Oregon Labor Rules Better Than Most, but Complaints Remain

Portland, ORIf you work in the restaurant industry in Oregon, chances are your employer has violated Oregon Employment code or federal labor statutes in some fashion. That’s because a federal investigation last year found that the vast majority of restaurants in the state have crossed the line.

This, in deference to the fact that Oregon, in many cases, observes more stringent minimums than the federal Fair Labor Standards Act (FLSA).

As an example, under FLSA guidelines, a tipped employee at a restaurant must be paid a minimum of $2.13 each hour as a base. Tips are expected to raise that minimum beyond the federally mandated minimum wage of $7.25. However, under FLSA rules, a tipped employee’s total earnings, when the base plus tips are factored in, must combine to a minimum of $7.25 per hour, reflecting the minimum hourly wage.

In Oregon, restaurant workers get a much better deal. Minimum wage in the state is higher than the federal minimum, at $8.95 per hour. That includes tipped employees, according to Oregon Labor Law. Tips are not factored in, so whatever an Oregonian makes in tips does not drive down the minimum wage under Oregon employment law, but rather is added to it. For many, a generous minimum wage and tips combine to a pay packet better than most other restaurant workers.

And yet, according to federal investigators, almost eight out of 10 restaurants they checked were found to be in violation of FLSA guidelines and Oregon Labor statutes.

According to The Oregonian (6/7/13), an ongoing investigation throughout 2012 stemming from filed complaints and random visits to 110 facilities found the vast majority - 79 percent - were in violation of FLSA. According to the report, about 500 workers toiling at restaurants in Oregon, Idaho and southern Washington had been jilted out of about $740,000 in back pay.

For Oregon workers, given the generous Oregon employment labor guidelines, how could this be?

Investigators found that most infractions surrounded a requirement for employees to work off the clock - in essence, working for free and driving down the effective hourly rate - as well as incorrectly classifying workers as exempt from overtime pay. Those employees made to pay for their own uniforms, or whose pay packets were deducted to compensate for shortfalls in the float at day’s end, also cost workers.

Oregon state labor laws notwithstanding, the restaurant industry as a whole is generally a low-wage industry with affected workers often reluctant to file complaints, according to the report. And even with the state of Oregon’s generous minimum wage and stance on tip credits, an employee who is forced to work off the clock and face deductions representing costs associated with uniforms is suddenly making less per hour in real dollars than state statutes allow.

Incorrectly classifying a qualifying employee as exempt from overtime pay is another common violation of FLSA rules, as well as Oregon labor and employment law.

Bill Perry, vice president of government affairs at the Oregon Restaurant and Lodging Association in Wilsonville, questioned the federal investigators’ results.

“It would be hard for me to believe that a high percentage of people would be violating federal minimum wage,” he said in comments published in The Oregonian. While less than half of the affected workers identified in the investigations were from the state of Oregon, Oregon labor investigators nonetheless received 186 wage complaints from July 2011 to June 2012.

Given that restaurant workers in general are more apt to avoid filing complaints, that number could be low - in spite of the better shake employees appear to get under Oregon labor and employment law.