BOLI Makes Critical Change to Interpretation of Manufacturing Overtime Law: Update

January, 2017


By Ryan Orr, Human Resource and Compliance Consultant
Cascade Employers Association
rorr@cascadeemployers.com

*** Please Note – Based on recent discussions with BOLI, this article contains new information and different recommendations than the previous alert on this subject. ***

In Oregon, mills, factories, and manufacturing employers must calculate weekly overtime for employees working more than 40 hours per week, as well as daily overtime for employees working more than 10 hours per day. BOLI has long interpreted this rule to require employers to pay only the greater of the daily or weekly overtime in a workweek. For instance, if an employee works three 12-hour shifts and a single 6-hour shift in a workweek, that employee has worked 6 hours of daily overtime and 2 hours of weekly overtime. The employer would be obligated to pay the 6 hours of daily overtime (and 36 hours of straight time) in this situation, rather than paying a combined 8 hours of weekly and daily overtime (and 34 hours of straight time).

In December of this year, BOLI – with very little notice to employers – pulled a complete 180 and is now saying that manufacturing employers must pay the combined total of daily and weekly overtime in a workweek. This interpretation is in response to a pending class action lawsuit between the Northwest Workers Justice Project (NWJP) and Portland Specialty Baking, in which the NWJP has alleged that Portland Specialty Baking owes unpaid overtime to its workers because it did not pay the combined total of daily and weekly overtime.

What is truly odd about BOLI’s about-face is that the lawsuit is still pending, and the trial court – not to mention appellate courts if any decision is appealed – could decide that the prior interpretation of the statute is correct. Adding another wrinkle is that, since 1984, courts have used a principle of statutory interpretation known as Chevron deference. Under that principle, if the statute or intent of the legislature cannot be discerned, the court will give deference to the administrative agency’s interpretation if it is consistent with the statutory language. A reading of the statute does seem to support BOLI’s new interpretation of the law because there is an “and” between the daily and weekly overtime clauses1. It is unclear, however, whether the court would solely focus on BOLI’s new administrative interpretation, which is less than a month old, or whether it would still give weight to BOLI’s decades-old prior interpretation.

BOLI has updated their enforcement manual and their article on this subject on their Technical Assistance for Employers page.

When we first learned about this, BOLI’s Technical Assistance for Employers informed us that BOLI was also taking the position that it would enforce unpaid overtime under this new interpretation going back the full two year statute of limitations. We have recently learned that BOLI plans to enforce would go back to January 1, 2017 only. Based on BOLI’s enforcement policy and the language of the statute, we recommend that manufacturing employers immediately change their practices if they have not already done so, and pay corrections for any overtime that an employee would have incurred under this new interpretation from January 1, 2017 to the time the policy is changed. While there is still some uncertainty given the pending nature of the lawsuit and possible legislative changes, we feel this is the best approach to minimize any potential exposure. While an employer could take the wait-and-see approach, wage and hour violations carry statutory penalties and potential attorney fees on top of the unpaid wages. Therefore, this approach is not recommended.

To further discuss how this decision may affect your organization, please contact us.


1 Employees “employed in” mills, factories, and manufacturing establishments must be paid at one and one-half times the employee’s regular rate of pay for hours worked in excess of 10 in any day and any hours in excess of 40 hours per week. In addition, employees may not work more than 13 hours in any given day. ORS 652.020(1).

 

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