017, 11:09 AM), [].
30 H.R. 2418, 115th Cong. (2017).
31 29 U.S.C. §§ 201–219 (2012).
32 H.R. 2418 sec. 2(a), § 8(1). The bill has the support of several prominent organizations, such
as the AFL-CIO, the ACLU, and the NAACP. See Letter from American Association of University
Women to the U.S. House of Representatives (May 24, 2017),
2017/01/Pay-Equity-for-All-Act-Sign-On-nsa-1.pdf [].
33 Cowley, supra note 27 (quoting Victoria A. Budson, Executive Director of the Women and
Public Policy Program at the Harvard Kennedy School of Government).
34 29 U.S.C. § 206(d)(1).
which measures earnings by quantity or quality of production; or (iv) a
differential based on any other factor other than sex.”35 Courts disagree
about the extent to which prior salary is a permissible “factor other than
sex.” In Kouba v. Allstate Insurance Co.,36 the Ninth Circuit held that
“the Equal Pay Act does not impose a strict prohibition against the use
of prior salary,”37 but an employer wanting to rely on it must assert “an
acceptable business reason.”38 The Seventh and Eighth Circuits agreed
that employers may use prior salary but declined to adopt the “‘acceptable business reason’ requirement.”39 The Tenth and Eleventh Circuits,
meanwhile, have held that “[t]he EPA . . . precludes an employer from
relying solely upon a prior salary to justify pay disparity,” whatever the
reason.40 In 2017, the Ninth Circuit revisited the issue in Rizo v.
Yovino,41 now vacated pending rehearing en banc, in which it endorsed
its decision in Kouba and clarified that it “did not draw any distinction
between using prior salary ‘alone’ and using it in combination with
other factors.”42
By prohibiting employers from relying on prior salary at all, the
Oregon Equal Pay Act of 2017 goes further to stop the prior salary defense than have the EPA, as interpreted by the circuit courts of appeals,
and other recent state equal pay laws. Other states responded more
narrowly or only in part. For example, California amended its equal
pay law to specify that “[p]rior salary shall not, by itself, justify any
disparity in compensation.”43 Delaware banned salary history inquiries
but continues to allow employers to use salary history information if
Id.; see also Corning Glass Works v. Brennan, 417 U.S. 188, 196–97 (1974).
691 F.2d 873 (9th Cir. 1982).
Id. at 878.
Id. at 876.
Wernsing v. Dep’t of Human Servs., 427 F.3d 466, 469 (7th Cir. 2005) (quoting Kouba, 691
F.2d at 876); see id. at 470 (“The disagreement between this circuit . . . and those that require an
‘acceptable business reason’ is established, and we are not even slightly tempted to change sides.”);
Taylor v. White, 321 F.3d 710, 719 (8th Cir. 2003) (“[The] ‘reasonableness’ level of review [in Kouba]
is . . . greater than that which we believe to be required under Title VII and the EPA.”).
40 Angove v. Williams-Sonoma, Inc., 70 F. App’x 500, 508 (10th Cir. 2003); see Irby v. Bittick,
44 F.3d 949, 955 (11th Cir. 1995). According to the Eleventh Circuit, “prior salary alone cannot
justify pay disparity,” Glenn v. Gen. Motors Corp., 841 F.2d 1567, 1571 (11th Cir. 1988) (emphasis
added), because the legislative history of the EPA demonstrates that Congress intended the statutory
term “factor other than sex” to mean something more than market forces leading women to accept
lower pay for equal work, id. at 1570–71. See also Nicole Buonocore Porter & Jessica R. Vartanian,
Debunking the Market Myth in Pay Discrimination Cases, 12 GEO. J. GENDER & L. 159, 173
(2011) (“Congress designed the EPA to be broadly remedial, . . . suggesting that legislators could not
have intended an exception so broad that it would provide employers with a convenient loophole
capable of justifying almost any wage differential.”).
41 854 F.3d 1161 (9th Cir.), reh’g en banc granted, 869 F.3d 1004 (9th Cir. 2017).
42 Id. at 1166.
43 CAL. LAB. CODE § 1197.5(b)(3) (West Supp. 2017) (emphasis added).
[Vol. 131:1513
applicants volunteer it.44 But the Oregon Equal Pay Act of 2017 appears
to bar wholesale any consideration of prior salary. The Act provides
that an employer may not “[d]etermine compensation . . . based on current or past compensation”45 and does not make any explicit exception
for voluntary disclosures or for consideration of prior salary in conjunction with other factors. Thus, the Act seems to wipe out the prior salary
defense for employers facing claims of unlawful discrimination.
There are, however, reasons to be skeptical that the Act will alter
hiring practices in a way that reduces gender differences in earnings.
First, salary history bans may not alter the information available to employers or whether they use it. The ban directly affects only job applicants with a salary history. That is, for applicants looking for their first
job, or for employees who never change jobs, the rule does not change
the information available to employers.46 In addition, there may be a
set of applicants for whom the employer knows their current salary regardless, such as government employees or employees in a firm, occupation, or industry about which the employer is knowledgeable. Finally,
an applicant may volunteer the information. In that case, even though
there is no specific exemption for applicant-volunteered salary history
under the Oregon Equal Pay Act of 2017, it is hard to imagine that an
employer would ignore it. Suppose an applicant says that he makes
$50,000 per year, and an employer, based on that information, offers him
$55,000. This consideration of prior salary would violate the Oregon
statute, but the violation may be difficult to detect. The applicant has
no incentive to complain,47 and the employer need only come up with a
lawful justification, such as “merit” or some combination of education,
training, and experience,48 to justify the offer.
Second, even if the Act alters the information available to employers,
this may not help women. There is a risk that by limiting the information available to employers, the Act may encourage discrimination
44 See DEL. CODE ANN. tit. 19, § 709B (2017). Recently, California amended its law, making
it more like Delaware’s. See Assemb. 168, 2017–2018 Leg., Reg. Sess. (Cal. 2017) (signed into law
Oct. 12, 2017).
45 Oregon Equal Pay Act of 2017 sec. 2, § 652.220(1)(d).
46 However, one possibility is that an employee can obtain an offer from another employer and
use the offer to bid up the employee’s current wage. In that case, if the law improves employees’
outside options, it could raise wages for employees who never change jobs.
47 Perhaps lawmakers envisioned that, for example, a female employee would have a strong
incentive to file a complaint after learning that a male colleague earned more in part because he
voluntarily disclosed his prior salary. But this example highlights the value of pay transparency.
See Deborah Thompson Eisenberg, Money, Sex, and Sunshine: A Market-Based Approach to Pay
Discrimination, 43 ARIZ. ST. L.J. 951, 1005–06 (2011); Jake Rosenfeld, Pay Transparency at Work:
The Great Equalizer?, ONLABOR (Mar. 1, 2016), [].
48 Oregon Equal Pay Act of 2017 sec. 2, § 652.220(2).
based on gender. At first, this may seem counterintuitive. But eliminating one input into employers’ hiring decisions, such as prior salary,
may increase the informative value of other inputs, such as gender.
Suppose an employer makes a wage offer based on what it believes a
job applicant will accept. To infer the applicant’s reservation wage, that
is, the lowest wage she will accept, the employer may rely on her education, her experience, and other information known about her — possibly her gender.49 To pay someone differently because of gender is, of
course, illegal, but there is evidence that employers behave this way.50
Social scientists refer to this type of group-based inference as statistical
discrimination.51 If the reservation wages employers infer without using
wage history approximately equal what they infer using the information,
the ban on asking about prior wages may have little effect on wage offers. If employers underestimate the gender difference in earnings, the
ban could have its desired effect. But if employers overestimate this
difference, the ban could result in lower wage offers to women.
Preliminary evidence suggests that the risk that salary history bans
encourage harmful statistical discrimination is not insignificant. Recently, in an effort to improve employment outcomes for individuals
with criminal records, particularly black men, several states have passed
“ban the box” laws that prohibit employers from asking job applicants
about their criminal history.52 Perversely, the policy was shown to encourage racial discrimination based on stereotypes about black criminality.53 In fact, the black-white gap in employer callback rates grew
sixfold.54 Of course, there may be important differences between “ban
the box” and salary history bans. First, racial stereotypes about criminality may be stronger than gender stereotypes about earnings. Second,
wage determination may differ from decisions about whether to interview applicants. But the two policies share basic similarities: the underlying discrimination is illegal but difficult to detect, and the policies
49 This idea extends in a straightforward manner to race and other group identities that may be
observable by the employer.
50 Cf. Roland G. Fryer, Jr., et al., Racial Disparities in Job Finding and Offered Wages, 56 J.L.
& ECON. 633, 635–36 (2013) (finding evidence that black workers have lower reservation wages
and employers statistically discriminate based on race in making wage offers).
51 See Edmund S. Phelps, The Statistical Theory of Racism and Sexism, 62 AM. ECON. REV.
659 (1972); Kenneth Arrow, The Theory of Discrimination, in DISCRIMINATION IN LABOR MARKETS 3 (Orley Ashenfelter & Albert Rees eds., 1973); Dennis J. Aigner & Glen G. Cain, Statistical
Theories of Discrimination in Labor Markets, 30 INDUS. & LAB. REL. REV. 175 (1977). Employers
may also discriminate based on animus. See generally GARY S. BECKER, THE ECONOMICS OF
DISCRIMINATION 39–54 (2d ed. 1971) (proposing a model of employer discrimination based on
52 See, e.g., N.J. STAT. ANN. § 34:6B-14 (West Supp. 2017).
53 Amanda Agan & Sonja Starr, Ban the Box, Criminal Records, and Racial Discrimination: A
Field Experiment, 133 Q.J. ECON. (forthcoming 2018) (manuscript at 5).
54 Id.
[Vol. 131:1513
limit information available to employers but not information about race
or gender. A concern that the “ban the box” result may extend to salary
history bans should not be ruled out.55 According to a recent survey,
women who refuse to disclose their prior salary receive slightly lower
wage offers than women who disclose, while men who refuse receive
slightly higher offers.56 This evidence is at least suggestive of the idea
that employer inferences may make women worse off. It also highlights
a separate concern, which is that, regardless of whether an employer
may legally use the information, a man may be more likely to volunteer
his prior salary.57 In that case, the employer may draw a negative inference about a woman applicant who does not disclose. Oregon, at
least, makes no voluntary-disclosure exception to the ban on determining compensation based on current or past compensation if an employee
files an otherwise successful complaint.58
The effect of the Oregon Equal Pay Act of 2017, then, may differ for
discrimination claimants versus women who never bring a claim. The
Act helps claimants by eliminating the prior salary defense, but its overall effect on wage setting is uncertain (and possibly undesirable). An
unexplored possibility is that the current gender pay gap has more to do
with factors, such as pay transparency59 and workplace flexibility,60 for
which the salary history ban is not a remedy. Experimentation should
inform whether other states follow the Oregon model or try something
55 One piece of experimental evidence suggests that preventing employers from learning about
prior compensation may benefit certain job applicants. See Moshe A. Barach & John J. Horton,
How Do Employers Use Compensation History?: Evidence from a Field Experiment (CESifo, Working Paper No. 6559, 2017), []. In
a field experiment involving an online labor market for remote tasks, such as computer programming, researchers randomly assigned whether employers could observe job applicants’ prior wages.
Id. at 6, 10. Employers that could not observe prior wages considered more applications and called
back and hired applicants with lower past wages, on average. Id. at 16, 21–22. Information about
prior wages did not affect the prevalence of wage bargaining, but conditional on bargaining, applicants with hidden wage histories struck better bargains. Id. at 26–28. The problem with extending
this finding to the Oregon Equal Pay Act of 2017 is that the online labor market in the experiment
included no information about gender, so that, by construction, gender-based discrimination could
not occur.
56 See Lydia Frank, Why Banning Questions About Salary History May Not Improve Pay Equity, HARV. BUS. REV. (Sept. 5, 2017), [].
57 Women have been found to be less likely to negotiate and to compete. See Marianne
Bertrand, New Perspectives on Gender, in 4B HANDBOOK OF LABOR ECONOMICS 1545, 1551–
54, 1556–58 (David Card & Orley Ashenfelter eds., 2011).
58 See Oregon Equal Pay Act of 2017 sec. 2.
59 See sources cited supra note 47.
60 See Claudia Goldin, A Grand Gender Convergence: Its Last Chapter, 104 AM. ECON. REV.
1091, 1093–94, 1103–04 (2014). Women may prefer greater flexibility in hours, for which different
firms and sectors face different costs, leading to workplace sorting. Id. at 1116–17.
61 Cf. New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932) (Brandeis, J., dissenting) (“It is
one of the happy incidents of the federal system that a . . . State may . . . serve as a laboratory . . .
[to] try novel social and economic experiments . . . .”).

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