Hiring Bonuses — Are They Legal?

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Ask an HR Expert

Q: There was a time during the early years of the pandemic when hiring bonuses were OK under the Oregon Equal Pay Act. I heard that’s not true anymore? What are the consequences if you continue offering hiring bonuses?   

A: You’re correct: 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.  

The Oregon Equal Pay Act prohibits employers from paying different wages (and other compensation, like bonuses) to employees doing comparable work unless the differences are based on bona fide factors.  

Those amendments expired on September 28, 2022.  

A house bill (3205) was introduced in 2023 to make those amendments permanent, but it didn’t pass. So, hiring and retention bonuses remain subject to the Equal Pay Act.   

However, you may still give your employees bonuses, as long as they’re available to all employees performing comparable work and the difference in compensation is accounted for by one or more of the bona fide factors listed in the law.  

For example, an employer could pay a $7,000 sign-on bonus to an engineer who has a highly desirable degree, like aerospace engineering, under the bona fide factor of education. This means the employer can:  

  1. Pay this engineer more than other engineers, but 

  1. Must give every other engineer with this degree an equivalent increase in compensation if the bonus caused their compensation to be unlawfully unequal. 

If an employer fails to work within the parameters of the Equal Pay Act, it can be costly.  

Employees can sue and, if they win, are entitled to unpaid damages, liquidated damages equal to their unpaid wages, attorney fees, and other relief. Employees can sue on their own behalf, or on behalf of other, similarly situated employees. And, a violation of the Equal Pay Act is a Class A misdemeanor

It’s a lot to keep in mind as you consider how to best attract top talent to your organization! 

Do you need more HR support? Boly:Welch HR Consulting can help your team go farther with budget-friendly human resources consulting, tailored for your success.


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