Save the date for our annual Best Practices for Best Employers" Labor & Employment Seminar, hosted in Portland on September 12 and in Seattle on October 9. Sign up for our Labor & Employment alerts to be notified when registration opens.
It has been a busy 2024 for federal agencies and the Oregon and Washington legislatures, which have ushered in new laws and regulations that affect employer-employee relationships in senior living communities. These legal developments encompass pregnancy accommodation obligations, restructured leave programs, pre-employment drug testing, timekeeping, overtime, pay equity, non-compete agreements, and independent contractor requirements, among others. Senior living communities in Oregon and Washington should assess their policies, practices, and agreements to ensure compliance with recent employment law developments.
FLSA Exempt Employee Salary Thresholds Increase
Starting July 1, 2024, employers must satisfy significantly higher salary thresholds in order to classify certain employees as exempt from the Fair Labor Standards Act's (FLSA) overtime obligations. The U.S. Department of Labor has increased the minimum standard salary level for the "white collar" exemptions (commonly referred to as the executive, professional, and administrative exemptions) to $844 per week, up from the current $684 per week. On January 1, 2025, the weekly salary requirement for these exempt employees will then increase to $1,128 per week. (Communities in Washington must apply the state's higher salary threshold for exempt employees, which is $1,302.40 per week.) For Oregon communities, the Department of Labor (DOL) also increased the threshold to qualify for the FLSA's "highly compensated employee" exemption (HCE). As of July 1, 2024, the annual total compensation requirement for the HCE exemption rises to $132,964 per year, up from $107,432 per year, and further rises to $151,164 per year on January 1, 2025. (Washington law does not recognize an HCE exemption.) Notably, employees must also meet the relevant "duties test," which remains unchanged, in addition to meeting the minimum salary threshold, to be properly classified as exempt.
New Federal Laws and Regulations Mandate Accommodations for Pregnant Workers
In addition to Washington and Oregon's state pregnancy accommodation laws, employers with 15 or more employees must comply with the Pregnant Workers Fairness Act (PWFA), which became effective in July 2023, and requires providing reasonable accommodations to an employee's known limitations related to pregnancy, childbirth, or related medical conditions. The U.S. Equal Employment Opportunity Commission (EEOC) issued final regulations implementing PWFA, which took effect on June 18, 2024. Like the federal Americans with Disabilities Act (ADA), the PWFA requires employers to engage in an interactive process with employees, and provides an undue hardship defense in most, but not all, circumstances. Unlike the ADA, however, the PWFA regulations declare certain accommodations to be reasonable as a matter of law "in virtually all cases" and requires reasonable accommodation for temporary periods in which an employee is unable to perform essential functions of the job, provided the employee can perform the functions in "the near future." For more information, see our related Legal Update.
Changes to the Oregon Family Leave Act, Paid Leave Oregon, and Oregon Paid Sick Time
The Oregon Legislature recently made fundamental changes to the Oregon Family Leave Act (OFLA) to eliminate overlap between employee leaves of absence under OFLA and Paid Leave Oregon (PLO) and to better coordinate with Oregon's Paid Sick Time (PST) law. Effective July 1, 2024, most, but not all, family and medical leaves of absences will exclusively be covered by PLO. (Revisions to OFLA, PLO, and PST regulations were also adopted in March 2024, to increase alignment across these programs.)
Additionally, by June 1, 2024, employers should have informed all employees currently approved for OFLA leave based on reasons that will no longer qualify for OFLA that their OFLA leave protections are coming to an end. Similarly, between now and July 1, 2024, employees who inquire about family leave, medical leave, or safe leave that will no longer qualify under OFLA as of July 1, 2024, must be directed to the PLO program within 14 days of the employee's notice of a need for leave to the employer.
More detailed information on changes to these laws and related regulations can be found here.
Rounding Up Time for Oregon Employees Is Unlawful
Once upon a time, it was common for employers to set their timekeeping systems to round up or down when an employee clocked in or out to simplify timekeeping records. For example, if an employee clocked in at 8:53 a.m., some employers programmed their timekeeping software to round up and record a 9:00 a.m. start time. While some forms of rounding are allowed under federal wage and hour law, rounding up is no longer allowed in Oregon. The U.S. District Court in Oregon held that Oregon state wage and hour law requires employers to pay employees for "all hours worked," which necessarily prohibits rounding up time.
Washington Pay Equity Law Amendments Provide Additional Anti-Discrimination Protections
The Washington Legislature recently expanded pay equity protections to all classes of employees who are currently protected from discrimination under state law. Among other things, Washington's Equal Pay and Opportunities Act currently prohibits Washington employers from discriminating among "similarly employed" employees with respect to compensation and career advancement opportunities because of gender. Effective July 1, 2025, this prohibition will be expanded to discrimination based on age, sex, marital status, sexual orientation, race, creed, color, national origin, citizenship or immigration status, honorably discharged veteran or military status, the presence of any sensory, mental, or physical disability, or the use of a trained guide dog or service animal by a person with a disability.
Under this law, employees who are similarly employed (which includes, at minimum, any employees performing the same job duties, such as caregivers) must receive the exact same rate of pay and benefits, unless an employer can show the differences in pay or benefits are based on justifiable factors not related to any protected class. Such factors may include education, training, experience, seniority, performance, regional differences in compensation or minimum wage, or differences in quantity or quality of work. Given the breadth of protected classes soon to be covered under this law and the fact employers may not know which employees are members of protected classes, employers would be wise to take steps to ensure pay equity is consistent with this law across all similarly employed employees, regardless of protected characteristics. Read our Legal Update on recent Washington employment law developments for more information.
Washington Paid Sick Leave Changes
The Department of Labor and Industries amended its regulations for Washington's Paid Sick Leave Act, which requires employers to provide non-exempt employees based in Washington with a minimum of one hour of paid sick leave (PSL) for every 40 hours worked. These changes, which became effective January 1, 2024, include, among other things, prohibiting employers from requiring employees to use PSL, even for absences due to a PSL-qualifying reason, and establish that employers who allow employees to have negative PSL balances are engaging in frontloading and must follow all frontloaded PSL requirements (including a yearly accounting of time accrued).
Effective January 1, 2025, employees will also be able to take PSL for additional qualifying reasons. See our Legal Update on recent Washington employment law developments for more information.
Washington Employers Cannot Discriminate Against Applicants for Off-Duty Marijuana Use
As of January 1, 2024, it is unlawful for most Washington employers to reject a job applicant based on the applicant's off-duty use of marijuana or a pre-employment drug test positive for non-psychoactive cannabis. Applicants for "safety-sensitive" positions may be tested for cannabis pre-hire, provided an employer identifies the position as safety-sensitive before the applicant applies for the position. However, the definition of "safety-sensitive" is narrow, requiring that impairment while performing the position's duties present "a substantial risk of death." The law also does not override state or federal laws that mandate testing for marijuana as a condition of employment (for commercial drivers, for example), a federal contract, or receipt of federal funds. See our previous Legal Update for more information.
Federal Law Changes to Independent Contractor Requirements
Effective March 11, 2024, the U.S. Department of Labor released a new standard to determine when a worker is properly classified as an independent contractor under the FLSA. The six-factor test considers (1) opportunity for profit or loss depending on managerial skill; (2) investments by the worker and the potential employer; (3) degree of permanence of the work relationship; (4) nature and degree of the potential employer's control; (5) extent to which the work performed is an integral part of the potential employer's business; and (6) whether the worker uses specialized skill and initiative. Additional factors may be relevant if they impact whether a worker is economically dependent on the employer for work. The rule rescinded previous DOL guidance that, some argue, made it easier for a worker to be classified as an independent contractor. Employers should be aware that some states, including Oregon and Washington, and other federal agencies (such as the IRS), may have different requirements for a worker to be considered an independent contractor under their respective laws and regulations.
Employee Non-Compete Agreements Face Uncertain Legal Future
The Federal Trade Commission (FTC) recently published a final rule, which applies nationwide, banning most worker non-compete agreements. The new rule explicitly bans non-competes going forward, and prevents businesses from enforcing existing non-competes, with some limited exceptions for a narrowly defined class of senior executives with existing agreements and related to the sale of businesses. The final rule defines non-compete clauses broadly to capture many other types of commonly used restrictive covenants, such as overly broad confidentiality and nondisclosure agreements, overly broad customer non-solicitation agreements, overly broad coworker non-solicitation agreements, training repayment agreements, and any other agreement that prohibits, penalizes, or functions to prevent a worker from seeking or accepting work or operating a business in the U.S. Court challenges to this final rule are already underway. If the final rule survives, it will become effective September 4, 2024, and will require issuing a notice to employees who signed agreements that will be unenforceable under this final rule.
Regardless of if or when the FTC's final rule becomes effective, applicable state statutes and common law limitations may apply to similar agreements. Both Oregon and Washington laws address the use of non complete and non-solicitation provisions, and Washington just updated its law. Most significantly, these recent amendments, which became effective on June 6, 2024, expand the definition of a non-compete provision, narrow enforceable customer non-solicitation provisions to current customers only, allow affected persons who are not a party to the agreement to take legal action (such as a former employee's new employer), and establish automatic increases to the earnings thresholds that must be met to enforce a non-compete provision, among other things.
See our Legal Update on the FTC's final rule and changes to Washington's law for more information on both of these developments.
Takeaways for Senior Living Communities in Oregon and Washington
Communities in Oregon should:
- Audit the exempt status and salaries of their employees to ensure compliance, and raise salaries and/or reclassify any employees who no longer qualify as exempt;
- Update leave policies, practices, and related materials to adapt to the new OFLA, PLO, and PSL laws and regulations no later than July 1, 2024; and
- Immediately contact their timekeeping system provider, if they round up time, to make necessary changes to ensure their timekeeping system no longer rounds up employees' time.
Communities in Washington should:
- Revaluate pre-employment drug testing practices, if they are covered by the new law, and instruct their testing provider to avoid testing for and reporting any non-psychoactive cannabis use;
- Update PSL policies and practices to comply with the amended regulations; and
- Consider conducting a pay equity audit for some or all positions to assess compliance with Washington's Equal Pay and Opportunities Act (with attorney guidance to establish attorney-client privilege of the results).
All communities should:
- Update pregnancy accommodation policies and practices to comply with the PWFA;
- Assess independent contractor relationships, in light of the new final rule;
- Identify employee agreements that will be invalid under the FTC's final rule (and amended Washington law), amend agreements for Washington employees, as needed, and monitor legal developments; and
- Train front-line managers on these legal developments and related policies and practices.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.