Earlier this week, the Court of Appeals for the Ninth Circuit held that an employer violated Oregon’s wage and hour law by (1) crediting the cost of seasonal workers’ on-site housing toward the Oregon minimum wage, and (2) paying its workers on the day after their last workday instead of on the last workday itself.

The employer in this case, Bear Creek Orchards, Inc., operates peach and pear orchards in Medford, Oregon. The company hires approximately 350 seasonal workers for its month-long harvest. Bear Creek recruits the majority of its workforce from the San Luis, Arizona, area, and offers those workers on-site housing and meals as part of their compensation. Bear Creek charged workers between five and seven dollars a day for the housing, deducted this amount from the workers’ paychecks, and credited that amount toward its minimum wage obligation under Oregon law. In addition, the company generally provided these employees with their final paychecks on the morning after their last day of work.

A number of those seasonal workers subsequently filed a class action lawsuit, claiming that Bear Creek violated Oregon’s wage and hour laws. With regard to the minimum wage claim, the federal district court found that Bear Creek lawfully credited on-site housing costs toward the workers’ minimum wage according to Oregon’s minimum wage law, which allows Oregon employers to deduct the fair market value of lodging, meals or other facilities or services furnished by the employer for the private benefit of the employee from a worker’s minimum wage.

The Ninth Circuit reversed the district court’s decision and ruled in favor of the workers. In reaching its decision, the Ninth Circuit concluded that the deduction was not for the employees’ “private benefit,” as defined by the relevant statute, because the workers staying in on-site housing was necessary for Bear Creek to maintain an adequate workforce. Although Bear Creek had argued that three administrative decisions from the Oregon Bureau of Labor and Industries indicated that the statute applied only to on-call employees, the court determined that the rule is applicable in all instances in which an employer provides lodging because it is otherwise unable to meet its need for workers.

With regard to the workers’ other claim, the Ninth Circuit affirmed the district court’s determination that, in failing to pay all wages due on the last day of employment, Bear Creek had violated the statute regarding final payment of wages, which provides that “whenever employment terminates,” seasonal farmworkers are due “all wages earned and unpaid” immediately.

Oregon employers should evaluate their pay practices in light of this decision. Notably, the penalty for unpaid minimum wage in Oregon is calculated at the employee’s regular rate of pay x 8 hours per day x 30 days. In addition, prevailing plaintiffs are entitled to an award of attorneys’ fees and costs.

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