The end of 2017 brought ups and downs with respect to employment law changes for Oregon manufacturers. On the federal side, the change in administrations brought modifications to federal agencies, such as the National Labor Relations Board, the Equal Employment Opportunity Commission, and the Department of Labor that have resulted in reversal of Obama-Era decisions and laws. The pendulum has swung back to a more business-friendly environment with less regulation. One cannot say the same for employment laws in Oregon. As the federal environment becomes more employer-friendly, the laws in Oregon provide more and more “protections” to employees that make doing business in Oregon challenging, at best. This article summarizes the top changes in state and federal laws that will affect Oregon manufacturers in 2018 and beyond.
New Updates to Oregon Employment Laws:
Oregon Equal Pay Act of 2017. Oregon passed an Equal Pay Act that has several components:
Ban on Asking Applicants for a Salary History
Effective October 6, 2017, employers cannot screen prospective employees based on compensation history or determine the compensation for a position from the compensation history of any applicant. Employers cannot ask an employee or applicant for salary history before extending an offer of employment that specifies compensation for the position, either directly or through a previous employer. After extending an offer of employment that specifies compensation for the position, an employer may ask a prospective employee for written permission to confirm the candidate’s prior compensation. Effective immediately, employers should revise job applications that include inquiries about salary history and should adjust their interview questions to remove any such inquiry.
New Equal Pay Requirements
Effective January 1, 2019, employers cannot pay wages or compensation to any employee at a greater rate than employees of a protected class who perform work of comparable character or discriminate in the payment of wages or compensation based on protected-class status. Employees performing work of comparable character may receive different levels of compensation if the entire difference is based on a seniority or merit system; a system that measures earnings by quantity or quality of production, including piece-rate work; workplace locations; necessary and regular travel; education, training, and/or experience; or a combination of the preceding factors that explains the entire salary differential. Employers also cannot decrease an employee’s compensation to comply with the Act. Additionally, employers must comply with a posting requirement beginning January 1, 2019. The Bureau of Labor and Industries (BOLI) will provide an updated posting template.
The Equal Pay Act encourages employers to undertake an equal-pay analysis and act to remedy existing wage differentials for members of protected classes. Employers that engage in an equal-pay analysis may obtain immunity from compensatory and punitive damages in subsequent litigation, under specific circumstances, including having eliminated the wage differential for the specific plaintiff, having made reasonable and substantial progress towards eliminating wage differentials for the protected class that the plaintiff asserts, and that the equal-pay analysis took place no more than three years before the lawsuit was filed.
- Update application forms to remove any questions about salary history.
- Train hiring supervisors not to ask for salary history.
- Consider performing a pay equity analysis.
- Update postings by January 1, 2019.
Manufacturing Work-Time Limits – effective January 1, 2018
Overtime Policy for Specific Workplaces
The Oregon legislature passed a bill to revise ORS 652.010 (affecting work conditions and overtime in “manufacturing establishments,”) and ORS 653.265 (affecting overtime for workers employed in canneries, dryers, and packing plants). The impetus for these revisions was to correct the changes made by the Bureau of Labor and Industries that required employers in manufacturing establishments to pay both daily and weekly overtime.
Employees in mills, factories, and manufacturing establishments must now receive either daily or weekly overtime pay, whichever is greater. Sawmills, planing mills, shingle mills and logging camps are currently exempted from this rule. In addition, the statute contains other exceptions, which we discussed in our article on the new overtime rules located (here).
Overtime is now required for employees working more than 10 hours in a day or 40 hours in a week. An employer may seek a BOLI waiver for overtime pay for two additional hours per day (i.e., the eleventh and twelfth hours). The BOLI waiver requires disclosure of information by the employee and an investigation by BOLI, including a tour of the workplace and confidential interviews with employees.
The new revisions also now provide for caps on the number of hours that an employee can work on a daily and weekly basis. Employees in mills, factories, and manufacturing establishments may not work more than 55 hours per week, unless the employee consents in writing to work up to 60 hours per week. Coercing an employee to consent to work more than 55 hours per week is an unlawful employment practice. Employees may not work more than 60 hours per workweek or 13 hours per day in a mill, factory, or manufacturing establishment, regardless of consent to work additional hours. Unless necessary because of an emergency outside the employer’s control, an employer cannot require an employee to begin a shift less than 10 hours after the employee’s previous shift of eight or more hours ended.
Employers may seek exemptions from the maximum-hour requirements when processing perishable products, such as agricultural products, meat and fish. The exemption is available only if the employer processes perishable goods in the ordinary course of its business, and allows only consenting employees to work more than 55 hours per workweek. To claim a hardship-period exemption, an employer must provide to BOLI written notice of the hardship period and written consent from all employees who will work more than 55 hours per week at any time during the hardship period. BOLI will promulgate forms for both employer notice and employee consent. Employers may qualify for multiple hardship periods throughout the year, but may not invoke the hardship-period exemption for more than 21 weeks in one calendar year. While the employer qualifies for a hardship-period exemption or exemptions, employees may work up to 84 hours per week for up to four weeks in a calendar year, and up to 80 hours per week for the remainder of the hardship period or periods.
Determining whether the new time limits and overtime policies apply to specific employees requires a two-level inquiry. First, is the facility where the employee works a “manufacturing establishment?” Second, is the employee exempt from the time limits and overtime policies?
The time limits and overtime policies apply to any establishment engaging in manufacturing, which is broadly defined under the statute as “the process of using machinery to transform materials, substances or components into new products.” The broadest reading of the statute would apply to any location where “manufacturing” occurs, even if manufacturing is a minor component of the work performed at that location. The new definitions of “manufacturing” and “manufacturing establishment” are similar to the definitions in the BOLI regulation interpreting the prior version of the statute, although the new definition of “manufacturing” is more concise.
The classification of a location as a “manufacturing establishment” does not necessarily impose the work time limits and overtime pay requirements on all employees at that location. Employees of “manufacturing establishments” who do not engage in manufacturing work are generally exempt from the hour caps and overtime requirements, including administrative employees, employees who do not typically engage in the direct processing of goods, and employees who transport other employees to and from work. The new categories of exempt employees are similar to the definitions in the BOLI regulation interpreting the prior version of the statute.
- Analyze whether any aspects of the business might fall into the definition of “manufacturing.”
- Analyze payroll processes, timekeeping systems, and scheduling systems and update to ensure the new rules are followed.
- Prepare hardship exemption request forms for employees to complete to request to work overtime for both the 60-hour rule and for the perishable-goods hardship.
- Update overtime provisions of employee handbooks to spell out overtime availability and the requirement for an employee to request to work overtime.
- Train supervisors and schedulers.
Effective January 1, 2018. Employers can limit employee accrual of paid sick leave to 40 hours annually and 80 hours in aggregate. Employers can also limit an employee’s use of paid sick leave to 40 hours per year, even if the employee has accrued more than 40 hours of paid sick leave. If an employer provides more than 40 hours of paid time off per year, the employer needs to comply with the paid sick leave regulations with regard to the first 40 hours of paid time off (PTO). An employer providing PTO no longer needs to track the reasons for PTO usage.
- Revise handbook policies, if necessary.
New Updates to Federal Law
Changes by the National Labor Relations Board affecting Unionized and Non-Union Work Places:
The Obama administration saw a very active and pro-union National Labor Relations Board (NLRB) that made sweeping decisions overturning long-standing precedent. It is not a surprise that a Republican administration will now attempt to “right the ship” with respect to the most significant changes. The NLRB has five members, appointed by the President, with consent of the Senate, to staggered five-year terms, with the term of one member expiring every year. The current Board Chair is Marvin E. Kaplan (R), who President Trump nominated to the post on August 10, 2017, and serves until August 27, 2020. Mr. Kaplan took the seat of the former chair, Philip A. Miscimarra, (R) who stepped down from the Board on December 16, 2017. Two Democratic members, Lauren McFerran and Mark Gaston Pearce, served on the Obama Board and will continue to serve until their terms end. Mr. Pearce previously served as Board chair and has served two consecutive terms on the Board. Also currently on the Board is new Trump appointee, William J. Emanuel. On Friday, January 13, 2018, Trump nominated management-sided labor lawyer, John Ring to fill the fifth Board slot. His nomination is pending Senate confirmation and will ensure a Republican majority on the Board. On November 8, 2017, Trump also named Peter J. Robb, a former management-sided labor and employment lawyer, to the NLRB General Counsel position.
The newly nominated NLRB Board did not waste much time in revisiting the Obama-Era changes. In mid-December, prior to Mr. Miscimarra’s departure, while the Board had a three-member Republican majority, the NLRB issued four key 3-to-2 decisions upon party lines that most believe are only the tip of the iceberg to provide relief from the extreme union-friendly Obama-Era decisions.
Reinstatement of the pre-Browning –Ferris Joint Employment Standard
In Browning-Ferris, the NLRB announced a new expanded standard for determining joint employment between two or more employers. The majority ruled that a joint employment relationship could be established where an entity had the “right to control” the terms and conditions of an employee’s employment, as opposed to the prior requirement that an entity had to actually exercise control. Under the Browning-Ferris standard, joint control could be established where one employer had a contractual right to set standards for employees, even where that authority was not exercised. Many commentators and the minority dissent asserted that the Board had departed from the common law definition of an employer. Applying this new standard, the NLRB imposed liability on companies that had not ever previously been determined to be a “joint employer.” There was an immediate adverse reaction to this ruling by companies and management-sided labor and employment lawyers. Therefore, it is not surprising that once the Board had a Republican majority; it took up a case to reverse Browning-Ferris. In Hy-Brand Industrial Contractors, LTD, the new Republican majority ruled that “a finding of joint-employer status shall once again require proof that putative joint employer entities have exercised joint control over essential employment terms (rather than merely having ‘reserved’ the right to exercise control), the control must be direct and immediate (rather than indirect), and join-employer status will not result from control that is ‘limited and routine.’ It further stated that the common law principles defining “Employer” govern.
Restoration of an Employer’s Right to Create and Enforce Civility Rules
In Lutheran Heritage Village-Livonia, the Board held that an employer who maintained a workplace rule that an employee might “reasonably construe” to limit the employee’s ability to participate in a protected Section 7 concerted rights activity (the right of employees to discuss the terms or conditions of employment) would violate the National Labor Relations Act (NLRA). Lutheran Heritage was a major decision, in part, because Section 7 of the NLRA applies to both unionized and non-unionized work places. Over the past several years, the Board used this decision to rule that many common policies that prevent employees from disrespecting other employees or their supervisors, disclosing confidential information in an investigation, and badmouthing the employer or a supervisor on social media were invalid. In The Boeing Company, the Board overruled the “reasonably construe” prong of Lutheran Heritage and set forth a new standard that the Board will now evaluate (1) the nature and extent of a rule’s potential impact on NLRA rights and 2) whether there are legitimate business justifications to support the rule. The Board will continue to evaluate workplace rules, but the standard will strike a more appropriate balance between the need for the rule, and the concern that it might cause an employee not to exercise his or her Section 7 concerted rights activities.
Restored Stability after Expiration of Union Contracts
In Raytheon Network Centric Systems, the Board reviewed whether an employer’s “past practice” in terms of making changes (in this case, whether Raytheon could make unilateral changes to its medical benefits, as it has done at the same time every year, after the expiration of a collective bargaining agreement). The Board considered whether this action was unlawful under a 2016 decision, E.I. du Pont de Nemours, that invalidated unilateral changes after the expiration of a collective bargaining agreement. The DuPont decision ruled that employers must maintain the status quo after a contract’s expiration, which includes “extra-contractual terms and conditions of employment that have become established by past practice.” The Board narrowly defined “past practice” and stated that changes that involve an employer’s discretion are not included. While cautioning that its ruling does not affect the duty of employers to bargain upon request over mandatory bargaining subjects, the Board announced a new definition of “past practice” and held that “an employer’s past practice constitutes a term and condition of employment that permits the employer to take actions unilaterally that do not materially vary in kind or degree from what has been customary in the past.”
Board Returns to Community of Interest Factors for Union Elections
Also part of the spate of decisions that the Board issued just prior to Philip Miscimarra’s last days on the Board was a decision that struck down the ability of unions to use micro units in union organization. In PCC Structurals, Inc., the Board returned to the prior standard of determining “whether the petitioned-for employees share a community of interest sufficiently distinct from employees excluded from the proposed unit to warrant a separate appropriate unit.”
General Counsel, Peter B. Robb’s December 1, 2017 Advice Memo
In addition to changes coming from the new Board, the new NLRB General Counsel came into office with a mission to reverse many of his predecessor’s Obama-Era guidances. On December 1, 2017, Mr. Robb issued Memorandum GC 18-02, available (here). In this memo, Mr. Robb rescinded seven advice memorandums issued by his predecessor, including the 3-15 guidance on employee handbooks that reviewed employee handbook policies to provide guidance on whether they would be lawful under Section 7 of the NLRA. The memorandum also provided a list of previously issued decisions where Mr. Robb “might want to provide the Board with Alternative analysis.” The list of changes include, among others:
- Concerted activity for mutual aid and protection
- Common employer handbook rules found to be unlawful – for example, rules prohibiting “disrespectful” conduct, rules prohibiting use of employer trademarks and logos; and rules requiring employees to maintain the confidentiality of workplace investigations
- Purple Communications (finding that employees have a presumptive right to use their employer’s email system to engage in Section 7 activities);
Two Tax Reform Changes
Tax Credit for the First Two Weeks of Paid Family Medical Leave
As part of the Tax Cuts and Jobs Act (H.R, 1), eligible employers in 2018 and 2019 will be able to claim a general business tax credit equal to 12.5% of the amount of wages paid to “qualifying employees” during any period in which such employees are on family medical leave. The rate of paid leave must equal at least 50% of the wages normally paid to an employee. The credit is increased by 0.25 percentage points (but not above 25%) for each percentage point by which the rate of paid leave equals 50%. The tax credit requires that employers have a written policy that allows all qualifying full-time employees not less than two weeks of annual paid Family Medical Leave Act (“FMLA”) leave. Employer provided vacation, sick, personal, or other medical leave cannot be used as “paid leave.” The policy also must allow qualifying employees a commensurate amount of leave on a pro rata basis.
A “qualifying employee” means any employee who has been employed by the employer for one year or more, and whom for the preceding year had compensation not in excess of 60 percent of the compensation threshold for highly compensated employees (which for 2018 means not in excess of $72,000).
Employers Cannot Write Off Settlements for Sexual Harassment
Also as part of the new tax act, companies may no longer take a tax deduction for sexual harassment settlements that contain a confidentiality provision or a non-disclosure agreement.
In conclusion, it is truly never a dull moment for an Oregon manufacturer. Even if your business is not unionized, the new changes at the NLRB will ease restrictions that were placed on your ability to institute civility policies, and policies to protect your brand and trade secrets. The general sense on the federal level is that all federal agencies are reexamining restrictions placed on employers during the last administration to provide a more employer-friendly environment. Unfortunately, the same cannot be said for Oregon laws that become more and more restrictive, and that place additional costs on Oregon employers.
Jean recently presented a webinar on the topics above. View the Recording >
 (E.I. du Pont de Nemours, 364 NLRB No. 113 (2016))
 365 NLRB No. 156 (Dec. 13, 2017),
 343 NLRB 646 (2004),
 365 NLRB No 154 (Dec. 14, 2017),
 365 NLRB No. 161 (Dec. 15, 2017),
 E.I. du Pont de Nemours, 364 NLRB No. 113 (2016).
 365 NLRB No. 160 (Dec. 15, 2017)