Overtime Exemptions in Oregon

Whether an employee is entitled to overtime, or whether they qualify for one of the statutory exemptions therefrom, is one of the trickier employment law issues and is a frequent topic of cases we handle for both our employer and employee clients. For employers, the stakes are high. Misclassification of a category of employees as exempt from overtime can lead to costly class action litigation, employee resentment or both. For employees the stakes are high, too. Those who have been wrongly classified as exempt from overtime could be missing out on tens of thousands of dollars in unpaid wages going back as far as three years.

Misclassification claims are attractive to plaintiffs not only because of the possibility of lucrative class-action litigation, but because the burden is flipped. Typically in employment litigation (as with all civil litigation), the burden is on the employee/plaintiff to prove that the employer/defendant owes her money. In claims alleging unpaid overtime due to misclassification, the burden is on the employer to prove that the employee was properly classified as exempt. Litigation is always harder on the parter with the burden of proof, and misclassification claims are no different. Not only that, plaintiffs can win liquidated damages and their attorneys fees should they win a misclassification claim.

The general rule in Oregon is that all employees are entitled to overtime pay (computed at 1.5 times the employee’s regular rate of pay) for all hours worked over 40 in a workweek (ORS 653.261). However, certain, limited categories of employees are exempt from this requirement (OAR 839-020-0005). Specifically, those employees engaged in Administrative, Executive, ProfessionalOutside Sales Work, Retail Sales or who are exempt under the Motor Carrier Exemption need not be paid overtime, provided they meet certain, defined criteria.

A widely held misconception about overtime is that employees who are paid a salary need not be paid overtime. That is simply not true. Whether an employee is paid a salary is simply one element of a multi-element test Oregon courts use to determine whether an employee is properly classified as exempt from overtime under the Administrative and Executive exemptions. Several other requirements also must be met for the exemptions to apply. For instance, an employee’s primary duty must be management or administrative, and the employee must exercise discretion and independent judgment under minimal supervision. The success of the white-collar exemptions typically rises and falls on the answers to those questions – not whether the employee was paid a salary.

Each exemption has its own specific rules, and determining whether an employee is properly classified can be a fact intensive inquiry. If you are an Oregon employer grappling with how to classify your employees, or an Oregon employee wondering whether you might be entitled to overtime, give us a call.

 

 

 

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