Oregon Alters Overtime for Certain Industries

Oregon Alters Overtime for Certain Industries

On August 8, 2017, Oregon Governor Kate Brown signed a bipartisan law that proponents believe ensures workers are paid fairly for their overtime and establishes consistency for how employers pay for employee overtime.  The new statute resolves confusion about when employers in certain industries are supposed to pay daily overtime as opposed to weekly overtime, and reduces the maximum number of hours these employees can work in a work day and a workweek.

Daily vs. Weekly Overtime

For most Oregon employers, overtime law follows the FLSA, requiring payment of overtime only where the employee works more than 40 hours in a workweek.  For manufacturing, mill and factory employers, Oregon law requires payment of overtime whenever a non-exempt employee works more than 10 hours in a work day.  Where an employee in one of these industries worked both more than 10 hours in a work day and more than 40 hours in a workweek, the applicable Oregon statutes did not clarify whether daily overtime was due, or whether weekly overtime was due. Oregon’s Bureau of Labor and Industries (BOLI) interpreted the law to require that, in this situation, the employer owed the employee either daily overtime or weekly overtime, whichever was greater.

In January 2017, however, the BOLI reversed course and issued a new guidance requiring employers to pay such an employee both daily and weekly overtime.   As an example, an employee who worked three 12-hour shifts and one 10-hour shift in the same work week (for a total of 44 hours), would be entitled to 6 hours of daily overtime pay, and  4 hours of weekly overtime pay.  This interpretation created a great deal of confusion.  The new legislation signed by Governor Brown seeks to clarify the situation, and re-establishes the rule that employers need pay only the greater of daily or weekly overtime.  This change became effective on August 8, 2017.

Additionally, the new legislation clarifies that canneries, driers, and packing plants (excluding those located on farms and primarily process products on such farms) also must pay their employees overtime for time worked over 10 hours in a day.

Limitations on Hours Worked

In addition to amending the overtime rules, this legislation limits the number of hours that manufacturing, mill and factory employees can work in a work week.  Effective January 1, 2018, with certain exceptions, these employees cannot be required to work more than 55 hours in a week.  However, at the employer’s request, an employee may consent in writing to work an additional 5 hours in a work week, for a total maximum work week of 60 hours.

The new legislation creates an exemption for manufacturers who process perishable products after harvest, catch or slaughter.  These employers may apply for an “undue hardship” exemption with the BOLI.  A single employer may apply for multiple undue hardship exemptions in a calendar year, but the exemption periods cannot exceed a total of 21 weeks in the calendar year.  Once an undue hardship exemption is granted by the BOLI, covered employees still must consent in writing to working hours beyond 55 in a week.  With written consent, employees may work up to 84 hours per week during the first 4 weeks of the undue hardship period, and up to 80 hours per week during the remainder of the undue hardship period.

Other Exemptions and Provisions

The overtime and maximum hour provisions described above do not apply to the employees who:

  • Are primarily engaged in:
    • Administrative duties not directly related to processing products;
    • The transportation of workers to and from work;
    • The care of quarters or livestock, the conducting of mess halls, the superintendence and direction or work, or the loading and removal of finished forest product;
    • Making necessary repairs;
  • Work for, or as:
    • A canner, drier or packing plant that is located on a farm and is primarily engaged in processing products on that farm (as mentioned above);
    • A member of a logging train crew, as a guard or as a boiler operator;
    • A seafood processor; or
  • Are represented by a union whose collective bargaining agreement covers overtime and maximum hours worked.

What Employers Should Do

Since the overtime rule went into effect on August 8, 2017, employers in the affected industries should immediately review and amend their overtime policies to make it clear that affected employees will be paid the greater of daily and weekly overtime, not both.  With regard to the prohibitions on maximum hours worked, employers should review and revise their work scheduling practices to bring them into compliance by January 1, 2018.  Employers who process perishable products after harvest, catch or slaughter should take the additional step of analyzing the organization’s their processes to determine whether the organization should apply for an “undue hardship” waiver during peak seasons.

Contributor:  Vida L. Thomas, Attorney at Law | Weintraub Tobin