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BOLI Changes Rule Regarding Overtime Payment For Manufacturing Employees

January 17, 2017

Overview

ORS 652.020 provides that certain employees who work in a mill, factory or manufacturing establishment in this state more than 10 hours in any one day must be paid a daily overtime rate of one and one-half times the employee’s regular hourly rate.  A separate statute, ORS 653.261, provides that employees who work over 40 hours in the week must be paid a weekly overtime rate of one and one-half the employee’s regular hourly rate.  Employers with collective bargaining agreements can agree not to comply with the daily overtime statute.

For purposes of the daily overtime rule, a “manufacturing establishment” is defined as “any place where machinery is used for * * * the process of making goods or any material produced by machinery; anything made from raw materials by machinery; the production of articles for use from raw or prepared materials by giving such materials new forms, qualities, properties or combinations, by the use of machinery.”  OAR 839-001-100(11)(a).  The law exempts the following employees:

  • Watchmen/women,
  • Boiler operators,
  • Employees who as one of their regular duties are engaged in the transportation of other employees to and from work,
  • Employees whose primary duty is that of making necessary repairs. This includes employees conducting maintenance on buildings, equipment or machinery,
  • Employees whose primary duty is that of supervising and directing work. This includes supervisors, managers, foremen/women and persons who are temporarily acting in these capacities in the absence of supervisory employees,
  • Employees whose primary duty is the loading and removal of finished forest products, and,
  • Employees engaged in emergency work.

In the past, BOLI interpreted the daily and weekly overtime provisions to mean that an employer in a manufacturing establishment must pay the higher of the daily overtime rate or the weekly overtime rate.  However, in December BOLI issued a memo and a new Technical Assistance page that changed how it interprets these two provisions.  The new memorandum circulated by BOLI provides that “there is no indication in either law that these two overtime regulations are intended to work in tandem, so that only one or the other would be applied where an employee earns both daily and weekly overtime.”  Interestingly, the same issue is currently at issue in a class action lawsuit pending in Multnomah County Circuit Court entitled Jose Ignacio Mazahua Reyes et al. v. Portland Specialty Baking, LLC, case number 16CV25324, in which the plaintiffs allege in part that Portland Specialty Baking failed to pay both daily and weekly overtime. 

Associated Oregon Industries has indicated that it may present a bill this legislative session to address this issue.  In the meantime, employers who have employees who work in a manufacturing establishment should either limit daily hours to no more than 10 hours a day or should change their overtime policies to pay both daily and weekly overtime.  You can access the BOLI Technical Assistance page at this link: https://www.oregon.gov/boli/TA/pages/t_faq_tamanufacturing.aspx.

If you have questions about BOLI’s new interpretation of the overtime rule, the attorneys in Schwabe, Williamson & Wyatt’s Employment group are happy to assist you.

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