Proposed Rules for Oregon's New Minimum Wage System Published

The Bureau of Labor and Industries has published proposed rules regarding Oregon's new minimum wage system taking effect on July 1, 2016.

Under the new system, three minimum wage rates have been established across the state by geographic regions and gradually increase through 2023. The designated regions are the Portland Urban Growth Boundary, nonurban counties (Baker, Coos, Crook, Curry, Douglas, Gilliam, Grant, Harney, Jefferson, Klamath, Lake, Malheur, Morrow, Sherman, Umatilla, Union, Wallowa and Wheeler) and the base rate which is everything that falls outside the first two.

The rate and increase schedule is as follows:

After 2022-2023, the minimum wage rates will be tied to the Consumer Price Index.

Here are some highlights of the proposed rules:

Employer location is defined. This is important because an "employer's location" determines which rate to pay. The proposed rule defines this as "...any place where an employer employs any employee for more than an incidental period of time during the employee's established workweek. An employer has more than one location if the employer has employees performing work in multiple regions during the same pay period."

Note that the rules refer to "more than an incidental amount of time." This is further defined in the rules as "less than four hours of an employee's compensable time during any workweek." Time spent traveling through a region for the purposes of travel and not performing work is also incidental.

What this means is that if you have an employee who works 32 hours in Crook County (Nonurban County) and 8 hours at a conference in Portland, the employee needs to be paid a minimum of 32 hours at the Nonurban County rate and 8 hours at the Portland UGB rate. If the employee works less than four hours in another region, then they do not need to be paid a different rate.

This requirement also impacts an employee's overtime rate since they must be paid at their average hourly rate, and in this scenario are working at different rates. Another impact will be for employers who have employees that telecommute or work remotely. Depending on where the employee is performing their work it could benefit the employer or employee. Although these issues are not specifically addressed in the proposed rules, they are definitely something to consider in your assessment of the impact these rules will have on your organization.

Another proposed change requires employers to track the "location of hours worked each workday." This tracking is required for each individual employee in order to determine the appropriate rate of pay. However, this tracking requirement is not required if the employer pays the highest required rate of pay, regardless of where the work is performed. For example, if an employee works 20 hours in Salem (base rate) and 20 hours in the city of Portland (Portland UGB) and is paid for 40 hours at the Portland UGB rate, no tracking is required.

The rules also define a workweek as "...any seven (7) consecutive twenty four (24) hour period as determined by the employer." The rule goes on to state that employers can redefine their workweek if the change is intended to be a permanent change and not "to evade the payment of minimum wage requirements..."

BOLI is accepting public comments until May 23, 2016. Comments can be submitted to Paloma.sparks@state.or.us.

With all of the changes either happening or pending (FLSA amendments), now is a great time to start evaluating your compensation strategy and structures.

Cascade will continue to keep you updated on this very important issue. In the meantime, do not hesitate to contact us with any questions you have.