OREGON: Trial judge okays paying greater of daily versus weekly overtime

A Guest Blog Post from Vigilant

Multnomah County circuit court judge recently ruled against workers who claimed their manufacturing employer should have paid them both daily and weekly overtime, not just the greater of the two amounts. This was the lawsuit that launched an uproar over how Oregon manufacturers should calculate overtime pay for employees who work more than 10 hours in a day and more than 40 hours in a workweek (Mazahua Reyes v. Portland Specialty Baking LLC, Or Cir Ct, March 2017).

The Northwest Labor Press first publicized the lawsuit by bakery workers in August 2016 and then broke the story that the Oregon Bureau of Labor and Industries (BOLI) had sided with the plaintiffs, endorsing their creative calculation theory. BOLI publicized its new approach in December 2016 by quietly changing both its Field Operations Manual for enforcement and its Technical Assistance FAQs on Daily Overtime for Manufacturing Employers to indicate that employers should pay both daily and weekly overtime. Previously, the long-standing advice from BOLI Technical Assistance was that employers only had to pay the greater of daily versus weekly overtime.

Tips: The judge’s ruling is good news for employers, but the fight isn’t over yet. Because this is only a local trial court decision, it isn’t binding in other cases and it may be appealed. Also, BOLI’s new enforcement position remains intact. A legislative correction is in the works, but it remains to be seen how it will fare in the Oregon legislature. SB 984 would restore the overtime calculation to be the greater of daily or weekly overtime. Stay tuned for further developments.

In the meantime, talk with your legal counsel about your strategy for addressing overtime pay during this period of uncertainty. The safest approach is to cap manufacturing employees’ hours at 10 hours per day or 40 hours per week. If that isn’t practical in light of production requirements, you should evaluate whether to go ahead and pay for both daily and weekly overtime consistent with BOLI’s position. Unfortunately, there isn’t any good solution. Employers who are willing to accept some risk may decide to wait and see what happens in the Oregon legislature and the Oregon appellate courts. Employers who want to take a conservative approach and pay both daily and weekly overtime will need to decide how far back in time to do so, and what they will do if it later turns out that those extra payments weren’t required.

Representatives from BOLI have stated that they will enforce their new interpretation effective January 1, 2017. Nothing prevents a plaintiff’s attorney, however, from going back a full two years to demand overtime pay under Oregon law.

One option, which may be beneficial regardless of the final resolution of BOLI’s position, is to ask the agency to waive the daily overtime requirements. To do so, an employer submits an application which includes the current and proposed shift schedule, number of breaks and meal periods, and data on health and safety incidents from the past two years. BOLI interviews managers and employees, taking workers’ opinions into account. More time off between shifts is a positive factor in evaluating the employer’s proposed schedule. For example, a two-week rotation of 12 hours per day for 3 days, followed by 4 days off, 12 hours per day for 4 days, and 3 days off would likely be viewed favorably. If the waiver is approved, it lasts for one year; the employer must reapply at least 60 days before the current waiver expires. To see the typical conditions contained in an approved waiver, see BOLI’s approval template.

For background information about this overtime saga, including an explanation of employers and workers covered by Oregon’s daily overtime requirements, see our previous OMEP blog post, BOLI Reverses Long-Standing Position on Overtime in Manufacturing. Members of Vigilant can also view our Legal Guide, “Daily Overtime in Oregon and California.”