Legislative Update: Is a $15 minimum wage imminent?

One question employers are asking us is about any changes to the minimum wage. Unless you have purposely not been paying attention to the news and stopped reading the newspaper you have probably heard some reference to an increase in the Oregon minimum wage to $15 per hour. There are several bills on this matter in the Oregon legislature. In Cardinal’s last Legislative Update we reviewed three bills. They were:

House Bill 2008 – This bill would raise the hourly minimum wage to meet the federal poverty line for a family of four. In 2017 minimum wage would be set to $12.20 and increased yearly depending on the federal poverty line.

House Bill 2009 – Increases the minimum wage to $15.00 by 2018. Subsequent increases would be tied to inflation.

House Bill 2012 – The minimum wage under HB 2012 would increase to $13.50 in 2017. Like HB 2009, subsequent increases would be tied to inflation.

All three bills have been referred to the House Committee on Rules. No future events are scheduled to move these bills forward at this time. Does this mean efforts to increase the minimum wage have come to a standstill? The legislature is still in session and could still act. However the emphasis on paid sick leave may be the legislature’s more pressing priority. But note that often priorities in a prior legislative session are brought forward to the next session. In the meantime, proponents of a hike in the minimum wage have filed a ballot measure for the 2016 election to raise the minimum wage to $15.00 by 2019.  

If you would like to keep up on these bills and the proposed ballot measure you can view them here:

HB 2008

HB 2009

HB 2012

Ballot Measure 41

2015 Legislative Labor Law Update

The Oregon Legislative has only been in session for a few months and already there has been quite a bit of activity in the labor law category.

Let's begin by reviewing the widely anticipated bills such as Paid Sick Leave and an increased Minimum Wage, which likely will end up on the Governor’s desk, then move on to the unexpected.

To better understand the direction of priorities in this session it is helpful to review the political landscape. Most of Oregon did not miss that Governor Kitzhaber resigned and we have a new governor, Kate Brown. Governor Brown is a Democrat and was formerly the Secretary of State. In the state legislature, the Oregon Senate is made up of 18 Democrats and 12 Republicans. The Oregon House is comprised of 35 Democrats and 25 Republicans. As the Democrats have solid majorities they are better able to advance their agenda. Generally speaking this agenda, relating to labor law, is focused on protections for employees and an increase in employee benefits.

PAID SICK LEAVE

Paid sick leave is something that will likely pass this session. Portland and Eugene both have sick leave laws on the books and other cities have looked into their own versions. Heading off the possibility of a patchwork of dissimilar laws in multiple municipalities the legislature seems set to devise a single statewide standard. Both the senate and the house are working on this matter and each has its own version. In the Portland sick leave law, businesses with less than six employees were not required to provide sick leave. The introduced bills for consideration do not contain exemptions for small businesses. However one bill, Senate Bill 454, was amended to require sick leave for all employees but would only require paid sick leave from employers that have six or more employees.

• House Bill 2005 –
• Senate Bill 454 –

As previously stated it is reasonable to assume that some version of paid or unpaid sick leave will soon be a required employee benefit.  This is one area where Cardinal can assist you in advising a course of action, tracking sick time taken or implementing a comprehensive time and attendance system with accruals. 

Related to paid sick time are:

• House Bill 3204 –
• House Bill 3205 –

These bills would give a tax credit to employers providing paid sick leave.

MINIMUM WAGE

An increase in minimum wage is another area where Democrats have been active nationwide at the state and local levels. For example, in 2014 Seattle voted to gradually raise the minimum wage to $15.00 per hour by 2021. There are several bills in the legislature:

• House Bill 2008 – Gradually increases the minimum wage.
• House Bill 2012 – Has the minimum wage top out at $13.50 in 2017.
• House Bill 2009 – Increases the minimum wage to $15.00 by 2018 . 

Not unlike paid sick leave, a bill was introduced on minimum wage to encourage a particular behavior.

• House Bill 3271 – Employers would qualify for a tax credit if they pay employees more than the minimum wage.  

EQUAL WORK, EQUAL PAY

These bills complement one another.

• House Bill 2006 – Deals with requiring equal pay for both sexes in the equivalent position. 
• House Bill 2007 – Prohibits employers from disciplining employees who disclose their pay.

At first glance these do not seem very controversial. However in reading the fine print it could set up scenarios that create animosity. For example, would an employee be able to request an investigation and then once it has been concluded do a record request even if the conclusion was that there is no evidence of wrongdoing? Then the employee would have access to all of their coworker's rates of pay. A fifty cents an hour difference between coworkers who are members of the same sex can still cause friction. This is often the argument for keeping employee rates of pay private. But maybe conventional wisdom is wrong and transparency is better in the long term. If these bills pass expect scrutiny in how they are implemented via Oregon Administrative Rules.

TIMELY PAYMENT OF WAGES

Non-payment of wages goes against American’s sense of what is right. To this end there are several bills addressing various iterations of this wrongdoing.

• House Bill 2212 – Would impose civil penalties on the employer for not paying wages on time.
• House Bill 2387 – Allows the Bureau of Labor and Industries to impose a bond on employers that fail to pay properly pay wages.
• House Bill 2923 – Creates a task force looking into employee compensation in Oregon.
• House Bill 3083 – This bill would help define wages for wage claims.
• House Bill 3113 – Requires an employer wage bond in certain wage claim cases.

HIRE A VETERAN

• House Bill 2839 – Income tax credits for employing veterans.

FLEXIBLE AND/OR PREDICTABLE WORK SCHEDULE

• House Bill 2010 – This bill is aimed solely at the retail, hospitality and food service industries and would require employers to provide a predictable and/or flexible work schedule. 

There are several provisions in this law. Employers would be required to provide schedules two weeks in advance. Employees are protected if they ask for changes in their schedule and employers must, “…engage in a timely, interactive process with the employee to attempt to agree upon a mutually acceptable work schedule.” There are also rules on calling in employees to work on their day off. If an employer calls in an employee because they think they are going to be busy, the employer will have to pay the employee an extra hour of time. Complying with this is going to require considerable documentation. This is in area where a time and attendance system would be advisable. Cardinal can help you implement such a system. Please visit our time and attendance webpage for more details. 

VOLUNTARY COMPLIANCE WITH E-VERIFY

• House Bill 2043 – Uses employee tax deductions as an incentive for employers to use the federal E-Verify program.

OREGON EMPLOYEE LEAVE

• House Bill 2007 – Reduces Oregon Family Leave Act eligibility hours from 25 to 24. It is unclear what spurred a house representative to ask for the threshold to be dropped by one hour.
• House Bill 2646 – Requires employers to let employees attend specific school related functions.

BAN THE BOX ON STEROIDS

There has been pressure to require employers not to ask about felony convictions on the initial application. This is referred to as ‘Ban the Box’.

• House Bill 3025 –
• House Bill 3097 –

The concern being addressed is that felons do not get past the initial screening when applying for a job. Portland recently implemented such a policy for internal positions. These proposed laws go beyond the initial Ban the Box lobby of requiring employers not to initially ask about felonies.  There are additional requirements. Some of the required steps include giving a conditional letter of employment, then running a background check, denoting the types of felonies that apply in a specific position and if any adverse action is taken the employee would have 4 or 10 days to clear that up and the employer would have to hold the job open during that time. Some parts of these proposed requirements are best practices which Cardinal already offers. 

FORCED FALSEHOODS

• House Bill 3137 – Would stop employers being able to force employees to sign false documents. 

One would think that this is already illegal. Even if it is not against the law (which it should be) it is like requiring bank robber to get a license.  It is reasonable to conclude that if an employer is falsifying documents they would have no scruples about forcing their employees to sign off on them.

Cardinal will endeavor to keep you updated as this session progresses. When there is movement on these bills and as laws go into effect we will discuss strategies for compliance. Or stay tuned by visiting our compliance section here.

Arin J. Carmack

Is Oregon’s Health Insurance Exchange in Jeopardy?

Recently the United States Supreme Court heard arguments on King v. Burwell. This case is focused on the legality of subsidies in states that did not set up their own exchange. In the Patient Protection and Affordable Care Act (more commonly known as the ACA or Obamacare) the law allowed states to decide if they wanted to set up an exchange. If states decline then the Federal government establishes an exchange. The exchange sets up a mechanism for individuals to compare, buy and importantly for this lawsuit, obtain a subsidy (a reduced price) for their coverage by way of means testing. The controversy is over the language in the ACA over states that do not have an exchange. The question before the Supreme Court is, can subsidies be given to individuals in the aforementioned states? There are 34 states without an exchange. Oregon is not one of the 34 states in the lawsuit but we are a special case in that we have elements of both a state and federal exchange. Would a ruling by the Supreme Court effect Oregon? Speculation is all over the board as the Supreme Court is difficult to predict. Oregon state officials contend that we are in compliance (see article here). A major contributor in the reasoning behind the plaintiff’s claim in King v. Burwell has a different opinion (see article here).

There are many questions. Will individuals using Oregon’s exchange lose their subsidies when the court is expected to rule in June? Will subsidies be rolled back to January 2014? Or will the Supreme Court answer this question only for the 34 states in the lawsuit?  

Large Employers without a Group Health Plan

This year the Employer Mandate went into effect. The Employer Mandate is a $2000 tax per employee per year on large employers that do not provide a group health plan. In 2015 a large employer is one that has 100 or more employees (for help calculating your employee count click here) and in 2016 that number drops to 50 employees. For large employers that offer a Group health Plan (GHP), 2015 is a non-event, as long as it is affordable for employees (for more information click here). For employers that do not offer a GHP, procedures need to be put into place well before the 2016 tax season. First, if you are close to 50 or 100 employees you need a mechanism to measure (prove) that you are not a large employer. It is not clear how stringent the IRS will be on these calculations. Second, it would be prudent to show that you did not shift too many employees from full time to part time in 2014 to avoid penalties in 2015. Finally you need to designate your part time employees. You do not pay the Employer Mandate penalty on part time employees (those that work less than 30 hours per week on average). It will be important to differentiate, or more specifically prove the difference between the part time and full time employees. Once again it is not clear how closely the IRS will scrutinize the difference but recordkeeping will be a key in any review or audit.

Pre and Post Tax Reimbursements

Recently the IRS released guidance on the practice of employers reimbursing employees for health insurance premiums. It is not surprising that the IRS ruled that pre-tax programs are no longer allowed (see this guidance about transition relief). What was surprising is that employers cannot reimbure employees for health insurance premiums with post-tax dollars. Post tax dollars means exactly that, the IRS has already gotten its share of taxes.  Why would the IRS care where money is spent after it has been taxed?

If you provide any money to an employee that is earmarked for health insurance you may be asking, can employer designate any of it for health insurance? The answer is buried deep within the bulletin. You can provide a health insurance bonus with the intention that it is spent on insurance. But in reality the employee can buy a first aid kit (almost health insurance) or something really unhealthy like a meal of boneless buffalo wings, drinks and carton of cigarettes. The point appears to be that you can give money to an employee but you cannot require them to spend money on health insurance. For more details on this guidance click here.

Arin J. Carmack

Confused and Dazed in Eugene

If you have employees in Eugene, recent changes in the law can leave you feeling confused. No, this is not another article about dazed employees due to recreational marijuana becoming in legal in Oregon. But it in many ways it is a similar situation due to conflicting laws at different levels of government.

Sick leave advocates have used municipality elections as a battleground to advance their cause. In Oregon, Portland passed a sick leave ordinance in 2013 and Eugene followed suit the following year. But just days before Eugene was able to pass their law, Lane County preempted it with a series of ordinances that nullified Eugene’s ability to pass laws pertaining to sick leave. Undaunted, the Eugene City Council moved ahead with passage of a leave law and is in the development of rules phase. You can view the particulars of the Eugene sick leave law here.

Can Eugene enforce a sick leave law? A lack of clarity leaves employers in an unwelcome position. Either the City of Eugene or Lane County could try to resolve this ambiguity by bumping that question up to the state level to see which law(s) supersedes the other. In reviewing the press releases from Lane County there was no obvious reference to Eugene’s sick leave beyond the initial passage of the county ordinance. The county seems to have passed their set of laws and forgot about it. Similarly the city fails to address this contradiction either on their sick leave webpage or in the FAQs. A failure by either side to clarify this question is a violation of the public’s trust.

What should you do as an employer with employees in Eugene? The safest thing to do is to provide sick leave and meet the minimal requirements. If you do not offer sick leave or some equivalent, at a minimum begin tracking employee hours beginning July 1, 2015 in case the city prevails.

Stay tuned for further developments. This is an issue that the Oregon Legislature might step in with a statewide requirement.

Arin J. Carmack

Recreational Marijuana and the Employer- Ballot Measure 91 Passed. Now What?

On November 4, 2014 Ballot Measure 91 was voted into law which allows recreational marijuana to be sold to adults that are 21 and older.   The passage of Measure 91 means that at the state level, in many instances, marijuana will no longer be illegal to use or possess. Now that it is being made legal, what do you do as an employer? 

Background: Should you still drug test? 

In many ways we are revisiting questions from 1998 when Oregon became the second state to legalize the use of medical marijuana with the passage of Ballot Measure 67.  Eventually the Oregon Bureau of Labor and Industries (BOLI) took a stance that essentially said voters wanted Oregonians to have access to medical marijuana and therefore employers should not discriminate against them based on the medicine they are legally taking under Oregon law.  (I should note that this is my own interpretation from my correspondence with the Labor Commissioner.)  My concern at the time was employers were unable to objectively conclude that an employee was under the influence of medical marijuana while working.  If someone is consuming alcohol a breathalyzer can determine what level of alcohol is currently in their bloodstream.  There is no breathalyzer test available to employers for THC and employers cannot do a blood test on employees.  Your only option is a passive test like a urinalysis.   A urinalysis shows what drugs an employee had or had not used in the past and does not determine if they are currently impaired for the drug that they have tested positive for.  This left the employer in the position choosing to err on the side of safety or ignore drug test results to avoid a potential wrongful termination suit.  This impasse was resolved when the case, Emerald Steel Fabricators vs BOLI was heard by the Oregon Supreme Court.  Essentially the Oregon Supreme Court concluded that since marijuana is a controlled substance under federal law that employers do not have to accommodate the use of an illegal substance (click here for a link to that decision).  With Measure 91’s passage it is likely that employers can rely on this decision to apply to recreation marijuana in the near future.  Additionally Measure 91 states that, “…this Act may not be construed: (1) To amend or affect in any way any state or federal law pertaining to employment matters.”  Stay tuned to Cardinal’s newsletters and we will advise you if there are any updates on the Federal Controlled Substance Act or BOLI’s position on employee use of recreational marijuana.

Should the employer rely only the Oregon Supreme Court’s decision that marijuana is a federally controlled substance?

In my letter to BOLI on medical marijuana my focus was on safety.  I believe this is still the best angle to approach this issue.  Employers have an obligation to provide a safe workplace (feel free to verify this with OSHA) which includes making sure your employees do not hurt themselves or others because they are impaired while working. Let’s look at two positions, a clerical employee and a forklift driver, to illustrate when you should apply drug testing.  In this example we assume the clerical employee never drives for work and a forklift driver works at a mill in close proximity to coworkers.  The clerical employee has a very limited ability to hurt themselves or others and thus does not need extra resources directed towards drug testing.  In fact, chronic use of marijuana (or any intoxicating substance) is going to be reflected in job performance and can be dealt with in that manner. A forklift operator can not only hurt themselves but also drives around with heavy loads balanced on forks that can hurt or kill others.  An employer without a drug policy and drug testing in place for the forklift driver exposes themselves to OSHA fines, increased workers’ compensation or general liability costs and even a potential civil suit from an injured coworker.

Who should you drug test?

Deciding which job classifications you are going to test are not going to be as easy as the examples provided.   When deciding what to do focus on the potential of employees to hurt themselves or others, the general public or even machinery or product.  Briefly document what you decide. 

What about drug testing still required by Federal law?

There are some jobs that require drug testing.   For example, truck drivers that fall under the Federal Department of Transportation rules should still follow those drug testing requirements.

When should I make changes?

Measure 91 does not go into effect immediately upon passage but on July 1, 2015.  But you should be working on your response to the change in the law before that date.

Do I have to accommodate use at work?

The short answer is no.  However if you terminate an employee for use at work you should protect yourself with an employee handbook with a drug and alcohol policy.  

Which drug tests are affected?  We do random, post-accident, pre-employment and reasonable suspicion testing?

Some, all or none may be affected depending what you decide to do for testing.  Once you make a decision on the need for which types of drug testing in which positions, be sure to document and enforce that policy across the board in like positions.

Arin J. Carmack

Risk Management