By Christopher Morehead
For the Oregon Beer Growler
As you may recall from prior Oregon Beer Growler issues, the status of Oregon’s overtime rule for mills, factories and manufacturing establishments (which includes breweries) has been in constant flux since December 2016. That is when the Oregon Bureau of Labor and Industries (BOLI) unexpectedly decided to reinterpret longstanding overtime laws by requiring that manufacturing employers “pyramid” (i.e., pay both) daily and weekly overtime hours. Unsurprisingly, employers were extremely concerned with potential exposure to wage claims (including class actions) and, further, whether they’d have to completely overhaul their scheduling and pay practices.
However, after legal battles and legislative action, Gov. Kate Brown signed into law House Bill 3458 on Aug. 9, 2017, which explicitly rejects BOLI’s 2016 interpretation and brings much-needed clarity and certainty to Oregon breweries. The new law will permit breweries to pay nonexempt employees the greater of daily or weekly overtime. As a compromise with labor interests and lobbies, the law will also impose new maximum limits on hours in the workweek for manufacturing employees.
When Will the Law Take Effect?
The provision of the law affecting how manufacturing employers calculate daily and weekly overtime takes effect upon the law’s passage. The provisions that impose new maximum limits on hours in a workweek take effect Jan. 1, 2018.
Which Employees Are Covered by the Law?
As mentioned, the law applies to individuals employed in breweries. However, the law does not apply to employees “whose principal duties [are] administrative in nature or who are not otherwise engaged in the direct processing of goods in the usual course of the employee[s’] duties.”
There are also numerous exemptions. The law does not apply to supervisors, managers, foremen or forewomen, or other employees whose “primary duty” (i.e., who spend more than 50 percent of their time) supervising and directing work. In addition, employees are not considered “employed in” a manufacturing establishment if they perform duties that do not include work in connection with production machinery and are in a location that is physically separated from the actual production process by means of an architectural barrier. For example, a marketing employee working in a back office, which is physically separated from the production floor, probably would not count.
Does the Law Apply to Employees Subject to a Collective Bargaining Agreement?
No, provided that a collective bargaining agreement (1) is in effect at the employee’s worksite; (2) contains a provision that limits the employee’s required hours of work; and (3) contains a provision for the payment of overtime hours of work.
How Does the Law Change the Way in Which Overtime Pay Is Calculated?
As noted above, in December of 2016, BOLI changed its guidance to employers on the payment of daily and weekly overtime hours. Under BOLI’s revised guidance, the requirement to pay overtime wages for working more than 10 hours in a day under Oregon Revised Statutes (ORS) 652.020 and the requirement to pay overtime wages for working more than 40 hours a week under ORS 653.261 operated independently of each other, without an offset. As a result, BOLI directed employers to “pyramid” the overtime hours — i.e., calculate the amount of overtime earned by the employee under each statute and pay both overtime amounts to the employee.
The new law restores the overtime calculation method that BOLI had historically advised for employers: When employees who are entitled to daily overtime have worked more than 40 hours in a workweek and have also exceeded the maximum number of hours on one or more days in the workweek, thereby earning daily overtime, the employer should calculate overtime hours worked on both the daily and weekly bases and pay the greater amount.
The law further clarifies that a “workweek” means a “fixed period of time established by the employer that reflects a regularly recurring period of 168 hours or seven consecutive 24-hour periods.”
What Are the New Limitations on Maximum Hours in a Workweek?
Under the new law, ORS 652.020 is modified to impose the following additional limitations on hours in a workweek:
— Covered employees may not work more than 55 hours in any one workweek; however, an employee may “work up to 60 hours in one workweek if the employee requests or consents in writing to enforwork more than 55 hours in the workweek.”
— Breweries are likely eligible for an “undue hardship period exemption” because they process perishable products in the ordinary course of their business. The “undue hardship period exemption” allows the employer to permit employees to work up to 84 hours per workweek for four workweeks and up to 80 hours per workweek for the remainder of the undue hardship period. To claim the exemption, employers must provide notice to BOLI and obtain written consent from each affected employee.
What Are the New Enforcement Provisions?
The law makes it unlawful for employers to discharge, refuse to hire, discriminate or retaliate against employees or prospective employees who inquire about their rights to overtime compensation under the law, report violations, file complaints or decline to consent to work more than 55 hours in a workweek. Employees may file complaints with BOLI to enforce their rights or file fee-bearing private civil actions. In addition to recovering damages, BOLI has authority to assess civil penalties of up to $3,000 per violation.
By Christopher Morehead
For the Oregon Beer Growler
With beer festival season getting into full swing, it’s easy to turn one’s attention toward things like spending afternoons in sun-soaked beer gardens or deciding which summer release to fill your growler with (or asking yourself why you only brought one growler…). However, employers in the craft beer industry should also be aware that certain legal obligations, at least with respect to employment laws, are about to change. One is a big-time game changer. One is relatively minor (but necessary to follow). And one will relieve employers from a recordkeeping burden.
1. Oregon’s Pay Equity Bill — Pay Attention to the Details
On June 1, 2017, Gov. Kate Brown signed a bill that seeks to help ensure workers receive equal pay for equal work. The new law makes it unlawful for employers to pay employees performing comparable tasks different amounts on the basis of sex, race, religion, disability, sexual orientation, age or any other protected status. We can all agree that people should not be paid less based on any of those factors. To get there, however, all employers need to pay close attention to what the law requires.
The law specifically prohibits employers from:
· Screening job applicants based on their current or past compensation
· Setting a prospective employee’s compensation based on current or past compensation
· Inquiring about a job applicant’s salary history (including applications) until after making a job offer that includes a compensation amount
While employers can still compensate employees performing comparable work at different rates, the difference must be based on bona fide factors related to the position, such as seniority, merit, production, workplace location, training, education and experience. The potential exposure for employers facing a pay equity suit who can’t “prove their innocence” can be massive. Employees can file complaints with Oregon Bureau of Labor and Industries (BOLI) or go straight to court and seek compensatory damages (such as back pay) as well as punitive damages and attorneys’ fees and costs. In addition — and of particular concern for larger employers — companies will also be exposed to class-action lawsuits, which could easily shutter a once-thriving business.
Luckily, the law gives employers some time to prepare, as the majority of claims cannot be brought until after Jan. 1, 2019 (violations of compensation history inquiries become actionable in 2024). However, employers would be wise to start thinking about revising job applications or once-standard interview questions that would violate the law. In addition, employers may also want to take advantage of a safe-harbor provision, which limits exposure if the employer has conducted an equal-pay analysis within three years of a civil lawsuit.
2. Oregon Minimum Wage Rates Increased July 1, 2017
You may recall that, as part of the national “Fight for $15” campaign last year, Oregon passed a bill that increases the state’s minimum wage rate on an annual basis through July 1, 2022. You may also recall that different minimum wage rates apply depending on where the employer is located.
Employers in the Portland-metro area face the biggest hike and must now pay employees at least $11.25 per hour, a $1.50 increase from the 2016 requirement of $9.75. Employers in “non-urban counties” (defined as Baker, Coos, Crook, Curry, Douglas, Gilliam, Grant, Harney, Jefferson, Klamath, Lake, Malheur, Morrow, Sherman, Umatilla, Union, Wallowa and Wheeler) are required to pay employees at least $10 per hour, a $0.50 increase. All employers that are outside the Portland-metro area, but not in a “non-urban county,” must now pay at least $10.25 per hour, also a $0.50 increase from last year.
3. OSHA Electronic Recordkeeping Rule Delayed
Last year, the Occupational Safety and Health Administration (OSHA) issued a rule that, starting July 1, 2017, would have required employers to electronically file employee injury information to an electronic recordkeeping system. However, in May 2017, OSHA postponed the filing requirement for a yet-to-be-determined time period.
For those employers ready to comply with the electronic recordkeeping law, you can take that off of your to-do list for the time being. But please note that this delay does not in any way impact your ongoing obligation to comply with your OSHA Form 300, 300A and 301 recordkeeping requirements. You just don’t have to worry about your workplace accident history being posted on a public website for everyone to see.
Have a safe and wonderful summer!
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 email@example.com or 503-552-2140.
By Chris Morehead
For the Oregon Beer Growler
Oregon’s Bureau of Labor and Industries (BOLI) recently announced a new interpretation of overtime compensation rules that directly impacts Oregon breweries and brewpubs. Under the new guidance issued in December 2016, employees in “manufacturing establishments” must be paid overtime rates for hours worked in excess of 40 hours per week and overtime rates for any hours in excess of 10 hours in any given day. BOLI says that manufacturing establishments cannot continue with the former practice of paying employees the greater of the daily overtime rate or the weekly overtime rate.
It’s important to note that this new interpretation is not the result of a new law being passed. Oregon Revised Statutes (ORS) 652.020 has always stated that employees who work in manufacturing establishments must be paid one and one-half times their regular hourly rate when the employees work more than 10 hours in a work day. Similarly, ORS 653.261 has always stated that employees who work more than 40 hours in a week are entitled to pay one and one-half times their regular hourly rate.
However, as noted above, BOLI previously interpreted these two statutes to allow covered employers to simply pay employees the higher of the weekly and daily overtime amounts. For example, under the prior interpretation, if an employee worked 11 hours on Monday and Tuesday, and 10 hours on Wednesday, Thursday and Friday — for a total of 52 hours in the week — the employee would only be entitled to 12 hours of overtime pay (because the 12 hours over 40 is greater than the two daily hours of overtime for Monday and Tuesday). Under the new interpretation, however, the same employee is entitled to 14 hours of overtime pay (the two daily overtime hours for Monday and Tuesday, plus the 12 hours over 40 in the week) and 38 hours of regular pay.
The timing of BOLI’s position change is also interesting. It follows a class action lawsuit that was filed last year against Portland Specialty Baking. The suit argues that the bakery was not paying workers daily and weekly overtime. Brad Avakian, the BOLI commissioner, submitted a declaration in support of the plaintiff workers. And now we have the new interpretation.
Why does this apply to breweries and brewpubs?
Breweries and brewpubs are covered because a “manufacturing establishment” is defined as any place where machinery is used for “manufacturing purposes.” This includes any establishment making goods by machinery, any making of raw materials by machinery, and any producing articles for use from raw or prepared materials by giving such materials new forms, qualities, properties or combinations, by use of machinery.
Beer, of course, is brewed from raw materials and involves the use of machinery. My conversations with BOLI have similarly confirmed that the agency interprets the statute to cover breweries and brewpubs.
Are there any exceptions?
Yes. The new interpretation does not impact the statutory exceptions, which state that the daily overtime pay requirements do not apply to, among others: supervisors, managers, foremen/women and those temporarily acting in such capacities in the absence of supervisory employees; those whose primary duty is that of making necessary repairs; and boiler operators.
The daily overtime law also does not apply to employees who are employed to perform duties that do not include work in connection with production machinery, such as administrative staff or bookkeepers, provided they don’t work in the brewery or brewpub, or they perform their duties in a location that is physically separated from the actual production process by means of an architectural barrier.
This “double pay” issue is currently being looked at by the legislature, which will hopefully amend the existing statutes to clarify its intent as to whether employees are or are not entitled to daily and weekly overtime pay when the employee works more than 40 hours in a week.
It is also unclear whether BOLI will take the position that covered employers are expected to retroactively correct payments made to employees during the last two years (the length of the applicable statute of limitations for overtime wage claims). But as the Portland Specialty Baking case made clear, some plaintiffs’ attorneys are not necessarily going to wait to find out what the courts or legislature decide.
At the very least, breweries and brewpubs should immediately ensure they are not currently running afoul of BOLI’s new overtime interpretations. Breweries and brewpubs are also encouraged to seek legal counsel to help evaluate their potential exposure to overtime wage claims, and how to best handle their specific wage payment structure and shift scheduling practices.
Chris Morehead is an attorney in the Portland office of Fisher Phillips, a national labor and employment law firm. He focuses on hospitality employers, with an emphasis on the craft beer industry. When not in the office, he’s collecting badges on “Untappd.” He can be reached at CMorehead@fisherphillips.com or 503-205-8099.