A new Oregon law clarifies Oregon’s daily and weekly overtime laws and sets new maximum-hour limits for certain Oregon employers.  The new statute, which Oregon Governor Kate Brown signed on August 8, 2017, requires most employers in the manufacturing sector to pay employees the greater of daily or weekly overtime if an employee works more than 10 hours in a single day and more than 40 hours total in the course of a single workweek.  The law also sets a firm 55-hour weekly limit for most manufacturing-sector employees.

The law generally applies to employees who work in mills, factories, and manufacturing establishments.  However, both the original statutes and the statutes as amended by the new law contain numerous provisions that include exceptions or varying requirements for employers engaged in specific types of manufacturing operations.  Processors of perishable goods are, for instance, exempt from the new 55-hour weekly maximum.  Employers should consult with counsel to determine which of the new provisions apply to them.

The new overtime calculations went into effect immediately upon passage and the remaining changes will take effect on January 1, 2018.

Daily and Weekly Overtime Calculations

The new statute amends several provisions in Oregon’s daily and weekly overtime statutes to specify that manufacturing employers must pay employees the greater of daily or weekly overtime for employees who work both more than the daily maximum of 10 hours and the weekly maximum of 40 hours during a single workweek.  This amendment clarifies the previously vague statutory language that did not specify how employers should compensate an employee who works both daily and weekly overtime.

For nearly a century, Oregon manufacturing employers had interpreted the overtime statutes as requiring them to pay employees the greater of daily or weekly overtime.  But in January, Oregon’s Bureau of Labor and Industries (BOLI) issued new guidance stating that if an employee worked both daily and weekly overtime, the employer had to pay the employee both types of overtime.  In other words, BOLI’s new interpretation stated that an employee who worked three 12-hour shifts and one 10-hour shift in a given week (for a total of 44 hours) should receive 10 hours of overtime—6 hours of daily overtime for the 3 days where the employee worked more than 10 hours, and 4 hours of weekly overtime because the employee worked more than 40 hours in the week.

The new law overrides BOLI’s “double overtime” interpretation and reestablishes the status quo that both Oregon employers and BOLI itself had maintained prior to BOLI’s January guidance.  Now, an employee who works both daily and weekly overtime in a single week receives the greater of the daily or weekly overtime, but not both.  Thus, under the hypothetical discussed above, the employee would receive 6 hours of overtime pay for the three 12-hour days, since that is greater than the 4 hours of weekly overtime he had earned during the week.

Maximum Hours Requirement

The other major component of the new law prohibits most manufacturing employers from requiring employees to work more than 55 hours in a workweek.  

The primary exception set forth in the statute applies to manufacturers who process perishable products.  Those employers can permit employees to work more than 55 hours during the period of time when the perishable product “must be processed after harvesting, slaughter or catch.”  During that “undue hardship period,” eligible employers can permit their employees to work up to a maximum of 84 hours per week for four weeks, and up to 80 hours per week for the remaining hardship period.  Affected employers can claim up to 21 weeks per year of undue hardship for purposes of the statute.  Employers must obtain the written consent of any employee who will work more than 55 hours in a week during the hardship period, and the employer must also provide BOLI with a written notice stating, among other things, when the undue hardship period will start and when it is expected to end.

Next Steps for Affected Employers

Employers with manufacturing operations in Oregon should consider taking the following steps to ensure compliance with the new law:

• Review the amended statutes carefully with counsel to determine which provisions apply to their employees and which do not;
• Examine past employee schedules and timesheets to determine the frequency with which employees worked both daily and weekly overtime hours in a single week;
• If a manufacturing employer has employees who work more than 55 hours in any week and does not process perishable goods, it should implement new scheduling policies and hire new employees as necessary to ensure uninterrupted operations while complying with the new weekly maximum;
• If an employer processes perishable goods, it should determine which week(s) of the year it may need employees to work more than 55 hours, and draft the employee consent and BOLI notification forms necessary to claim the undue hardship exemption;
• Train human resources, payroll, and managerial staff on the new requirements;
• Edit employee handbooks and new hire materials to reflect the new requirements.