Hourly employees in Oregon are almost always entitled to overtime for all hours worked in excess of 40 per workweek. However, salaried employees may also be entitled to overtime pay if they have been misclassified for overtime exemption purposes under Oregon overtime law or federal overtime law. Simply paying employees a salary does not relieve employers of the legal obligation to pay overtime if the employee is misclassified. Payment on a salary basis is only one requirement for an employee to be exempt from federal and Oregon overtime laws.
Employees paid on a salary basis who do not perform specific "exempt duties" are often eligible to receive up to two years of back overtime pay (up to three years of overtime for willful violations). Employees may also be able to recover double the amount of their unpaid overtime under federal law plus additional penalties under Oregon state law. The Oregon Bureau of Labor and Industries ("BOLI") does not enforce federal law and therefore does not collect double/liquidated damages for employees.
Employees paid on a salary basis who do not perform specific "exempt duties" are often eligible to receive up to two years of back overtime pay (up to three years of overtime for willful violations). Employees may also be able to recover double the amount of their unpaid overtime under federal law plus additional penalties under Oregon state law. The Oregon Bureau of Labor and Industries ("BOLI") does not enforce federal law and therefore does not collect double/liquidated damages for employees.
Employers frequently conflate the concepts of "salary pay" and "exempt from overtime." Employees lose compensation for their work as a result of these employer mistakes. For example, if a non-exempt employee earned $45,000.00 per year and worked just 5 hours of overtime per week, that employee's overtime, liquidated damages, and penalty claims over two years could add up to over $30,000.00. This number may be significantly higher for higher-paid employees, those working longer hours, and groups of similarly-situated employees who are subject to uniform employer policies that result in systematic nonpayment of overtime, i.e. members of a class action if the court certifies the case as a collective/class action.
In deciding whether an employee is legally entitled to receive overtime pay, courts must determine whether an employee fits under specific "exempt" categories as spelled out in detail by Oregon and federal law. See, e.g. ORS 653.020, 29 U.S.C. ยง 213. The employer bears the burden to prove exempt status.
The duties test: Exempt status often, but not always, requires salary pay plus exempt duties. Exempt duties typically require that an employee perform higher-level executive, technical, or administrative work. Certain outside sales and commission pay employees may also be exempt from overtime.
Discretion and independent judgment requirement: An employee's primary job duty must also include the exercise of discretion and independent judgment with respect to matters of significance. This means that lower level employees and production employees are usually entitled to overtime, regardless of whether they are paid a salary or hourly wages.
The duties test: Exempt status often, but not always, requires salary pay plus exempt duties. Exempt duties typically require that an employee perform higher-level executive, technical, or administrative work. Certain outside sales and commission pay employees may also be exempt from overtime.
Discretion and independent judgment requirement: An employee's primary job duty must also include the exercise of discretion and independent judgment with respect to matters of significance. This means that lower level employees and production employees are usually entitled to overtime, regardless of whether they are paid a salary or hourly wages.
Salary basis test: Next, even if an employee's duties fit into an exempt category, courts will still need to consider whether an employer strictly adhered to the "salary test." If an employer does not pass the salary test, they must pay overtime to the employee(s) in question. There are many things that can cause an employer to fail the salary test. For example, if an employer regularly deducts from an employee's salary for short periods of missed work or pays an employee on an hourly basis, the employee in question may have a viable overtime claim. Effective January 1, 2020, the salary threshold for the white-collar exemptions (managerial, administrative, and professional) was increased from $455 per week ($23,660 per year) to $684 per week ($35,568 per year).
To reiterate, salary pay alone does not disqualify Oregon employees from receiving overtime. If you have concerns about a specific situation, it is best to call an employment attorney. An experienced employment lawyer will help you determine your exact legal rights regarding overtime pay and work with you to develop a game plan to enforce your rights, whether through negotiations, litigation, or administrative proceedings.