Oregon's Bureau of Labor & Industries (BOLI) recently
announced a new interpretation of overtime compensation rules that
directly impacts Oregon breweries and brewpubs. Under the new
guidance issued in December 2016, employees in "manufacturing
establishments" must be paid overtime rates for hours worked
in excess of 40 hours per week and overtime rates
for any hours in excess of 10 hours in any given day. BOLI says
that manufacturing establishments cannot continue with the former
practice of paying employees the greater of the daily overtime rate
or the weekly overtime rate.
It's important to note that this new interpretation is not
the result of a new law being passed. ORS 652.020 has always stated
that employees who work in manufacturing establishments must be
paid one and one-half times their regular hourly rate when the
employees work more than 10 hours in a work day. Similarly, ORS
653.261 has always stated that employees who work more than 40
hours in a week are entitled to pay one and one-half times their
regular hourly rate.
However, as noted above, BOLI previously interpreted these two
statutes to allow covered employers to simply pay employees the
higher of the weekly and daily overtime amounts. For example, under
the prior interpretation, if an employee worked 11 hours on Monday
and Tuesday, and 10 hours on Wednesday, Thursday, and Friday
– for a total of 52 hours in the week – the employee
would only be entitled to 12 hours of overtime pay (because the 12
hours over 40 is greater than the two daily hours of overtime for
Monday and Tuesday). Under the new interpretation, however, the
same employee is entitled to 14 hours of overtime pay (the two
daily overtime hours for Monday and Tuesday, plus the 12
hours over 40 in the week) and 38 hours of regular pay.
The timing of BOLI's position change is also interesting. It
follows a class action lawsuit that was filed last year against
Portland Specialty Baking. The suit argues that the bakery was not
paying workers daily and weekly overtime. Brad Avakian, the BOLI
Commissioner, submitted a declaration in support of the plaintiff
workers. And now we have the new interpretation.
Why does this apply to Breweries and Brewpubs?
Breweries and brewpubs are covered because a "manufacturing
establishment" is defined as any place where machinery is used
for "manufacturing purposes." This includes any
establishment making goods by machinery, any making raw materials
by machinery, and any producing articles for use from raw or
prepared materials by giving prepared materials by giving such
materials new forms, qualities, properties or combinations, by use
Beer, of course, is brewed from raw materials and involves the
use of machinery. My conversations with BOLI have similarly
confirmed that the agency interprets the statute to cover breweries
Are there any exceptions?
Yes. The new interpretation does not impact the statutory
exceptions, which state that the daily overtime pay requirements do
not apply to, among others: supervisors, managers, foremen/women,
and those temporarily acting in such capacities in the absence of
supervisory employees; those whose primary duty is that of making
necessary repairs; and boiler operators.
The daily overtime law also does not apply to employees who are
employed to perform duties that do not include work in connection
with production machinery, such as administrative staff or
bookkeepers, provided they don't work in the brewery or
brewpub, or they perform their duties in a location that is
physically separated from the actual production process by means of
an architectural barrier.
This "double pay" issue is currently being looked at
by the legislature, which will hopefully amend the existing
statutes to clarify its intent as to whether employees are or are
not entitled to daily and weekly overtime pay when the employee
works more than 40 hours in a week.
It is also unclear whether BOLI will take the position that
covered employers are expected to retroactively correct payments
made to employees over the last two years (the length of the
applicable statute of limitations for overtime wage claims). But as
the Portland Specialty Baking case made clear, some
plaintiffs' attorneys are not necessarily going to wait to find
out what the courts or legislature decide.
At the very least, breweries and brewpubs should immediately
ensure they are not currently running afoul of BOLI's new
overtime interpretations. Breweries and brewpubs are also
encouraged to seek legal counsel to help evaluate their potential
exposure to overtime wage claims, and how to best handle their
specific wage payment structure and shift scheduling practices.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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