BY PETER HICKSThis article originally appeared in the June 15th, 2016, edition of the Cascade Business News
The past ten months have seen the introduction of three new laws or regulations that significantly impact Oregon employers. In July of 2015, the Oregon Paid Sick Leave Act was introduced, mandating paid sick leave for Oregon employees. Last month, Governor Brown signed Senate Bill 1532, significantly increasing the Oregon minimum wage. Finally, on May 23, 2016, the U.S. Department of Labor (“DOL”) published its final rule increasing the minimum salary threshold employees must be paid to potentially be exempt from overtime. This article summarizes the basic provisions of each law and provides recommendations for what to do in response to each.
Oregon Paid Sick Leave
The Oregon Paid Sick Leave Act (the “Act”) provides 40 hours of sick leave for all Oregon employees, with employees earning one hour of sick leave for every 30 hours worked. Employers in cities with populations less than 500,000 must provide paid leave if the employer has ten or more employees. Employers in cities with a population greater than 500,000 (currently only the Portland Metro Area) must provide paid leave if the employer has six or more employees. If the employer has less than the minimum number of employees, the leave is unpaid. Most significantly, the Act applies to all employees, including temporary and seasonal employees, and begins to accrue immediately, although the employer can require that it not be used until after the first 90 days. Leave may also be used for a wide range of absences, including caring for family members.
The Act became effective January 1, 2016. Employers should therefore be providing leave for eligible employees. Employee handbooks and policies should also be immediately updated and leave tracking and accrual policies must also be implemented notifying employees, at least quarterly, of any available leave.
Oregon Minimum Wage
Effective July 1, 2016, Oregon employers will be required to phase in an increase in the minimum wage over six years. The minimum wage will be tiered, with differing wage rates required depending upon the population density of the Oregon county where the employer is located. The minimum wage will increase each year until 2022, when the rates will be $14.75/hour for high-density counties, $13.50/hour for medium-density counties, and $12.50/hour for low-density counties. After 2022, annual cost of living increases will be made by the Commissioner of Labor (“Commissioner”).
An open question is how employer location is defined. The law currently does not contain a specific definition and instead directs the Commissioner to implement rules defining “employer location.” Debate on the definition is ongoing, with employers pushing for a definition consistent with the Oregon Sick Leave Act and labor groups seeking shifting wage rates depending on the amount of work performed by the employee at each location.
Federal Overtime Revision
On December 1, 2016, the long-awaited changes to the minimum salary threshold to classify employees as exempt from overtime under the Fair Labor Standards Act (“FLSA”) will take effect. Under the revised regulations, the minimum threshold will increase significantly, from $455/week to $913/week ($47,476/year).
The salary threshold is the first part of the two-part test to determine whether certain occupations are exempt from overtime. Employees must be paid at least $913/week (the “salary test”) and perform primarily executive, professional, administrative, outside sales, or computer-related duties (the “duties test”). Up to ten percent of the salary can be nondiscretionary bonuses, incentive pay, or commissions. The salary test will be adjusted every three years to a rate equal to the 40th percentile of full-time employees in the lowest wage region in the U.S. Additionally, the highly compensated employee exemption, exempting highly compensated employees, is now tied to the 90th percentile of full-time salaried workers nationally, raising the annual salary basis from $100,000 to $134,004.
Despite the revisions, other overtime exemptions remain such as the exemption for agricultural workers. Simply designating an employee as “salaried” however does not automatically exempt that employee from overtime. The revisions present an opportunity to review existing job descriptions for compliance with all applicable wage and hour laws.