21 January 2021

OP-ED: A Call For An Overhaul Of Laws Crushing Oregon Small Businesses

Schwabe Williamson & Wyatt


Schwabe Williamson & Wyatt
Picture this: You have 20 hourly workers covered by a policy that requires them to take 30 minutes for a meal period.
United States Employment and HR
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Picture this: You have 20 hourly workers covered by a policy that requires them to take 30 minutes for a meal period. Your superintendent or foreman makes sure everyone is abiding by the rule. You provide tables, heaters and a canopy under which workers can enjoy their lunch. On Fridays you even bring in a food cart during the meal period. Nevertheless, a class action attorney sues your company, alleging that on several occasions workers returned to work after only a 29-minute break. You review your time clock records, and in fact, there are folks who occasionally clocked in after 29 minutes – but also some who clocked in after 30, 32 or 35 minutes. Overall, everyone has received a full, 30-minute meal period, or at least close enough.

In this situation, based on current Oregon law, the judge could rule that you owe 30 minutes of pay as a penalty for each short meal period, plus 30 days of wages to each worker, and that you have to pay the class action attorney's fees and prejudgment interest. The total bill? More than $1 million. What's your option? Bankruptcy.

Employees deserve breaks – of that there is no question. And employers that intentionally force employees to work through breaks on a regular basis should be punished. But the penalties currently imposed far outweigh the crime.

The Oregon Legislature never intended the law to be so far out of balance. Rather, the current state of the law is the invention of the Oregon Bureau of Labor and Industries in concert with the courts. In 1967, the Legislature granted BOLI the authority to promulgate rules for meal and rest breaks and to apply those rules through administrative enforcement. From 1967 to 2007, BOLI was the sole enforcer of meal and rest break rules. In 2007, following examples in California and Washington, lawyers in Oregon began filing cases in court. Case after case was lost because the courts recognized that while BOLI could enforce meal and rest break rules through administrative action, employees could not sue and claim damages for missing breaks.

But in 2010, BOLI – having expressed doubt to the Oregon Supreme Court that it had the authority to do so – changed its rule that purportedly allowed employees to sue employers in court under its meal and rest break rule. After years of increasing meal and rest break litigation, in 2019, the Oregon Court of Appeals went beyond what even any California court had done and held that not only did employers have to provide meal periods, but they had to force employees to take a full 30 minutes and pay a “penalty wage” of 30 minutes even if an employee inadvertently clocked in a minute early against the employer's rules and without the employer's knowledge. Only six months later, a Multnomah County judge held that an employer was on the hook not only for this “penalty wage,” but also for a “cascade of additional penalties” including 30 days of wages, prejudgment interest and attorneys' fees.

The Oregon Legislature never intended to create what the courts admit are a “cascade of additional penalties” that will cripple and kill small businesses for one minute of lost meal period time. BOLI's “penalty wage” stacked on top of a 30-day penalty, stacked on top of prejudgment interest, and attorneys' fees, results in a few minutes of missed meal periods turning into millions of dollars of uninsured liability that Oregon's businesses cannot afford.

These class action lawsuits are happening now, and Oregon's small businesses are facing this unprecedented liability. There are several ways in which the Legislature can restore balance to meal and rest period law, including:

1. Specifying BOLI as the sole enforcer of meal and rest break rules

The Legislature can amend ORS 652.261 to prevent BOLI from creating any private right of action for meal and rest break violations. Rather, BOLI can promulgate rules, and it can enforce those rules with penalties or even lawsuits it brings against employers.

2. Limiting the penalties for meal and rest period violations

Should the Legislature want employees to be able to enforce meal and rest break rules in court, then it should at least limit the penalties that an employee can collect to something that is commensurate with the harm caused by a violation. For example, the Legislature could make clear that an employee is entitled to 30 minutes of pay if an employer intentionally shorts the employee's meal break, but not 30 days of penalty wages, attorneys' fees, or prejudgment interest.

3. Enacting a de minimis exception

The Legislature can adopt a de minimis rule that does not permit employers to be penalized for trivial, unintentional violations of meal and rest period provisions.

4. Requiring employers to provide – not paternalistically police – meal and rest breaks

Oregon could follow California's approach and require employers to provide breaks, and not police employees to ensure that every second of a meal or rest period is actually taken. These suggested actions, together or individually, could restore some much needed balance to meal and rest period law and ensure that well-intended employers do not lose their businesses over trivial violations of BOLI's meal and rest period rules. 

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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