Miller Nash LLP

1

GENERAL PRINCIPLES

Forums For Adjudicating Employment Disputes

Employment-related claims can be asserted in state or federal courts or administrative agencies, including the Oregon Bureau of Labour and Industries (BOLI) and the U.S. Equal Employment Opportunity Commission (EEOC). Certain claims based on federal law must first be filed with the EEOC before they can be filed in court. A person is not required to file a complaint with BOLI before filing a state law civil lawsuit. BOLI will investigate the complaint at no charge. BOLI handles two main types of complaints: civil rights complaints and wage and hour complaints. Each has a separate process and separate forms. For example, when BOLI concludes, dismisses, or closes a case, or if one year has passed from the date a complaint was filed, BOLI will usually issue a “right to sue letter.” The letter will state that the employee has 90 days to file a lawsuit or the right to pursue the claims may be lost.

Employees and employers may agree to have employment disputes adjudicated in private arbitration, but Oregon has statutory and formal requirements that must be followed to do so. Also there is an argument (based on Oregon law) that the Oregon statute may be pre-empted by the Federal Arbitration Act, 9 U.S.C. §§ 1-16, so local counsel should be consulted.


The Main Sources Of Employment Law

The main sources of employment law are federal and Oregon state statutes, regulations, agency interpretations, and judicial interpretations. State employment statutes include ORS chapter 659A (which includes most employment discrimination laws), the Oregon’s minimum wage and overtime law (ORS 653.010 – ORS 653.261), workers’ compensation statutes (ORS chapter 656), various leave laws (ORS chapter 659A), and whistleblower protection laws (ORS chapter 659A). (Note: In 2018, Oregon expanded its whistleblowing protections to allow employees to more easily report alleged mismanagement, waste, fraud, and abuse.)

Additional restrictions on employment conditions can be created by agreement between employers and employees, or by Collective Bargaining Agreements (CBAs) between labour unions and employers. Employee handbooks can also sometimes create binding agreements between employers and employees.


National Law And Employees Working For Foreign Companies

Federal and Oregon state law will typically apply to employees who work in Oregon, regardless of the employer or employee’s nationality.


National Law And Employees Of National Companies Working In Another Jurisdiction

Federal law applies to most employees working in the United States (U.S.) and, in some circumstances, to employees outside of the U.S. for U.S.-based companies or government agencies. Oregon law may also apply to employees working elsewhere for Oregon-based companies depending on the circumstances—and in certain instances, the employee can be protected by both Oregon and the law of the state in which they work.


Data privacy

Oregon employers may monitor employees with cameras or videos in public work areas. Employers may also monitor an employee’s work computer and email. It is best practice to inform employees of workplace monitoring in advance and may be a mandatory subject of bargaining if the workforce is unionised/represented.

Oregon employers must safeguard an employee’s confidential information under the Oregon Consumer Identity Theft Protection Act, which includes limiting employers to the public display or disclosure of only the last four digits of a Social Security number, among other requirements.

Oregon law prohibits recording of private communications without the prior consent of the employee, with limited exceptions for telephone conversations. Likewise, employers cannot request or require that an employee or job applicant grant them access to social media accounts (unless, of course, the employee is managing the organization’s social media properties)

2

HIRING THE EMPLOYEE

Legal Requirements As To The Form Of Agreement

There are no other legal formal requirements for an employment agreement than common-law contract principles, including offer, acceptance, and consideration. However, certain employment terms, such as a post-employment covenant not to compete, may be subject to Oregon statutory requirements that it be in a written agreement, as well as other requirements addressed at “Restricting Future Activities” below. Absent an agreement that states otherwise, employment in Oregon is “at-will”, which means that either party may end the employment relationship at any time, for any reason (so long as the reason is not prohibited by law), with or without cause or notice.


Mandatory Requirements
  • Trial Period

    • Employers are not required to provide employees with a trial or probationary period, although they may do so.

  • Hours Of Work

    • Generally, hours of work are not regulated. There are laws, however, that restrict the number of hours and times that minors may work. ORS 653.010 – ORS 653.992. Also, employees who work more than 40 hours in a week must be paid overtime unless they are exempt. Oregon’s exempt tests may slightly differ from federal law as well. Exemptions are stated in ORS 653.020 and OAR 839-020-0005.

    Maximum hours of work in certain industries are also regulated by federal and Oregon law. For example, employees in “manufacturing” (which is broadly defined) may not be required to work more than 55 hours per workweek or 13 hours in a single day, including three hours of overtime, and are entitled to overtime for any hours worked in excess of 10 per day (ORS 652.020).

  • Special Rules For Part-time Work

    • NA.

  • Earnings

    • Oregon’s minimum wage depends on the location of the employee, with special rules for employees who may work in multiple areas due to travel for their job. For July 1, 2023, through June 30, 2024, the standard minimum wage is $14.20 an hour, $15.45 for the Portland metropolitan area (including Clackamas, Multnomah, and Washington Counties), and for “nonurban counties” $13.20 an hour. Minimum wages increase on 1 July each year. A table and interactive map with the full information about the various minimum wages and locations is published by BOLI on the “Oregon Minimum Wage” webpage

  • Holidays/Rest Periods

    • Oregon requires an employer to provide eligible veterans with paid or unpaid time off for Veterans Day in recognition of their national service. By law, an employee must give notice and proof-of-service documentation, such as a DD 214, to their employer at least 21 days in advance of Veterans Day. Employers must respond to time-off requests at least 14 days before the holiday, confirming explicitly if time off will be granted and whether it will be paid or unpaid. If the request is denied due to hardship, the employer must allow the employee an alternative day off within the year after the Veterans Day on which the employee worked as a replacement for Veterans Day to honor the employee’s service. Whether the time off is paid or unpaid is at the discretion of the employer.

    Otherwise, there is no legal requirement for employees to receive or take holidays or vacations. Many employers choose to provide full time employees with a certain number of unpaid personal or vacation days per year by agreement. The number of personal days or vacation days available to an employee commonly increases with the number of years of employment.

    Under Oregon law, rest and meal breaks are mandatory for most employees, unless they are exempt. The time and duration of these breaks depend on the working time of the employee.

    There are very limited exceptions to the meal break requirement, including a hardship exception that requires specific documentation.

  • Minimum/Maximum Age

    • Children under 14 are generally prohibited from employment. Employers who employ minors 14 through 17 years of age must follow Oregon’s child labour laws, in addition to other employment laws. Those seeking to employ minors must apply to BOLI for an annual Employment Certificate from the state of Oregon. The Annual Employment Certificate Application is available on BOLI’s website. (Employment of minors under 14 requires an additional permit.) Employers must also verify the age of each minor hired from an appropriate proof-of-age document, maintain a list of all minors employed, and comply with all federal and state child-labour laws.

    There are no maximum age limits and employers may not discriminate against employees who are over 18 years of age.

  • Illness/Disability

    • Numerous federal and Oregon laws pertain to ill and injured workers, including the Family and Medical Leave Act of 1993 (FMLA), Oregon Family Leave Act of 1995 (OFLA), Americans with Disabilities Act of 1990 (ADA), Oregon’s “mini-ADA”, state and federal anti-discrimination laws, and workers’ compensation laws.

    Oregon also now has a paid family and medical leave program, known as Paid Leave Oregon. Paid Leave Oregon is a mandatory statewide insurance program that provides qualifying employees with state wage replacement benefits for time off from work needed to give or receive care. Unless an employer has an approved equivalent plan, these benefits are funded by premiums deducted from employees’ wages, with contributions from “large employers” (those with 25 or more employees working within or outside Oregon), and are administered by the Oregon Employment Department (OED).

    Oregon employees are eligible for benefits if they have earned at least $1,000 in wages in Oregon in the prior benefit yet. Paid Leave Oregon provides employees with partial wage replacement benefits for up to 12 weeks in the event of the birth/adoption/foster placement of a child, when the employee is seriously ill or needed to care for an ill family member, or when leave is needed due to domestic violence, sexual assault, harassment, or stalking (this latter category is known as “safe leave”). In some pregnancy-related situations, up to 14 weeks may be available.

    The actual amount of weekly benefits will be determined by OED based on the individual’s average wages from the previous year. As of July 2023, the minimum weekly amount is $63.48, and the maximum weekly amount is $1,523.63. Minimum and maximum amounts will change each year as they are based on the state average weekly wage, which is updated every year on July 1st.

    For more information regarding Paid Leave Oregon, please visit: https://paidleave.oregon.gov/.

    Oregon law also mandates that employees receive job-protected sick leave. Employers within the City of Portland with six (6) or more employees must provide the sick leave as a paid benefit; Portland employers with fewer than six (6) employees can provide the leave as an unpaid benefit. For Oregon employers outside the City of Portland, 10 is the threshold to provide sick leave as a paid benefit. Employers that employ fewer than 10 employees (6 in Portland) must provide 40 hours of unpaid protected sick time.

    All employees employed by the employer (full-time, part-time, seasonal, and temporary) must be counted for purposes of determining the number of employees. Generally, if an owner is also getting a W-2, they should be counted as an employee unless some specific exemption applies.

    Some parties are not covered by Oregon’s sick leave law. The federal government is exempt. Independent contractors, railroad workers exempt under the federal Railroad Unemployment Insurance Act, individuals employed by that individual’s parent, spouse, or child, participants in work-training programs administered under a state or federal assistance program, and participants in work-study programs are not eligible for sick leave under the law.

    Covered employers are required to provide one (1) hour of sick time for every 30 hours worked (or one (1) and one-third (1-1/3) hours for every 40 hours worked). Accrual must begin on the first day of employment, but employees are not eligible to use accrued sick time until the 91st day of employment unless the employer allows leave to be used earlier. Once the employee is eligible to use accrued leave, the employee must be permitted to take sick leave in hourly increments as it accrues. Employees must be permitted to accrue at least 40 hours of sick time per year. Employees must also be permitted to roll over at least 40 hours of accrued but unused sick time from year to year. Employers may limit accrual to 80 hours total or may cap usage at 40 hours per year. If the leave is paid, it must be paid at the employee’s regular rate.

    Sick time must be allowed for at least the designated purposes, which includes when a public official has determined that the air quality or heat indexes at either the employee’s work location or home are at a level where continued exposure to such levels would jeopardize the health of the employee.

    The law contains notice requirements and guidelines for requesting medical documentation and verification. The law is enforced by BOLI, and there is a private right of action for violations of the law.

    An employer is required to allow employees to use accrued paid sick leave while on OFLA leave, even if the employer’s policy would not otherwise allow them to do so. An employer must also allow employees to use this leave to engage in religious observance or practices unless the leave is restricted in the manner in which it may be used, or use of the leave will create an undue hardship on the employer.

  • Location Of Work/Mobility

    • Oregon law requires employers to pay employees for travel time between work locations in certain circumstances. This requirement is stated in the law (ORS chapter 653 and Oregon Administrative Law (OAR) 839-020-0045) and may not be changed, waived, or eliminated by private agreement.

  • Pension Plans

    • Oregon law does not require a pension plan. The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most voluntarily established retirement and health benefit plans in private industry to provide protection for individuals in these plans. ERISA does not require the employer to establish a plan. If an employer chooses to establish a plan, however, ERISA requires the plan to meet certain minimum standards such as regularly providing participants with information about the plan, setting minimum standards for participation, vesting, benefit accrual and funding, and requiring accountability of plan fiduciaries.

    In general, ERISA does not cover plans established or maintained by governmental entities, churches for their employees, or plans which are maintained solely to comply with applicable workers compensation, unemployment, or disability laws. ERISA also does not cover plans maintained outside the United States primarily for the benefit of nonresident aliens or unfunded excess benefit plans.

  • Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)

    • Pregnancy discrimination is prohibited by statute in Oregon. The federal (FMLA) and Oregon (OFLA) family and medical leave laws provide up to 12 weeks of unpaid parental leave for certain eligible employees. Parental leave includes the birth of a child and may also be taken to care for a newly adopted child or when a foster child is placed with the employee. Oregon law provides an additional 12 weeks of unpaid leave if there is a pregnancy-related disability and an additional 12 weeks for sick child leave. Under Paid Leave Oregon, in some pregnancy-related situations, up to 14 weeks of paid leave may also be available.

    Parental leave must generally be taken as one (1) continuous block of time and must be completed within one (1) year after the birth, adoption, or placement of the child. Intermittent leave or reduced schedules must be permitted as necessary for pregnancy disability or prenatal care. Often, but not always FMLA and OFLA leave will apply concurrently, but the OFLA provides additional circumstances where leave may be used that may exceed the FMLA and therefore cannot count toward the same 12-week entitlement.

    Pregnant employees are also entitled to reasonable workplace accommodations that would not pose an undue burden on the business (e.g., acquisition or modification of equipment or devices; more frequent or longer break periods or periodic rest; assistance with manual labor; or modification of work schedules or job assignments).

    For a period of up to 18 months after childbirth, employers must provide lactating employees with reasonable break times and a suitable room to express breast milk for a nursing child. Employers must post signs in a conspicuous and accessible location informing employees of these anti-discrimination protections and their right to reasonable accommodations. A template for that notice is available on BOLI’s website.

  • Compulsory Terms

    • None.

  • Non-Compulsory Terms

    • The parties are free to agree upon terms, but some provisions may not be enforceable as a matter of public policy. If a statute or regulation requires a particular term or condition of employment, the parties may not agree to a less favourable term or condition.


Types Of Agreement

Employment in Oregon is “at-will” employment unless the employer and employee agree otherwise. “At-will” employment means that the employee is employed for an indefinite period of time and that the employer or employee may terminate the employment relationship at any time with or without cause and without prior notice, subject to any statutory limitations on termination (for example, it must not be discriminatory, retaliatory or in violation of any whistleblower laws). An employer and employee may enter into an oral or written employment agreement. Employment agreements may, under certain circumstances, be implied by actions an employer takes or by policies or written promises that employer makes in offer letters, a policy manual, or employee handbook.

Written or oral employment agreements can cover a variety of subjects including length of employment, signing bonuses, and bonus structure. Typically, such agreements are used for high-level executives. If the workplace is unionised, a CBA may also address cover certain workplace issues.


Secrecy/Confidentiality

Oregon has adopted the Uniform Trade Secrets Act, which 47 states and the District of Columbia have adopted. Under Oregon’s trade-secret statutes, employees must keep an employer’s trade secrets confidential during and after employment. In addition, employers and employees may enter into express agreements that create broader confidentiality obligations on employees.

Oregon also has a Workplace Fairness Act (“OWFA”), which restricts employers from including confidentiality, non-disparagement, and no-rehire provisions in settlement agreements and separation agreements that prevent the employee from disclosing sexual harassment or sexual assault in the workplace unless the employee specifically requests them.

For example, an employer that enters into a separation or severance agreement with an employee who has not alleged a claim of discrimination under ORS 659A.030, ORS 659A.082, or 659A.112 is not restricted from including confidentiality, non-disparagement, and no-rehire provisions (e.g., employers and employees resolving a wage claim, but not alleged discriminatory conduct, may include such provisions if desired).

The amended OWFA also makes it unlawful for an employer to make an offer of settlement or separation conditional upon a request by the employee to include any of these restricted terms. The amendment also specifies that an employee can recover a civil penalty of up to $5,000 in a private action claiming a violation of the OWFA, as well as other relief, including lost wages and emotional distress damages.


Ownership of Inventions/Other Intellectual Property (IP) Rights

In the absence of a written agreement between the parties, ownership of IP rights is determined by federal law. Generally, an employer owns work created by an employee during employment or with information or “know how” belonging to an employer.


Pre-Employment Considerations

Oregon “ban the box” law prohibits employers from obtaining information about a job applicant’s criminal records until after the employer determines the applicant meets the minimum qualifications for the position. (In Portland, employers must wait until a conditional job offer has been made before inquiring about criminal histories. Portland City Code 23.10.030.)

The law also prohibits employers from advertising openings that exclude people with criminal records from applying.

Employers may confirm a candidate’s salary history only after making a conditional offer of employment, including an amount for compensation.

Most employers may not legally obtain or use an applicant’s or employee’s credit history information. Exceptions include: federally insured banks or credit unions; employers who are required by law to use credit history for employment purposes; applicants for public safety officers who enforce criminal laws or laws related to airport security; applicants for positions where credit history is “substantially job related”—provided the reasons for checking credit history are disclosed in writing.


Hiring Non-Nationals

Employers may not discriminate against employees or applicants based on national origin. However, federal law requires employers to verify that employees are eligible to work in the U.S., which includes completing the Employment Eligibility Verification Form (I-9). Employers are subject to penalties for employing people who are not authorised to work in the U.S.


Hiring Specified Categories Of Individuals

Federal and Oregon state discrimination laws prohibit an employer from discriminating against individuals based on a legally protected characteristic, including disability, race, colour, creed, national origin, sex, marital status, age, sexual orientation, gender identity or expression, veteran or military status, whistleblower status, or protected genetic information. Covered employers that contract with the federal government may be required to have affirmative action programs, including training programs, outreach efforts, and other positive steps. There are restrictions on the types of work that minors can be required to undertake.


Outsourcing And/Or Sub-Contracting/Temporary Agency Work

Like most states, and under most federal laws, Oregon has special rules for when someone may qualify as an independent contractor or consultant, otherwise they will be considered an employee and entitled to all rights and privileges (and associated taxation) by default. (Note: Rescinding a prior 2021 rule, the U.S. Department of Labor has now issued a long-anticipated rule redefining “independent contractor” for purposes of the Department’s interpretation of the Fair Labor Standards Act (FLSA).)

Oregon also requires special licensure/registration for: farm/forest labour contractors, construction labour contractors, and property services/janitorial contractors. It also has statutory restrictions on “employment agency” activities.

 

3

MAINTAINING THE EMPLOYEE RELATIONSHIP

Changes To The Contract

If employment is “at-will”, the employer may change the terms and conditions of employment on a prospective basis. If there is an oral, written, or implied employment contract (or a CBA between an employer and a labour union), the terms of that contract will govern whether and how changes to the contract may be made.


Change In Ownership Of The Business

Unless there is a contract or CBA, there are generally no specific employment-related rules governing a change in the ownership of a business. Successor employers are not generally required to hire the former employer’s workforce, although various restrictions may apply where the successor employer is considered an alter ego of the former employer. If a successor employer hires some or all of the predecessor employer’s employees, employees may generally be subjected to new or different terms and conditions of employment upon hire by the successor employer.

Oregon law does impose potential liability for unpaid wages upon what it deems as the “successor to the business” which requires special care when planning for an ownership transition or sale of a business. ORS 652.310(1).


Social Security Contributions

Employers and employees are required to make social security contributions as a matter of federal law. The employer must withhold the employee’s contribution from the employee’s pay.


Accidents At Work

Oregon’s workers’ compensation laws provide medical and job-protected leave benefits to employees who are injured at work. Oregon employers are required to ensure that subject workers are covered by workers’ compensation insurance.

Under the Oregon Safe Employment Act of 1973 (OSEA), Oregon employers are also required to provide a safe and healthy work environment for their employees. Employers are subject to civil and criminal penalties for violations of the OSEA.

Leave laws and disability laws may also be applicable.


Discipline And Grievance

In private employment in Oregon, discipline and grievances are governed by the employer’s policies, any employment agreement, or CBA. Most employer policies provide for discipline up to and including termination of employment for violations of employment policies, insubordination, or other employee misconduct. Progressive discipline policies may be viewed as creating a contractual right to continued employment on the part of the employee.


Harassment/Discrimination/Equal pay

Harassment/discrimination:

  • Federal and state laws prohibit discrimination and harassment based on protected characteristics such as race, creed, colour, sex (including pregnancy), religion, age, sexual orientation, gender identity or expression, marital status, national origin, veteran or military status, or disability.
  • Oregon also prohibits discrimination based on hairstyles associated with a person’s race. The CROWN act prohibits discrimination based on protective hairstyles. Protective hairstyles are defined as “hair color or manner of wearing hair that includes, but is not limited to, braids, regardless of whether the braids are created with extensions or styled with adornments, locs, and twists.” The law also expands the definition of “race” under ORS 659A to include “physical characteristics that are historically associated with race, including but not limited to natural hair, hair texture, hair type, and protective hairstyles.” The CROWN act also addresses dress codes that may have a disproportionate adverse impact on members of a protected class. Oregon anti-discrimination act, ORS 659A, does not prohibit employers from enforcing an otherwise valid dress code or policy so long as the policy provides reasonable accommodations. The CROWN act further specifies that the dress code or policy must not have a disproportionate adverse impact on members of a protected class to a greater extent than the policy impacts persons generally.
  • Discrimination is prohibited in all aspects of employment, including job postings, interviewing, hiring, payment, other terms and conditions of employment, and termination of employment. Harassment includes both conduct within the workplace location and offsite where there is a nexus to the working relationship, such as conferences or work-related or hosted events. As noted above, Oregon also adopted the Workplace Fairness Act in 2020 which, among other things, extended the timeframe in which complaints may be brought to five (5) years and mandates that employers adopt and enforce policies addressing discrimination and harassment with statutorily mandated terms. It also added robust protections related to employee speech regarding potential discrimination and harassment.
  • Federal and Oregon state law also prohibits employers from retaliating against employees who report discrimination or harassment or participate in an investigation into such complaints, or who make use of sick time or other protected leaves.

Workplace Accommodations:

Under federal and Oregon law, employees may be entitled to reasonable accommodations in the workplace based on disability, pregnancy, and religion.

Equal Pay:

As of 2019, Oregon also has a robust Pay Equity Act that prohibits employers and prospective employers from:

  • Screening job applicants based on their current or past compensation;
  • Determining the compensation for a position based on the current or past compensation of a prospective employee; and
  • Lowering an employee’s compensation to comply with the provisions of the Pay Equity Act.

Additionally, the Pay Equity Act prohibits employers from seeking the salary history of an employee or applicant from the employee/applicant or the employee/applicant’s current or former employer.

The Pay Equity Act does not prohibit employers from compensating two (2) employees differently if all the difference in compensation is based on specific “bona fide factor” related to the employee’s position, such as seniority and merit systems or systems that measure earnings by quantity or quality of production, including piece-rate work, workplace location, travel, education, training, or experience.

The Pay Equity Act does not prohibit an employer from (a) considering a current employee’s compensation during a transfer, move, or hire of the current employee to a new position with the same employer or (b) requesting from a prospective employee written authorisation to confirm his or her prior compensation, so long as the employer does so only after making an offer of employment to the prospective employee that includes an amount of compensation:

  • An employer may avoid having to pay compensatory and punitive damages if it can establish that it completed in good faith an equal-pay analysis—defined as “an evaluation process to assess and correct wage disparities among employees who perform work of a comparable character”—within three (3) years of the date on which the employee filed his or her complaint and the results are corresponding to the requirements.
  • The law eliminated the wage differentials for the plaintiff and made “reasonable and substantial progress” toward eliminating wage differentials for the protected class asserted by the employee.

Additional protections under Oregon’s pay equity law, include:

  • Employers cannot discriminate against an employee because the employee made a complaint or are testifying in any investigation related to the pay equity law.
  • Employers may not reduce the compensation of any employee to comply with the law.
  • Amounts owed to an employee because of a failure of an employer to comply with the requirements of the pay equity law are considered “unpaid wages” under the law, which means workers can file a claim to recoup that money.
  • Employees who assert violations of the pay equity law may file complaints with the Civil Rights Division of the Bureau of Labor and Industries or take civil action with a private attorney within one year after the occurrence of the unlawful practice. Workers can file complaints and receive the back pay or wage differential they were owed by their employer for two years prior to filing the complaint or the period of time the worker was subjected to an unlawful wage differential.
  • Employers are required to clearly post pay equity notices in each worksite.
  • An unlawful compensation practice occurs each time workers are paid under a discriminatory compensation decision or other practice.

Compulsory Training Obligations

Other than mandated safety or health related trainings that may be required for a specific industry, trade, or pandemic response, there are no compulsory training obligations placed upon the employer or the employee. However, if the employer requires the employee to attend training, the employer must pay the employee at least minimum wage for the training time.


Offsetting Earnings

An Oregon statute prohibits employers from making deductions from an employee’s wages except in limited circumstances stated in the statute (e.g., deductions required by law such as taxes or garnishments). ORS 652.610. In addition, the federal Fair Labour Standards Act of 1938 may apply.


Payments For Maternity And Disability Leave

Pregnancy and disability leave (see above) are unpaid unless the employer’s policies or Paid Leave Oregon provide otherwise. An employee may generally use accrued vacation leave, sick leave, or other paid leave that the employer offers during the period of pregnancy or disability leave, in accordance with the employer’s policy.


Compulsory Insurance

Employers must generally maintain workers’ compensation insurance and unemployment insurance for employees in Oregon.

In addition, under the federal Patient Protection and Affordable Care Act, certain employers may be obligated to provide health insurance benefits under the newly enacted and can face fines and penalties for failing to provide “minimum essential coverage” to their employees. The obligations generally depend on the size of the employer.


Absence For Military Or Public Service Duties

Military Service and Military Spousal Leave:

  • Employees who take leave for military duty are protected by federal law and have specific reinstatement rights. Oregon law also provides public employees with certain paid military leave entitlements.
  • An employee who is the spouse or domestic partner of a service member (of the U.S. Armed Forces, the National Guards, or U.S. military reserved forces) has received an impending call to active duty during a period of military conflict may take up to 14 days of (unpaid) job-protected leave from work per deployment.
  • OMFLA leave counts against an employee’s OFLA entitlement, but it remains available even if all OFLA leave has been exhausted. (Note that OMFLA eligibility requires that employees work an average of just 20 hours per week rather than 25 with no minimum length of employment so an employee who is not eligible for OFLA leave may still be eligible for OMFLA leave.

Jury Duty:

Employers must allow employees to take a leave of absence while they are serving as jurors. The leave does not need to be paid.


Works Councils or Trade Unions

Under federal law, employees may organise or choose to be represented by a labour union. Union activity is generally governed by federal law.


Employees’ Right To Strike

Federal law generally prohibits employers from terminating employees who are on strike.


Employees On Strike

Employees on strike are generally protected and cannot be terminated unless the employees engage in serious misconduct while striking or the strike was unlawful and unprotected. However, if employees are on an economic strike they may be permanently replaced by the employer and may be denied reinstatement if there are no open positions upon the conclusion of the strike, and until open positions materialise.


Employers’ Responsibility For Actions Of Their Employees

Employers are typically responsible for the conduct of their employees unless the employee was acting outside the course and scope of employment.

4

FIRING THE EMPLOYEE

Procedures For Terminating the Agreement

There are no requirements related to the procedure for terminating employment, unless specified in a contract or a CBA.

There are strict requirements that apply to the payment of final wages when an employee is fired, laid off, or quits. Oregon law dictates when final pay must be given to an employee and will depend on the reason for termination.

  • If an employee quits with less than 48 hours’ notice, excluding weekends and holidays, the paycheque is due within five (5) business days or on the next regular payday, whichever comes first.
  • If an employee quits with notice of at least 48 hours, the final paycheque is due on the final day worked, unless the last day falls on a weekend or holiday. In that case, the paycheque is due on the next business day.
  • If an employee is discharged, or if the employee and employer mutually agree to terminate the relationship, the final paycheque is due no later than the end of the next business day.

There is a statutory exception from the final paycheque requirements if a CBA makes provisions for final pay.

Employers that fail to pay final wages when they are due risk the imposition of a penalty wage equal to eight (8) times the employee’s regular rate of wage for each day that final wages go unpaid up to 30 days. With certain exceptions, employers may limit this liability to 100 percent of unpaid wages by paying final wages within 12 days of written notice from the employee that wages remain due.

Oregon law also provides a $1,000 civil penalty for wilful failure to pay wages at termination as well as costs, interest and attorney fees.


Instant Dismissal

Employment in Oregon is generally “at will”, meaning that the employer or the employee may terminate the employment relationship at any time, for any reason, with or without notice—subject to state and federal discrimination and labour laws and any employment contract.


Employee's Resignation

See “instant dismissal” supra.


Termination On Notice

Absent a contract between the employer and the employee to the contrary, employees may generally be terminated without prior notice. However, notice may be required before certain plant closings or mass layoffs.


Termination By Reason Of The Employee's Age

Federal and state discrimination laws prohibit termination based on age except in very limited and unusual instances.

Oregon employers may not fire, refuse to hire, or otherwise discriminate against an employee in compensation or other terms, conditions, or privileges of employment because of that person’s age if they are 18 or older. ORS 659A.030(1). For example, a business may not reject a qualified 19-year-old applicant because the employer is concerned that the worker may not fit in with an older workforce.

State and federal law provide narrow exceptions that allow employers to factor in age when it is reasonably necessary for the particular business, known as a bona fide occupational qualification (or BFOQ). For example, regulations prohibit employers from hiring a bartender who is under 21. OAR 839-005-0013.

Federal guidelines also allow an employer to make hiring and firing decisions on the basis of age if federal laws or regulations impose age limitations for public safety. Airline pilots who fly passengers on commercial aircraft, for example, may not be 65 years of age or older. Therefore, employers may refuse employment to someone who is outside the ages prescribed by regulations.


Automatic Termination In Cases Of Force Majeure

If the employment is “at-will”, the employer or employee may terminate regardless of the reason, including force majeure.


Collective Dismissals

Oregon does not regulate workforce reductions or mass layoffs for private-sector employers. In other words, Oregon has no mini-Worker Adjustment and Retraining Notification (WARN) Act.

The federal WARN Act requires companies planning a “mass layoff” to notify workers 60 days before the closure. Companies must provide written notice to the Employment Security Department and to the chief elected official of the community where the layoff or closure will occur. To comply with state law, employers must also notify the Higher Education Coordinating Commission (HECC) if they give notice of a plant closing or mass layoff under the federal WARN Act—Section 3 of 29 U.S.C. § 2102. ORS 285A.516. The HECC provides a list of employers that have given notice under the WARN Act. https://ccwd.hecc.oregon.gov/Layoff/WARN

In general, employers are covered by the WARN Act if they have 100 or more employees, excluding employees who have worked less than six months during the last 12 months or who work an average of less than 20 hours per week. Private, for-profit employers and private, nonprofit employers are covered, as are public and quasi-public entities which operate in a commercial context and are separately organized from the regular government. Federal, state, and local government entities that provide public services and Indian tribal governments are not covered under the WARN Act.

Notice is triggered when a covered employer closes a facility that will result in 50 or more employees during a 30-day period. Additionally, a covered employer must give notice if a layoff will result in a loss of 500 or more employees, or 50-499 employees if they make up at least 33 percent of the workforce.


Termination By Parties’ Agreement

If the employer and employee have an agreement, or if the employer and a labour union have a CBA, then termination must be done in accordance with the terms of the agreement or CBA.


Directors Or Other Senior Officers

Termination of employment does not automatically bring an end to board membership or officer designation. A company’s Articles of Incorporation and/or bylaws will usually govern the steps needed to terminate those relationships.


Special Rules For Categories Of Employee

There are no special rules for terminating any particular category of employees.


Specific Rules For Companies in Financial Difficulties

In addition to complying with WARN Act requirements (described above in the Collective Dismissals section), companies experiencing financial difficulty must also comply with federal bankruptcy laws, which may require them to continue honouring employment agreements and/or continue voluntary employee benefits.


Restricting Future Activities

Noncompetition agreements (i.e. restrictions on an employee’s ability to work in a particular industry/type of employer within a defined geographic area for a period of time after employment ends) are valid in Oregon, as long as (i) at least two (2) weeks before the first day of an employee’s employment, the employer notifies the employee in writing that a noncompetition agreement is a condition of employment or (ii) the noncompetition agreement is entered into upon the employee’s subsequent bona fide advancement. Both federal and state courts in Oregon have defined “bona fide advancement” as used in the Oregon statute to mean promotion or advancement to a higher position. In addition, a noncompete agreement is also void unless: (i) the employee meets the criteria for a salaried exempt employee whose annual income at termination exceeds a minimum amount adjusted each year for inflation; (ii) the employer has an interest to protect, such as trade secrets; sensitive, confidential business or professional information; product development plans; launch plans; marketing strategy or sales plans; and (iii) the employer provides a signed, written copy of the terms of the noncompetition agreement to the employee within 30 days after the employee’s termination.

Before 2022, a noncompetition agreement was “voidable” under several conditions. Under SB 169 (2021), the Oregon Legislature narrowed the application of noncompetition agreements and clarified that agreements entered into on or after January 1, 2022, which did not meet revised criteria are simply void. This means an employee would not have to take any affirmative steps to invalidate an agreement that did not meet the requirements.

Under SB 169 (2021), the effective term of a noncompetition agreement may not exceed 12 months from the date of the end of employment. ORS 653.295.

For the provisions of a noncompetition agreement to be valid, the statute generally requires that the total amount of the employee’s annual gross salary and commissions at the time of the employee’s termination must exceed a minimum amount. For 2024, that number is $113,241. The statute also requires that this minimum annual amount be adjusted each year based on the Consumer Price Index for All Urban Consumers, West Region (All Items), as published by the Bureau of Labor Statistics of the United States Department of Labor. BOLI will use the average annual inflation for Western Region provided by BLS to compute the minimum salary and commission going forward.

The statute makes an exception for “bonus restriction agreements”, which restrict competition after termination of employment and limit the penalty for competition to “forfeiture of profit sharing or other bonus compensation that has not yet been paid to the employee”.

Valid noncompetition agreements, whether voluntary or mandatory, must also meet four (4) general requirements: (1) the restriction must be partial or restricted in its operation with respect to time or territory; (2) it must be supported by good consideration; (3) it must be reasonable; and (4) there must be a protectable interest.

Non-solicitation Agreements must be supported by sufficient consideration and have “reasonable” terms to be enforceable under Oregon law.

Note: The Federal Trade Commission (FTC) has issued a proposed rulemaking (January 5, 2023) that would generally prohibit the use of noncompete agreements and preempt state laws that provide less protection for workers than the proposed rule. Among other things, the rule would prohibit employers from using noncompete clauses, including independent contractors and anyone who works for an employer, whether paid or unpaid. The rule would also require employers to rescind existing noncompetition agreements and actively inform workers that they are no longer in effect. Employers should verify the current status of this rule or seek legal counsel before implementing any noncompetition agreements.

On August 30, 2023, the FTC and the U.S. Department of Labor (DOL) signed a new agreement (“Memorandum of Understanding Between The U.S. Department of Labor and the Federal Trade Commission”) that outlines ways in which the FTC and DOL will work together on key issues such as labor market concentration, one-sided contract terms, and labor developments in the “gig economy.”


Whistleblower Laws

Most federal and Oregon laws prohibit employers from terminating or otherwise discriminating against employees who complain about conduct prohibited by those laws or participate in an investigation into potential prohibited conduct. Oregon’s whistle-blower law also protects employees from discrimination or retaliation when they in good faith report criminal activity to any person, cooperate with a criminal investigation, bring a civil proceeding against an employer, or testify at a civil proceeding or criminal trial. It also protects public and certain non-profit employees in Oregon from retaliation for reporting waste, fraud and abuse or other workplace violations.


Special Rules For Garden Leave

None.


Severance Payments

Oregon does not require an employer to provide severance pay. Employers may voluntarily pay severance to dismissed employees or they may have a severance plan that applies to all employees. If an employer offers a severance pay out, the employer may require that the employee sign a release. A release that relates to certain claims, including age discrimination claims under federal law, requires a notice and waiver period, along with specific statutory language. Oregon law also prohibits severance or separation agreements from including terms that would prevent an employee from discussing or complaining about discrimination, harassment, or other unlawful conduct so terms related to non-disparagement and confidentiality.


Special Tax Provisions And Severance Payments

Severance payments are subject to taxation and are generally treated as wages.


Allowances Payable To Employees After Termination

Absent a written agreement, policy, or practice to the contrary, there is no requirement for employers to cash out accrued, unused sick leave or vacation leave upon separation. Employees who are dismissed may qualify for state unemployment benefits. Employers pay taxes for these unemployment benefits, and they are administered by the Oregon Employment Department.


Time Limits For Claims Following Termination

If an employee wishes to pursue state law claims with BOLI, the complaint must generally be filed within 180 days, except for claims brought under the Oregon Fair Workplace Act which allows claims to be filed for up to five (5) years. If the claim being pursued is a federal claim, the complaint must be filed or “cross-filed” with the EEOC within 300 days. If there is no requirement to file a complaint with an administrative agency, the time limits for filing suits in federal or state court are governed by the statute under which claim is made. The statute of limitations for contract claims is six (6) years, and most other employment related claims are three (3) years.

5

GENERAL

Specific Matters Which Are Important Or Unique To This Jurisdiction

Oregon law also provides for –

  • Paid Leave Oregon;
  • leave for the victims of crime;
  • protection from discrimination based on expunged juvenile record;
  • the prohibition of polygraph exams;
  • leave to donate bone marrow;
  • the legal use of lawful tobacco products on off-duty hours;
  • leave for death of a family member under OFLA;
  • reasonable unpaid rest periods for employees to express breastmilk; and
  • limitations on pre-employment background checks. Employers must also provide reasonable safety accommodations to employees who are victims of domestic violence, unless doing so would pose an “undue hardship”. This may include a transfer, reassignment, modified schedule or any other adjustment to a job structure, workplace facility, or work requirement in response to actual or threatened domestic violence, sexual assault, or stalking.

Marijuana:

Medical and recreational marijuana has been decriminalised in Oregon. Nevertheless, an employer may prohibit marijuana use and it may conduct drug tests to ensure compliance with such a prohibition. Employees do not have a private cause of action if they are terminated based on marijuana use, nor does the law require employers to accommodate an employee’s off-site use of medical marijuana.

Predictive Scheduling:

Oregon has a predictive scheduling law that applies to retail, hospitality, and food-service employers with more than 500 employees. This requires –

  • Mandatory Rest Period:

    • If applicable, Oregon’s Predictive Scheduling Law requires employers provide employees with at least a 10-hour rest period between work shifts, to address shifts that require closing at the end of one (1) shift and opening for the next. An employer may schedule an employee to work during this rest period only if the employee requests or consents to do so. If an employee works during the rest period, the employer must pay time and a half for all time worked during the rest period.

  • Restrictions on Altering Employee Schedules:

    • Employers subject to this law must also post a written work schedule at least 14 days before the first day on the schedule. Employees are entitled to give input into schedules. Certain employer-made changes to the posted schedule after that time entitle employees to additional compensation. The employer must also provide each new employee with a written, good faith estimate of the employee’s works schedule at the time of hire.

    Some schedule changes are entitling an employee to one additional hour of pay—i.e., adding more than 30 minutes to the work shift; changing the date or state/end time of the employee’s work shift with no loss of hours; and scheduling the employee for an additional work or on-call shift.

    Other schedule changes can entitle an employee to one-half times the employee’s regular rate of pay per hour for each schedule hour that the employee does not work—i.e., subtracting hours from work shift before or after the employee reports for duty; or changing the date or start/end time of the employee’s work shift, resulting in a loss of hours, cancelling the employee’s work shift.

Voluntary Standby Lists:

An employee may volunteer to be on a standby list of employees willing to work on-call shifts. The employee may not be entitled to additional compensation under this circumstance.



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Amy Robinson
Miller Nash LLP
United States


Iván Resendiz Gutierrez
Miller Nash LLP
United States


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© 2024, Miller Nash LLP. All rights reserved by Miller Nash LLP as author and the owner of the copyright in this chapter. Miller Nash LLP has granted to Multilaw non-exclusive worldwide license to use and include this chapter in this guide and to sublicense Lexis Nexis, a division of RELX Inc. and its affiliates certain rights to use and distribute this Guide.

The information in the How to Hire and Fire Guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: May 2024