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Preparing for Oregon’s July 1, 2019 Minimum Wage Increase

Posted Thursday, July 25, 2019 by Paul Cirner (Ogletree Deakins).

As of July 1, 2019 Oregon’s minimum wage has increased. Oregon’s minimum wage structure is more complicated than most states with three different levels, depending on location. Here is everything Oregon employers need to know to comply.

The New Minimum Wage

In Oregon, the minimum wage rate varies depending upon an employer’s location categorized by (1) standard counties; (2) Portland Metro areas; and (3) nonurban counties. The wage increase for each location is as follows:

Table

Below is a useful map created by the Oregon Bureau of Labor and Industries (BOLI) identifying each location under the law. There are areas within Multnomah, Washington, and Clackamas counties that are outside the Portland urban growth boundary (UGB) which are only subject to the standard county wage-rate.

Oregon Map

*Created by the Oregon Bureau of Labor and Industries (BOLI).

Employers located in Washington, Clackamas, and Multnomah counties can use the Urban Growth Boundary lookup tool to determine if they are located within the UGB and subject to the Portland metro rate.

The July 1, 2019 Transition

All hours worked up to midnight on June 30, 2019 should be paid at the previous applicable minimum wage rate even if payroll is done on or after July 1, 2019. If an employee’s work day spans between June 30th and July 1st there should be two different rates of pay if they are a minimum wage rate worker. For hours worked on and after 12:01 a.m., July 1, 2019, the employee must be paid at the higher applicable minimum wage rate.

Impact on Exempt Employees

For exempt employees, Oregon law sets a salary threshold that is higher than the threshold set by Federal law. Oregon’s minimum wage increase impacts employees’ exempt status for those exempt employees that earn salaries near the minimum wage. As of July 1, 2019, employees subject to the Portland metro rate must earn at least $500 per week or $26,000 per year due to the $12.50 wage increase. Employees subject to the standard county rate must earn at least $450 per week or $23,400 per year due to the $11.25 wage increase. Employees subject to the nonurban county rate must earn $440 per week or $22,880 per year due to the $11.00 wage increase. Misclassification of non-exempt employees can result in significant penalties so it is crucial that employers review the exempt status of their employees. Overtime should also be adjusted according to the new wage rates.

Wage Compression

“Wage compression” occurs when senior employees are no longer better compensated than less senior employees due to minimum wage increases. Employees often judge their compensation based on how much others are paid around them. If a senior employee is earning close to the same amount as a new employee as a result of wage increases, this can create moral and retention issues. Companies may want to consider giving raises to employees who earn just above the new minimum wage to avoid moral, retention, and hiring issues.

Conclusion

PPI’s members continue to be faced with significant compliance challenges, as well as economic pressures, caused by active state legislatures enacting new pro-employee measures. In addition to Oregon, association members in Alaska, Hawaii, Montana, and Washington have had to deal with increased minimum wages in 2019. We will continue to monitor developments for our membership.