Chiefly L&E – Winter 2016 Newsletter

Labor & Employment Law

Legislative Changes and Proposed Changes

If you’ve been reading the news, you know there were many legislative changes and proposed changes last year: mandatory sick leave, social media, non-competition agreements, criminal background checks, and overtime exemptions are just a few of the changes and proposed changes. With the ink still drying on Governor Brown’s signature (see below), we thought this would be a good time to send out another recap of the changes.

Keep in mind that this newsletter is only a brief summary of the changes.  If you need more information, or help implementing any of the changes, we’re just a phone call or an email away!  The Oregon Bureau of Labor & Industries and the Department of Labor are also great resources.

OREGON LAW

Breaking news: Minimum Wage

Governor Kate Brown signed the new law on March 2, 2016. By 2022, Portland’s minimum will rise to $14.75, $13.50 in smaller cities and towns, and $12.50 in rural areas.

The first increases will occur in July, when the current $9.25 hourly rate will go up by 50 cents in Portland and smaller cities, and will increase by 25 cents in rural communities.

Oregon Sick Leave

Effective January 1, 2016, employers with 10 or more employees must provide up to 40 hours per year of paid sick leave. For Portland employers, the threshold remains 6 employees.

Smaller employers must provide unpaid job-protected sick leave.

BOLI will have jurisdiction to investigate claims of retaliation or interference, and may assess fines of up to $1,000 per incident. No penalties may be assessed until January 1, 2017—that is, there is a one year grace period where non-compliance will be presumed inadvertent except for (a) retaliation or (b) attendance policies that punish employees for use of sick leave.

Criminal Background Checks

Unless otherwise required by state or federal law, employers may not require disclosure of criminal history prior to holding an interview or, if no interview is held, prior to extending a job offer.  This will likely require an overhaul of almost everyone’s application forms!

Non-Competition Agreements

Non-competition agreements are now limited to a total of 18 months. The other restrictions in ORS 653.295 continue to apply (agreement must be provided in writing at least two weeks prior to the first day on the job, employee must receive a minimum salary and must be an exempt employee as that term is defined in wage laws).

Right to Discuss Wages

Under new Oregon law, employers may not prohibit employees from discussing wages (their own or the wages of other employees), and may not take adverse employment action against an employee who discloses such information.

The new law carves out an exception for an employee “who has access to wage information of employees as part of the job functions of the employee’s position” may be prohibited from disclosing that information “to individuals not authorized access to the information.” Payroll staff likely fall under the exception, but it is not clear whether that extends to supervisory employees simply by virtue of their supervisory role.  For example, does the supervisor for Employee A have “access to wage information” of Employee B as “part of [the supervisor’s] job functions”?

Until we have more information, employers should (continue to) avoid policies that generally prohibit employees from disclosing wage information.

A similar Oregon rule for state public contracts imposes even more stringent obligations and notice, and Federal law applies additional restrictions related to federal public contracts – speak with your attorney when preparing or reviewing public contracts.

Changes to Leave Laws

1. Health insurance must be provided during OFLA leave.

2. Definition of “child” clarified. For purposes of sick child care leave or parental leave, the child must be under the age of 18 or a dependent adult child who is disabled. For purposes of serious health care leave or bereavement leave, there are no restrictions on the age of the child.

3. New OFLA verification form: //www.oregon.gov/boli/TA/docs/OFLA_SHC_Cert_template.pdf

4. Intermittent parental leave must be allowed.

As a reminder, pregnancy disability leave may cover the time before, during, and after childbirth, so an employee who chooses to take leave to give birth under parental leave (rather than pregnancy disability leave) may then choose to take the remainder of her parental leave later.

5. Penalties for failing to give notice of foreseeable leave.

In the event an employee unreasonably fails to give notice of foreseeable leave, the FMLA allows an employer to delay FMLA coverage for up to 30 days, while OFLA allows an employer to reduce the available leave by up to three weeks.  The old rule was that for leave qualifying under both OFLA and FMLA, an Oregon employer was limited to either the OFLA penalty or the FMLA penalty (not both), and the employer was required to apply the penalty “most beneficial to the employee.”  The new rule allows employers to apply both penalties, so long as the leave qualifies under both FMLA and OFLA, and the employer has posted the required notices.

Social Media

Employers are already prohibited from requiring applicants or employees to provide access to their personal social media accounts.  The new law takes it one step further and prohibits employers from requiring applicants or employees to have a social media account, or to advertise for the employer (or allow the employer to advertise) on their personal social media accounts.

As with other employment laws, retaliation is prohibited (i.e. an employer may not fire an employee for refusing to post compliments about his employer on Facebook).

FEDERAL LAW

Overtime Exemptions: Department of Labor’s Proposed Rules

The Department of Labor has proposed the following regulatory changes:

a. Increase minimum salary to $970/week ($50,440) (Stay tuned, as the figure has changed once and is subject to further change)

b. Include nondiscretionary bonuses in calculating whether an employee meets the minimum salary threshold listed above

c. Increase “Highly Compensated Employee” minimum salary to $122,148/year

d. Automatically update the minimum salary levels annually

e. The DOL is also considering changing the standards for what is considered exempt work.

Although long-winded (!), the DOL’s comments about computer professionals nicely illuminate the distinction between exempt and non-exempt duties:

“. . . To provide additional context . . . a help desk operator whose responses to routine computer inquiries (such as requests to reset a user’s password or address a system lock-out) are largely scripted or dictated by a manual that sets forth well-established techniques or procedures would not possess the discretion and independent judgment necessary for the administrative exemption, nor would that individual likely qualify for any other EAP exemption.

On the other hand, an information technology specialist who, without supervision, routinely troubleshoots and repairs significant glitches in his company’s point of sale software for the company’s retail clients might be an example of an administrative employee . . . as this employee’s work appears to be directly related to the management or business operation of his employer or employer’s customers and requires the use of discretion and independent judgment with respect to matters of significance.”

Independent Contractors: Department of Labor Misclassification Memo

According to an opinion issued on July 15, 2015, “most workers are employees,” rather than independent contractors, consultants, or other “classification.”

Worker classification affects not only wages (as contractors are not eligible for overtime, regardless of whether they would otherwise meet one of the exemptions), but also taxes (employers must report all wages paid to employees, and must pay a portion of FICA, and must withhold and file the employee’s portion of FICA and any income taxes).  In addition, employers must report employee wages to the state employment department and—unless another exception applies—must pay unemployment insurance premiums, and provide workers compensation coverage.  Only employees are entitled to medical leave and other leave mandated by law, and most other employment protections generally apply only to employees, not contractors.

The DOL memo focuses on the “economic realities test,” which boils down to whether “the worker is economically dependent on the employer or in business for him or herself.”  As a practical matter, if a worker provides a certain kind of services only for you, he or she is an employee.  The six factors in the economic realities test are:

  • The extent to which the work performed is an integral part of the employer’s business.
  • The worker’s opportunity for profit or loss depending on his or managerial skill.
  • The extent of the relative [financial] investments of the employer and the worker.
  • Whether the work performed requires special skills.
  • The permanency of the relationship [as opposed to a contract for a specific project with a proposed end-date].
  • The degree of control exercised or retained by the employer.

According to the DOL:

“In undertaking this analysis, each factor is examined and analyzed in relation to one another, and no single factor is determinative,” the DOL noted. “The ‘control’ factor, for example, should not be given undue weight. . . .  The factors should not be applied as a checklist, but rather the outcome must be determined by a qualitative rather than a quantitative analysis.”

Oregon’s law can be generally summarized as follows.  An independent contractor must be:

(1) free from direction and control as to the manner and means of providing services;

(2) licensed (if a license is necessary); and

(3) customarily engaged in an independently established business, as demonstrated by at least three of five factors:

(a) maintains a separate business location,

(b) bears the risk of loss,

(c) makes a significant investment in the business,

(d) has the authority to hire and fire others to support his/her work, and

(e) provides similar services to at least two others each year, or engages in marketing efforts to obtain other contracts to provide his/her services.

Newsletter Summary and Lawyerly Caveat

This newsletter is long, but it’s really just the tip of the iceberg. Each of the changes and proposed changes above includes far more details than provided. This newsletter is provided for information purposes only, and is no substitute for legal advice. If you’d like more information, or want help applying the information to a specific situation, call or email us!

Employees are your most valuable, and often most expensive, asset. How you handle employment issues can have a significant impact on your bottom line. Our labor and employment attorneys provide creative, strategic legal counsel – targeted to your mission and business environment. We can help ensure the most proficient use of human resources, prevent costly disruptions, and help you identify and address issues before they become costly claims or lawsuits.

We specialize in providing labor and employment advice, counseling, and litigation services to public and private employers.

Please Note
Nothing in this communication creates or is intended to create an attorney-client relationship with you, constitutes the provision of legal advice, or creates any legal duty to you. If you are seeking legal advice, you should first contact a member of the Labor and Employment Team with the understanding that any attorney-client relationship would be subsequently established by a specific written agreement with Harrang Long Gary Rudnick P.C. To maintain confidentiality, you should not forward any unsolicited information you deem to be confidential until after an attorney client relationship has been established.