Week In Review

February 22, 2016

Oregon Minimum Wage Bill Approved, Governor Promises to Sign
The Oregon House of Representatives passed Senate Bill 1532 on February 18 to increase the state minimum wage. Oregon Governor Kate Brown promises to sign the measure. The bill would raise the minimum wage for all workers to the highest in the nation. The minimum wage bill calls for gradual increases over six years, with increases based on geographical boundaries—to reach $13.50 per hour statewide by July 1, 2022, $14.75 in the metro Portland area, and $12.50 in rural areas. Beginning in 2023, the minimum wage would then be determined based on inflation, with the larger cities being $1.25 more than the state minimum wage and the rural areas being $1 less. Currently, the minimum wage in Oregon is $9.25 per hour.

Specifically, the minimum wage bill calls for the minimum wage to increase statewide to $9.75 effective July 1, 2016; $10.25 on July 1, 2017; $10.75 on July 1, 2018; $11.25 on July 1, 2019; $12 on July 1, 2020; $12.75 on July 1, 2021; and $13.50 on July 1, 2022. After June 30, 2023, and beginning July 1 of each year, the minimum wage rate is to be adjusted annually for inflation.

If the employer is located within the Portland Metro Urban Growth Boundary (within the boundaries of Clackamas, Multnomah and Washington counties) organized under Chapter 268, the minimum wage increase would also start at $9.75 on July 1, 2016, and would then increase as follows: $11.25 on July 1, 2017; $12 on July 1, 2018; $12.50 on July 1, 2019; $13.25 on July 1, 2020; $14 on July 1, 2021; and $14.75 on July 1, 2022. After June 30, 2023, the minimum wage is to be $1.25 more than the statewide minimum wage determined above, based on the rate of inflation.

If the employer is located in a nonurban county, namely, Baker, Coos, Crook, Curry, Douglas, Gilliam, Grant, Harney, Jefferson, Klamath, Lake, Malheur, Morrow, Sherman, Umatilla, Union, Wallowa or Wheeler county, the minimum wage is to increase as follows: $9.50 on July 1, 2016; $10 on July 1, 2017; $10.50 on July 1, 2018; $11 on July 1, 2019; $11.50 on July 1, 2020; $12 on July 1, 2021; and $12.50 on July 1, 2022. After June 30, 2023, the minimum wage is to be $1 less than the state minimum wage, as determined by inflation.

Vermont Legislature Passes Earned Sick Time Measure
The Vermont Legislature has finalized a bill under which, beginning January 1, 2017, employers must give employees at least three days of earned sick time in a 12-month period. After December 31, 2018, employers must provide at least five days of earned sick time in a 12-month period. Employers would be permitted to implement a one-year waiting period before the accrued sick time may be used, however.

The requirements of the legislation apply to all employers, but there is an exemption for new employers that delays compliance until one year after the employer hires its first employee. The earned sick time requirements do not apply to federal employees, or employees that are under 18 years of age, have been employed for 20 weeks or fewer, or are employed on jobs that last 20 weeks or fewer, among other types of employees.

The legislation requires that employers provide earned sick time at the rate of at least one hour for every 52 hours worked. From January 1, 2017, until December 31, 2018, employers must provide employees with at least 24 hours of earned sick time in a 12-month period. For existing employees, employers may implement a waiting period of up to one year beginning January 1, 2017, during which employees earn but cannot use sick time.
After December 31, 2018, employers must give employees at least 40 hours of earned sick time in a 12-month period. An employer with five or fewer employees who are employed for an average of not less than 30 hours a week may implement a waiting period for existing employees of up to one year during which employees accrue but cannot use earned sick time.

An employee may use earned sick time for any of these reasons: (1) because he or she is ill or injured; (2) to obtain professional diagnostic, preventive, routine, or therapeutic health care; (3) to care for a sick or injured parent, grandparent, spouse, child, brother, sister, parent-in-law, grandchild, or foster child, including helping that person obtain diagnostic, preventive, routine, or therapeutic health treatment, or accompanying the employee’s parent, grandparent, spouse, or parent-in-law to an appointment related to his or her long-term care; (4) to arrange for social or legal services or obtain medical care or counseling for the employee or for the employee’s parent, grandparent, spouse, child, brother, sister, parent-in-law, grandchild, or foster child, who is a victim of domestic violence, sexual assault, or stalking, or who is relocating as the result of domestic violence, sexual assault, or stalking; and (5) to care for a parent, grandparent, spouse, child, brother, sister, parent-in-law, grandchild, or foster child, because the school or business where that person is normally located during the employee’s workday is closed for public health or safety reasons.

Claim That Hours Were Cut to Dodge ACA Mandate Plausible Under ERISA
A federal court has held that a former employee may proceed with her lawsuit alleging that her former employer violated the Employee Retirement Income Security Act of 1974 (ERISA) when the employer reduced her work hours so it could avoid paying the looming increase in health insurance costs brought on by the Affordable Care Act (ACA). The former employee’s complaint asserted that, in violation of ERISA, her former employer slashed her hours “for the purpose of interfering with the attainment” of a right to which she “may become entitled” under the company’s employee benefit plan.

For seven years, the employee worked full-time (30-45 hours per week) and was covered under the employer’s health insurance plan. However, when the ACA was enacted in 2010, managers told employees that it would cost $2 million dollars to comply once the statute’s coverage mandates took effect in 2015. To avoid those costs, the employer told employees the restaurant planned to reduce its full-time (insurance-covered) workforce at that location from its current complement of 100 employees down to 40. Sure enough, after June 1, 2013, the former employee’s schedule was reduced to 10-25 hours per week (or 17.43 hours, on average) and, in March 2014, she received a letter from the employer giving formal notice that she was now on part-time status, and her insurance coverage would terminate at the end of the month.

The former employer argued that an employee has no entitlement to benefits not yet accrued and that, to state an ERISA claim, an employee has to establish “more than lost opportunity to accrue additional benefits.” The court rejected that argument and held the “critical element” is intent, not effect. The court held that the ERISA claim arose from the employer’s unlawful motivation in interfering with employees’ accrual of benefits, and the employee asserted that the employer specifically intended to interfere with employees’ benefits and that it acted with an “unlawful purpose.”

SESCO recommends that clients review all applicable policy and practices to ensure compliance. For assistance, contact us at 423-764-4127 or by email at sesco@sescomgt.com