Daily Overtime for Manufacturing Employees – New Developments & More Uncertainty

By: Randall Sutton

As we have previously reported to you here, BOLI has recently taken the position that during weeks where a manufacturing employee earns both daily and weekly overtime, the two overtime rates are added together to essentially pay the employee double-time for all overtime hours worked in the same week. BOLI’s new interpretation is a 180 degree change from its longstanding guidance on the subject.

BOLI’s change in view arose from a class action lawsuit we told you about involving bakery employees. Last week, the Multnomah County Circuit Court Judge ruled in favor of the employer by deciding that the overtime laws only require an employer to pay the greater of either daily or weekly overtime. The Court found that the legal theory asserted by the bakery employee required an inconsistent construction of the term “overtime” in the daily and weekly overtime statutes. Because the weekly overtime statute caps overtime at 1.5 times the regular rate of pay, the employees’ contention that daily overtime should be paid in addition to weekly overtime would result in double-counting. Under its judicial mandate to construe statutes consistently, the trial court held that an employee should be paid the greater of either daily or weekly overtime earned, not both.

Now that the trial court has weighed in, it is unclear whether BOLI will reverse course yet again. As of now, the Wage and Hour Division of BOLI is reviewing the decision, and we expect to hear additional information from BOLI soon. Keep in mind that the trial court decision is only binding on the parties in the actual case. It is possible that the Oregon appellate courts could review the issue and ultimately still find in favor of the bakery employees.

To resolve this issue once and for all, Associated Oregon Industries (“AOI”) has sponsored Senate Bill 984, which is now under consideration before the Oregon Legislature. If this bill passes, the statute would be clarified to allow certain manufacturing and cannery employers to pay the greater of either daily or weekly overtime when an employee works both daily and weekly overtime hours during a single week.

With the law in flux, it makes sense for manufacturing employees to carefully evaluate their strategy going forward. We are monitoring this issue closely and will keep you informed of further developments. Feel free to contact us if you have any questions or would like to discuss your company’s compliance strategy.