The 2015 Oregon legislature has adjourned, but not before handing Oregon businesses a number of significant new employment laws. Below is a brief summary of the new legislation, all of which Governor Kate Brown has signed, that Oregon businesses should consider as they head into the third and fourth quarters of 2015.
Statewide Mandatory Paid Sick Leave (Senate Bill 454)
After 40 proposed amendments, hours of testimony, and contentious floor debates, Oregon became the fourth state in the country to mandate sick leave for all employees. Effective January 1, 2016, Oregon employers with 10 or more employees statewide (or only 6 employees if operating in Portland) must implement a paid sick time policy allowing every employee to accrue and use up to 40 hours of paid leave per year for a broad list of statutorily defined reasons. Smaller employers must comply with the ordinance as well, but may provide unpaid sick time.
Compliance with the new sick time law will generally require employers to revise or create new sick time or paid time off policies to satisfy the many substantive and notice requirements of the law. These include: (1) altering or creating new accrual systems to ensure sick time is accrued at the minimum mandatory rate of 1 hour for every 30 hours worked (or one-and-one-third hours for every 40 hours worked), or fully frontloading sick time at the beginning of each year; (2) altering payroll or other systems to regularly notify employees of their leave balances; (3) updating attendance policies and practices to ensure employees are not treated adversely for using sick time for any of the six broadly-framed purposes; and (4) updating or creating new policies to satisfy the law’s mandate that employers inform employees about 15 separate sections of the new law.
Enforcement of the new law will be come from both the Oregon Bureau of Labor and Industries (BOLI) and employees through private lawsuits. While BOLI cannot assess penalties until 2017 for anything but civil rights claims, such as discrimination or retaliation for exercising rights under the statute, employees and their attorneys are free to pursue claims as soon as the law takes effect on January 1, 2016; thus, timely compliance is critical to avoid legal exposure.
Once the law takes effect, employers located in Portland will no longer be subject to the city’s paid sick leave ordinance. Nevertheless, Portland employers will need to update their policies and practices to reflect the differences between the ordinance and the new state law. Unlike the Portland ordinance, the new state law does not require employees to work at least 240 hours before becoming eligible to use accrued sick time and includes leave under the Oregon Family Leave Act as a basis for using statutory sick time.
A more detailed summary about the new law is available here. Ogletree Deakins will hold a webinar this fall to help employers understand and implement the new law, particularly the new regulations that will be issued in the coming months.
Use of Accrued Sick or Personal Business Leave for Domestic Violence, Harassment, Sexual Assault, or Stalking (Senate Bill 492)
Oregon law requires employers with six or more employees to provide reasonable leave to employees or their children who are victims of domestic violence, harassment, sexual assault, or stalking. The law also requires employers to allow employees to use vacation or “paid leave that is offered … in lieu of vacation leave” for any related absences. Although most, if not all, employers already allow covered employees to use any sort of available paid leave, effective January 1, 2016, employees must be allowed to use vacation, paid leave offered in lieu of vacation, or “any accrued sick leave or personal business leave” to deal with these issues.
Employers should ensure that their policies allow for protected leave related to domestic violence, harassment, sexual assault, and stalking, and also that any form of available paid vacation, sick, or personal leave is available for such absences.
Oregon Retirement Savings Plan (House Bill 2960)
Oregon is taking steps to require private sector employers to offer their employees retirement benefits. House Bill 2960 created the Oregon Retirement Savings Board (ORSB), which is charged with creating the Oregon Retirement Savings Plan. The plan would be available to all Oregonians lacking access to retirement plans at work. If the new law proceeds as proposed (and that is far from certain), employers that do not already offer a qualified retirement plan will be required to offer their employees the ability to contribute to an account established under the Savings Plan via payroll deduction.
However, Oregon’s new law may be preempted by the federal Employee Retirement Income Security Act of 1974 (ERISA). Indeed, the state of Illinois passed a similar law, but the Illinois law requires the state to seek the advance opinion of the U.S. Department of Labor (DOL) as to whether ERISA preempts its state program. If so, the Illinois program cannot move forward.
Unlike its Illinois counterpart, the new Oregon law does not require the ORSB to obtain advance determination from the DOL. Rather, it merely requires the ORSB to make its own determination as to ERISA preemption, and includes a “poison pill” section that prohibits the ORSB from creating the Savings Plan if it concludes that ERISA preempts the plan. At present, it remains uncertain what steps the ORSB will take to assess the critical issue of ERISA preemption. In the meantime, a group of 26 Democratic senators, including Oregon’s Ron Wyden, signed a letter to President Obama “to encourage [him] to take action as soon as possible to facilitate the state-based efforts aimed at providing every working family the opportunity to prepare for retirement.” The senators are encouraging President Obama to “ask the Department of Labor and the Department of the Treasury to remove any potential uncertainty with respect to the application of federal law to the state-based reform initiatives,” to clarify that state plans like Oregon’s are not preempted by ERISA, and to provide specific guidance as to how state plans could be designed without triggering ERISA. The DOL has yet to respond to Illinois’ request or to take the steps sought by the senators.
Until the ORSB determines how ERISA affects the new law, Oregon employers do not need to take any steps towards compliance.
“Wage Transparency” (House Bill 2007)
House Bill 2007, which is part of Labor Commissioner Brad Avakian’s pay inequality campaign, makes it an unlawful employment practice to discharge, demote, suspend, or to otherwise discriminate or retaliate against an employee because the employee has (1) inquired about, discussed, or disclosed in any manner his or her wages or the wages of another employee, or (2) made a charge, filed a complaint, or otherwise initiated some sort of action related to the alleged disclosure of wage information.
The law takes effect January 1, 2016, and can be enforced by BOLI and through private lawsuits brought by employees. Remedies for violation of the new law may include economic damages and injunctive relief, along with attorneys’ fees and costs. Emotional distress damages will not be available.
Most employers already know that taking action against an employee for discussing wages with coworkers may violate the National Labor Relations Act. However, the new Oregon law goes much further. It protects an employee’s mere inquiry about his or her own wages to company personnel, as well as discussions and disclosures about the wages of the employee or other employees. A wage inquiry, discussion, or disclosure “in any manner” becomes a legally protected activity that may form the basis of a retaliation claim for any subsequent adverse action. As a result, employers should train human resources and all supervisory personnel to ensure they carefully manage any employee’s inquiry, discussion, or disclosure regarding wages.
“Ban the Box” (House Bill 3025)
Effective January 1, 2016, most Oregon businesses will not be able to require applicants to disclose criminal convictions on an employment application or at any time prior to an initial interview. For positions that do not require an interview, such as certain seasonal agricultural jobs, employers may not ask about criminal convictions before extending a conditional offer of employment.
House Bill 3025 makes exceptions for federal, state, or local laws requiring consideration of an applicant’s criminal history, as well as for law enforcement agencies, employers in the criminal justice system, and employers seeking “nonemployee volunteers.” In these situations, the legislation does not apply at all, and applicants may be required to disclose criminal convictions at any stage in the hiring process.
All businesses operating in Oregon should review their paper and electronic applications. Unless the company or position in question is excluded from the law’s coverage, applications may not require disclosure of criminal convictions.
If an employer plans to ask applicants about criminal convictions at the appropriate stage in the hiring process, it would be well served to use a form that includes the applicant’s signed and dated acknowledgement that the disclosure is not being required prior to an initial interview. The form should also include an affirmation that the employee is being truthful in the disclosure, and a statement that misrepresentations about criminal convictions will result in a decision not to hire or in subsequent termination.
Finally, employers should train personnel who interact with applicants not to seek disclosure of criminal convictions prior to an initial interview.
Preemption of Local Authority to Regulate Scheduling of Employees (Senate Bill 968)
In recent years, Oregon’s legislature has considered multiple bills that, if passed into law, would obligate employers to negotiate with any employee who requests a flexible or predictive work schedule. The proposed laws would require employers to engage in an “interactive process” with each employee to identify a “mutually acceptable work schedule,” and in many cases would obligate employers to grant scheduling requests absent exceptional circumstances. While these scheduling bills have not become law, some cities—notably Portland—have considered enacting similar local ordinances.
As part of a 2015 legislative compromise to pass Oregon’s new mandatory sick leave law, legislators agreed to temporarily prohibit local governments from regulating how private employers schedule their employees. The new prohibition is effective immediately, but will automatically expire on August 31, 2017. If the state has not enacted a scheduling law by that date (or perhaps even if it has), cities, counties, and other local governments will be free to enact their own local ordinances on the subject.
Increased BOLI Collection Power (Senate Bill 468)
Although Senate Bill 468 was initially drafted to grant BOLI the extraordinary power to place liens on property without obtaining a judgment, the final version of the bill allows BOLI to operate like other agencies and issue warrants. Effective January 1, 2016, if BOLI obtains a judgment against a party that has gone unpaid and has not been appealed, the agency may file a warrant in any county where the judgment debtor has property, which will create a lien on that property.
Noncompetition Agreements Limited to 18 Months (House Bill 3236)
Oregon already strictly regulates the use of noncompetition agreements by statute, generally limiting them to exempt employees earning more than the median income for a family of four (approximately $74,000 currently), and further conditioning enforcement on the employer informing the employee about the agreement “in a written employment offer received by the employee at least two weeks before the first day of the employee’s employment.” Even when enforceable under current law, the statute places a two-year cap on the duration of the restriction.
House Bill 3236 reduces the maximum enforceable duration of a noncompetition agreement to just 18 months. The revised law will take effect January 1, 2016, and will only apply to agreements entered into on or after that date.
Importantly, this legislation does not affect covenants not to solicit employees or not to solicit or accept business from former customers. Oregon continues to treat nonsolicitation agreements differently than noncompetition agreements. Unlike noncompetition agreements, courts can enforce nonsolicitation agreements regardless of an employee’s exempt status and compensation, and beyond 18 months when warranted. It is important to note, however, that employers must carefully draft nonsolicitation agreements to avoid them from being categorized as noncompetition agreements, which are more strictly regulated.
As a result of this new law, employers using noncompetition agreements in Oregon should (1) ensure the restrictive period does not exceed 18 months from the date of termination for any agreement entered in 2016 or later, and (2) assess whether a covenant not to solicit can achieve the same legitimate goals with less risk of being deemed unenforceable.
Unique Social Media Law (Senate Bill 185)
Purportedly spurred by his wife’s story of a Navy veteran who told her a large national company refused to interview him solely because he did not have a Facebook account, an Oregon state senator shepherded a one-of-a-kind social media bill into law. Effective January 1, 2016, it will be unlawful for an employer to require applicants or employees (1) to establish or maintain a social media account, or (2) to allow the employer to advertise on their personal social media accounts.
While this may be a solution in search of a problem, any Oregon business that mandates applicants or employees have Facebook, Twitter, or other social media accounts as a condition of employment, or that requires employees to allow the business to use those personal accounts for its own advertising should halt such practices by January 1, 2016.