During the Great Depression of the 1930s, many employees worked 10 to 14 hour days without extra compensation. This is especially true of blue-collar workers who needed to provide for their families. This changed in 1938 when The Fair Labor Standards Act made it mandatory for employers to pay a premium rate for work rendered beyond 40 hours in a given workweek. This discouraged employers from overworking their employees while also giving employers a reason to hire more people, thus creating more jobs.
In Oregon, overtime pay is determined by both state and federal laws, and rules may vary depending on the employee’s pay rate, occupation, and the industry they work in. As a general rule under federal law and Oregon labor laws, overtime refers to hours worked beyond 40 hours in a workweek and must be paid at 1.5 times the regular hourly rate.
This article provides a comprehensive guide on Oregon overtime laws, special rules for different industries, who qualifies for overtime pay, and how it is calculated. This will help both employees and employers. Employees must know their rights as workers, while employers must comply with these laws to avoid lawsuits.
What are Oregon overtime laws?
Oregon overtime laws follow minimum federal standards unless state law provides a higher standard of protection for workers. For instance, Oregon state law provides that in addition to being entitled to overtime when working more than 40 hours per week, workers in certain industries may also qualify for daily overtime pay rates when they work beyond a certain number of hours per day. Oregon labor law also places limits on how much overtime an employee may work and requires mandatory rest periods.
Manufacturing Overtime Rules
A manufacturing establishment refers to those engaged in “the process of using machinery to transform materials, substances or components into new products.”
Workers employed in a manufacturing establishment are entitled to overtime pay if they work more than 10 hours per day. However, they may not work more than 13 hours within a 24-hour period, and rest periods are mandatory at the end of any 8-hour shift.
Additionally, employers cannot require or allow an employee to work more than 55 hours per workweek in a mill, factory, or manufacturing establishment. This rule also applies to a cannery, drier, and packing plant. However, an employee may request permission or provide consent in writing, which allows them to exceed this threshold up to a maximum of 60 hours per workweek.
Canneries, driers, and packing plants Overtime Rules
Workers employed in canneries, driers, and packing plants are also entitled to overtime pay for hours worked beyond 10 hours per day. It’s important to note that this rule does not apply if the establishment is located on a farm and primarily processes products produced by that same farm.
There is no limit on how many hours an employee may work per day, but the 55-hour weekly threshold still applies. Similar to manufacturing employees, cannery, drier, and packing plant employees may also work up to 60 hours as long as the worker requested or consented to this in writing.
Undue hardship exceptions
In the event that manufacturers of perishable products experience undue hardships, they may request an exemption from the restrictions imposed on the maximum number of hours that their employees may work. This exemption, however, is still subject to the consent of the employee. This consent may be withdrawn at any time by the employee as long as they provide notice. Notice must be given to the employer at least 7 days before the week during which they no longer wish to work more than 55 hours. The number of hours worked is limited to 84 hours per week in the first four weeks and 80 hours per week for the remainder of the hardship period.
Who is and isn’t qualified under Oregon overtime rules?
Not every employee is qualified to be paid overtime. This section will discuss who is entitled to overtime pay in Oregon under federal and state laws.
Agricultural workers not entitled to overtime pay
In early 2021, Oregon labor groups pushed for the passage of House Bill 2358, which would have required farmers to pay overtime to their workers. Unlike in Colorado, where a similar measure was passed, the status quo remains in Oregon: agricultural employees are excluded from overtime pay.
Exempt employees not entitled to overtime pay
Under the Fair Labor Standards Act (FLSA), an employee is not entitled to overtime pay if the following two conditions are present:
- The employee performs executive, administrative, or professional duties; and
- The employee earns at least $35,568 per year or $684 per week.
Employees who satisfy the above criteria are considered exempt employees. Therefore, they are not entitled to overtime pay under federal law. As a general rule, all other employees are non-exempt employees unless other exceptions apply under state law.
In Oregon, the employer has the burden of proving that an employee is exempt from overtime pay by satisfying the duties test, the discretion and independent judgment test, and the salary basis test.
- Duties Test: Does the employee perform higher-level executive, technical, or administrative work? Under state law, this usually entails predominantly intellectual, managerial, or creative tasks.
- Discretion and Independent Judgment Test: Is the employee able to autonomously make decisions on significant matters?
- Salary Test: Is the employee salaried? The salary threshold of at least $35,568 per year or $684 per week still applies. Employees whose salaries fall below this threshold are still qualified for overtime pay, regardless of whether the two tests have been satisfied.
Other excluded employees
Under Oregon state law, the following individuals are not entitled to overtime pay:
- Workers who perform domestic labor on a casual basis in or about a family home;
- Workers employed by the United States government;
- Students who are enrolled in and employed by an institution whose function is primary or secondary education;
- Outside salespersons or taxicab operators;
- Individuals domiciled at their workplace in order to be available in case of emergencies (time spent at their workplace not performing their duties is not considered overtime work); and
- Other employees as provided by state law.
How is overtime calculated?
As previously mentioned, under the Fair Labor Standards Act (FLSA), all non-exempt employees must be paid 1.5 times their hourly rate for hours worked beyond 40 hours in a workweek.
If an employee is paid a monthly salary based on a 40-hour workweek, the regular hourly rate is determined by doing the following calculations:
- Monthly salary x 12=Annual salary
- Annual salary ÷ 52=Weekly salary
- Weekly salary ÷ 40=Regular hourly rate
If an employee works at different pay rates within the same workweek, the average hourly rate determines their overtime pay.
What is a “workweek”?
A workweek is a fixed and recurring period of 168 hours, which may or may not coincide with the calendar week or regular pay periods. An employer may set different workweeks for different groups of employees as long as each employee’s workweek is consistent. Employers are not allowed to average two or more workweeks to avoid overtime pay.
Fluctuating workweek method
Some employees may be paid a fixed weekly salary regardless of the number of hours worked, which may differ every week. To calculate overtime pay in this situation, the employer must use the fluctuating workweek method. To determine overtime utilizing this method, simply follow the steps below.
- Determine the hourly rate for that week by dividing the total weekly salary by the number of hours worked
- Multiply this hourly rate by 0.5
- Multiply the number above by the number of overtime hours (hours worked minus 40 hours)
For example, Mary gets paid $2,000 per week, regardless of how many hours she works. This week, she worked 50 hours.
- $2,000 ÷ 50 = $40 (hourly rate)
- $40 x 0.5 = $20
- $20 x (50-40) = $20 x 10 = $200
In this example, Mary is paid her regular rate for the 50 hours she worked. Her overtime pay of $200 is then added to that amount, for a total of $2,200.
What is included under the regular pay rate?
All forms of compensation, including non-discretionary bonuses, must be considered part of an employee’s regular pay. On the other hand, the following are not included:
- Expense reimbursements;
- Premium pay for Saturday, Sunday, or holiday work;
- Discretionary bonuses; and
- Gifts for special occasions.
Overtime laws help level the playing field for workers and help ensure that workplaces are safe and equitable for workers. Employers must comply with these laws in order to avoid expensive claims and fines on unpaid overtime, which could end up being double what they would have paid if they had followed how the Oregon labor laws treat overtime.