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.