The three employment law changes Oregon employers need to know for 2016

By: Peter S. Hicks, article originally published in Cascade Business News 

Peter S. Hicks is an employment and litigation attorney in Jordan Ramis PC’s Bend office. He has represented local, regional, and national clients in state and federal courts and before administrative agencies, including the Oregon Bureau of Labor and Industries, the Washington Human Rights Commission, and the Equal Employment Opportunity Commission. His involvement in the local community includes pro bono legal services for Boys and Girls Club of Central Oregon and Heart of Oregon Corps.

The past ten months have seen the introduction of three new laws or regulations that significantly impact Oregon employers. In July of 2015, the Oregon Paid Sick Leave Act was introduced, mandating paid sick leave for Oregon employees. Last month, Governor Brown signed Senate Bill 1532, significantly increasing the Oregon minimum wage. Finally, on May 23, 2016, the U.S. Department of Labor (DOL) published its final rule increasing the minimum salary threshold employees must be paid to potentially be exempt from overtime. This article summarizes the basic provisions of each law and provides recommendations for what to do in response to each.

Oregon Paid Sick Leave – The Oregon Paid Sick Leave Act (the Act) provides 40 hours of sick leave for all Oregon employees, with employees earning one hour of sick leave for every 30 hours worked. Employers in cities with populations less than 500,000 must provide paid leave if the employer has ten or more employees. Employers in cities with a population greater than 500,000 (currently only the Portland Metro Area) must provide paid leave if the employer has six or more employees.

If the employer has less than the minimum number of employees, the leave is unpaid. Most significantly, the Act applies to all employees, including temporary and seasonal employees, and begins to accrue immediately, although the employer can require that it not be used until after the first 90 days. Leave may also be used for a wide range of absences, including caring for family members.

The Act became effective January 1, 2016. Employers should therefore be providing leave for eligible employees. Employee handbooks and policies should also be immediately updated and leave tracking and accrual policies must also be implemented notifying employees, at least quarterly, of any available leave.

Oregon Minimum Wage – Effective July 1, 2016, Oregon employers will be required to phase in an increase in the minimum wage over six years. The minimum wage will be tiered, with differing wage rates required depending upon the population density of the Oregon county where the employer is located. The minimum wage will increase each year until 2022, when the rates will be $14.75/hour for high-density counties, $13.50/hour for medium-density counties and $12.50/hour for low-density counties. After 2022, annual cost of living increases will be made by the Commissioner of Labor (Commissioner).

Although the legislature initially left the crucial question of “employer location” undefined, the Oregon Bureau of Labor and Industries (BOLI) recently issued rules for making this determination.  BOLI’s new rules provide the following criteria for determining the “employer location”:

  1. If the employee performs at least 50% of the work at the employer’s “permanent fixed location” during a pay period, the region where the permanent fixed location is located is the employer location and determines the minimum wage rate.
  1. If the employee makes deliveries as part of their duties, the “permanent fixed location” of the employer is still the employer location governing the appropriate region/minimum wage rate if the employee begins and ends their regular work days at that same location.  For example, the minimum wage rate for a delivery driver who reports to work at the employer’s main office in Bend (Standard Region) and makes deliveries to Portland (Portland Metro Region) and back during the same work day would be entitled to the Standard minimum wage rate in effect for Bend; not the Portland Metro rate.
  1. If the employee performs more than 50% of their work at a location other than the “permanent fixed location” (such as a branch office or remote construction site), the “employer location” becomes the region where the majority of the work is performed.  In this scenario, if the employer has a main office in Bend (Standard Region), but employees that perform the majority of their work at a branch office or construction site in Madras (Nonurban Region), the employees in Madras would be paid the Nonurban minimum wage rate; not the Standard rate for Bend.
  1. Finally, if none of the scenarios above apply and the employee works in more than one region in a pay period, the employee is paid either: (a) at least the minimum wage rate for each hour in each region where the work is performed; or (b) the highest rate required in any region where work was performed by the employee during the pay period.  If the employer chooses option (a), the employee must keep records tracking where all work was performed during the pay period.  If the employer chooses option (b), the employer is excused from the tracking requirement.

Given the rapidly approaching July 1 effective date for the new minimum wage rates, employers need to be prepared to pay the appropriate wages and make sure the payments are accurately reflected on the employee’s pay stub.  If an employee works in more than one region, be sure to reflect the time and pay for the work in each region.  Although the employer may be exempt from keeping records documenting where the work was performed if the employer elects option 4(b) above, we recommend keeping records nonetheless as protection in the event of an audit.  As always, employees should also be asked each pay period to verify that their hours are correct and accurate by signing or otherwise verifying time cards or records.

Federal Overtime Revision – On December 1, 2016, the long-awaited changes to the minimum salary threshold to classify employees as exempt from overtime under the Fair Labor Standards Act (FLSA) will take effect. Under the revised regulations, the minimum threshold will increase significantly, from $455/week to $913/week ($47,476/year).

The salary threshold is the first part of the two-part test to determine whether certain occupations are exempt from overtime. Employees must be paid at least $913/week (the salary test) and perform primarily executive, professional, administrative, outside sales, or computer-related duties (the duties test).

Up to ten percent of the salary can be nondiscretionary bonuses, incentive pay, or commissions. The salary test will be adjusted every three years to a rate equal to the 40th percentile of full-time employees in the lowest wage region in the U.S. Additionally, the highly compensated employee exemption, exempting highly compensated employees, is now tied to the 90th percentile of full-time salaried workers nationally, raising the annual salary basis from $100,000 to $134,004.

Despite the revisions, other overtime exemptions remain such as the exemption for agricultural workers. Simply designating an employee as “salaried” however does not automatically exempt that employee from overtime. The revisions present an opportunity to review existing job descriptions for compliance with all applicable wage and hour laws.

(***The CBN article has been updated in the Member Focus to include BOLI’s new rules regarding “employer location” for the new minimum wage law)

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