By Chris Morehead
For the Oregon Beer Growler
Remember the March edition when I wrote about the Oregon Bureau of Labor and Industries’ (BOLI) bold new interpretation of overtime compensation rules that would have reversed years of past practice and potentially impacted craft brewers across the state? Well, brewers can now take a big sigh of relief. On March 9, 2017, an Oregon court shot down the new BOLI interpretation, which should be viewed as a major victory for all “manufacturing establishments” — breweries included— in Oregon.
As a brief refresher, in December 2016, BOLI did a complete 180 with respect to its interpretation of how daily and weekly overtime should be calculated for employees who work in mills, factories and manufacturing establishments. Under the new BOLI rule, manufacturing establishments (which includes breweries) were required to pay employees overtime rates for hours worked in excess of 40 hours per week as well as overtime rates for any hours in excess of 10 hours in any given day.
Significantly, this rule would have allowed employees to potentially count the same hour of work toward both their daily and weekly overtime totals (“double-counting”). This was a drastic change from the old rule, which only required manufacturers to pay the greater of daily or weekly overtime hours worked by employees in a workweek (but not both). BOLI’s new interpretation took center stage in a class-action lawsuit filed against Portland Specialty Baking in 2016.
In great news for employers, the Multnomah County Circuit Court rejected BOLI’s new rule. According to Judge Kathleen Dailey, a manufacturing employer subject to both ORS 653.261 and ORS 652.020 (which includes breweries) must calculate both daily and weekly overtime in a workweek and pay only the greater of the two amounts. The court reasoned that this interpretation creates a consistent reading of the two overtime statutes, prevents “double-counting” of overtime hours and ensures all work performed in excess of 40 hours per week is paid at the rate of no less than one-and-one-half times the regular rate of pay. Accordingly, Judge Dailey dismissed the plaintiffs’ claims for daily and weekly overtime wages for work performed in the same week.
While the court’s ruling is a big win for all Oregon manufacturing employers, this is not, unfortunately, the end of the matter. It is expected the plaintiffs will seek review of the decision. However, before any such review might occur, the Oregon legislature could pass Senate Bill 984, which is intended to eliminate any ambiguity as to the calculation of daily and weekly overtime under ORS 652.020 and ORS 653.261 in a manner consistent with the court’s ruling. Interested employers may want to contact their state legislators and express support for Senate Bill 984.
In the interim, the new court opinion is an important consideration in determining compliance obligations. While unlikely, it is conceivable that Senate Bill 984 will not pass and the Court of Appeals will reverse Judge Dailey’s opinion. In that scenario, brewers could be liable for overtime wages as far back as two years, plus attorneys’ fees and costs. Accordingly, brewery owners concerned about their current wage payment structure and/or shift scheduling practices are encouraged to seek legal counsel in addressing potential risk and exposure.
Chris Morehead is an attorney in the Portland office of Ogletree Deakins, a national labor and employment law firm. He focuses on hospitality employers, with an emphasis on the craft beer industry. He can be reached at firstname.lastname@example.org or 503-552-2140.