One of the most highly anticipated new Oregon laws for employers was signed into law on June 11, 2019, and will go into effect in the fall of 2019, with some provisions applying beginning October 2020. It brings sweeping changes for all companies with Oregon employees. Senate Bill 726, also known as the Oregon Workplace Fairness Act, affects employment agreements, settlement and severance agreements, written policies and employment practices. Although widely summarized as a #MeToo law aimed at limiting confidentiality agreements about sexual assault, harassment and discrimination, the scope of the final law is much broader.

Key Changes to Current Law Include:

  • Requiring a written anti-discrimination policy that includes new, detailed information to be included and provided at time of hire and whenever a covered complaint is made
  • Expanding the statute of limitations for many unlawful discrimination claims from one year to five years
  • Restricting nondisclosure or no-rehire provisions in many severance and settlement agreements 

These and other new requirements apply to every employer with Oregon employees and demand new approaches for employment-related agreements and practices. The law takes effect 91 days after the legislature adjourns in June 2019 and changes to the existing statute of limitations begin at that time. Other requirements kick in October 1, 2020. We will also discuss this law and others in our June 25 Webinar on new Oregon legislation.

Key Takeaways

Every Employer Must Adopt a New Written Discrimination Policy

All employers must have a written policy to prevent discrimination. Even employers who currently have robust anti-discrimination policies will need to make revisions in order to comply with the new requirements. Policies must be implemented by October 1, 2020. The written policy must:

  • State the process to report unlawful discrimination;
  • Identify the person(s) responsible for receiving complaints at the company, including an alternate;
  • State the new five-year statute of limitations for claims of unlawful discrimination under various Oregon laws covering discrimination based on multiple protected classes including race, color, religion, sex, sexual orientation, national origin, marital status, age, uniformed service members, or disability, as well as sexual assault;
  • State that the employer may not require or coerce the employee to enter a nondisclosure or nondisparagement agreement, and describe what that means;
  • State that an employee claiming discrimination may voluntarily request to enter into an agreement containing a nondisclosure, nondisparagement, or no-rehire provision if the agreement gives the employees seven days to revoke after signature;
  • Advise employers and employees to document conduct that is unlawful under the law.

Employers must provide the policy (1) to each employee at the time of hire, (2) to each person at the time he or she complains of prohibited discrimination or harassment, and (3) by making it available in the workplace. Although the Oregon Bureau of Labor and Industries (BOLI) will issue guidance on its website, we advise employers to seek legal counsel before implementing any new policies or practices in response to this law.

Employees’ Statute of Limitations is Increasing from One Year to Five Years

Employees claiming a broad scope of unlawful employment practices including discrimination, harassment and retaliation based on various protected classes under Oregon law will now have five years in which to file a complaint with BOLI or with a Court. This is a significant increase over the long-standing one-year statute of limitations.

In addition to an expanded scope of potential liability, this change will have practical consequences for both employees and employers. Companies will be re-examining document retention policies and electronic archives to determine how to preserve potential evidence to defend against claims dating back several years. There is no clear answer on the “right” policy to institute, and simply extending all preservation for up to five years is likely cost prohibitive for many employers. We strongly advise companies to consult legal counsel whenever implementing preservation policies.

This statute of limitations change begins in the fall of 2019 for existing discrimination claims. Conduct that is newly prohibited by the Oregon Workplace Fairness Act is subject to the longer limitations period as of October 1, 2020.

Employers Must Reconsider Certain Settlement and Severance Terms

The new law aims to stop employers from requiring nondisparagement or no-rehire provisions in any settlement, separation, or severance agreement with a current or former employee who claims adverse treatment based on certain protected statuses. Instead, the new law says that these provisions may only be included if (1) the employee requests them and (2) the agreement gives the employee seven days to revoke the agreement following signature. The amended law prohibits noncompliant agreements and conduct beginning October 1, 2020.

The legal change seems to be a solution in search of a problem, as settlement and severance agreements are already voluntary and negotiated by employees.
Regardless, the new law does not expand on the standard for “request” in this context, and it is unclear how courts will interpret a “request” that the employee is required to make as part of the agreement.

The rules are different if the agreement is with the accused person rather than the claimed victim. In that case, if supported by a good-faith investigation, the employer may include nondisclosure and no-rehire provisions, without any explicit request or seven-day revocation.

Mandatory Severance Agreements with Bad Actors are Voidable

Under the new law, as of October 1, 2020, employers will be able to avoid previously entered into contractual severance obligations, for qualifying managerial employees who are let go (following a good-faith investigation) for violating the new law’s broad requirements. The law does not negate these agreements, unless the employer chooses to void them. This section appears primarily directed at the so-called “golden parachutes” that have been widely publicized post-#MeToo and resulted in large payouts to accused harassers terminated for their conduct, but the legislature’s wording is unclear and raises questions about what is covered. Careful employers will consult legal counsel before entering into or voiding any such agreements.

While the law makes other changes—such as prohibiting nondisclosure and nondisparagement provisions with current and prospective employees regarding discriminatory conduct and sexual assault—those legal developments are unlikely, as a practical matter, to have major changes on many employers’ common and current employment practices.

To learn more about SB 726 and other new Oregon laws, join our webinar: New 2019 Oregon Employment Laws.