A new Session IPA produced by a local craft brewery has taken Oregon by storm. Customers are flocking to taphouses to fill their growlers. It’s bigger than the Oregon eclipse. To meet the surging demand, the brewery wants to dramatically increase production. The brewmaster tells the owner that he can meet the new production goals if he and his team work six ten-hour shifts and maybe more. You have to make hay when the sun shines, after all. The owner would like to bring on some temporary workers, but the brewery’s rural location makes that difficult.
Besides, the tight-knit team of employees are eager for the extra work. However, the owner must proceed with caution, as this arrangement may run afoul of new maximum workweek restrictions in Oregon’s overtime laws for mills, factories and manufacturing establishments. Although the owner may not consider his brewery a manufacturer, he should review the definitions under Oregon law and, if necessary, adhere to the maximum workweek restrictions.
HB 3458, which passed during the 2017 legislative session, was intended to clarify how employers calculate overtime wages at mills, factories, and manufacturing establishments. A 2016 BOLI interpretation advised employers to pay both daily and weekly overtime hours. That interpretation was overturned by a Multnomah County judge, but the uncertainty remained. HB 3458 clarified that employers need only pay the greater of the employee’s daily or weekly overtime hours, not both. However, the bill also codified a new definition of “manufacturing establishment” and added new restrictions on the maximum workweek at such establishments.
Breweries should first determine whether they fall within the definition of a “manufacturing establishment.” Under the law, “manufacturing” is the “process of using machinery to transform materials, substances or components into new products” with “machinery” defined as “material-handling equipment and power-driven machines powered by electricity, nuclear or fossil fuels, hydroelectric power, geothermal power or another power source other than by human hand, foot or breath.” Given the breadth of this definition, it is likely that a brewery would qualify and any determination otherwise should be made in consultation with counsel.
As a result, breweries are likely subject to the new maximum workweek restrictions, which go into effect on January 1, 2018. Under those restrictions, manufacturing establishments cannot require employees to work more than 55 hours during one workweek. The new law retains the 13-hour per day limit. There are two opportunities for employees to work more than 55 hours during the work week, but both require consent from the employee and prohibit any coercion by the employer to work the additional hours.
First, the brewery can permit an employee to work up to 60 hours in one workweek if the employee requests or consents in writing to work more than 55 hours during the workweek. That consent must be voluntarily given and should be drafted in collaboration with counsel to specifically disclaim any coercion by the employer. Indeed, employees will have a private right of action if the employer uses coercion and BOLI has authority to assess $2,000 for each violation.
The second option for permitting an employee to work more than 55 hours in a week is the “undue hardship period exemption.” Under this exemption, employers who process perishable products in the ordinary course of business can permit employees to work up to 84 hours per week for up to four workweeks. To take advantage of the undue hardship period exemption, the employer must again obtain requests or consents in writing from each employee and provide notice to the BOLI Commissioner that the employer is utilizing the exemption, as well as providing some additional information, such as the start and expected end dates of the undue hardship period.
At present, it is not clear whether a brewery would qualify for this exemption, or under what circumstances. It’s possible that BOLI will clarify the scope of the exemption during rulemaking. Until then, breweries should only utilize this exemption after discussion with counsel.
Although these changes will require additional labor considerations during surges in production, it seems likely that our craft brewery will be able to ride the wave created by its Session IPA. The brewery owner should first assess his operation to determine if he qualifies as a “manufacturing establishment” under the new law. If his brewery qualifies, he should seek written consent from each employee to work up to 60 hours per week as his brewmaster wants. If there are concerns about exceeding 60 hours per week, then the owner should consult with counsel about applying for the undue hardship period exemption. Taken together, HB 3458 may require additional considerations in utilizing employees for overtime, but our brewery owner will be able to keep his brewmaster and thirsty Oregonians happy.
Andrew Narus, anarus@barran.com, 503-276- 2104
