Oregon Adopts Tiered Minimum Wage Increase Effective July 1, 2016

Oregon is the first state in the nation to enact a statewide tiered minimum wage. Oregon’s new minimum wage law will phase in wage increases over a six-year period starting July 1, 2016. Eventually, the law will require employers located in the Portland metro-area to pay a minimum wage $2.25 an hour higher than the minimum wage for the state’s lowest density counties. This tiered approach requires minimum wage employers with operations in multiple counties to pay close attention, as they will likely need to implement multiple wage rates across the state. A chart showing the tiers and staggered increases to minimum wage over the next six years is set forth below.

The new minimum wage law divides Oregon into three regions based on population density of counties. It also sets a specific six-year schedule for increasing the minimum wage in each of the three designated areas on July 1 of each year, until the target rates are reached in 2022.

After the six-year period, the Commissioner of Labor will make annual cost of living increases to the minimum wage similar to the current system based on the national Consumer Price Index (CPI). However, the three-tier structure will remain. First, the Commissioner will set the wage for medium-density counties; then, $1.25 an hour will be added to determine the minimum wage for high-density counties and $1.00 an hour will be subtracted to determine minimum wage for low-density counties.

Employers should take note that the minimum wage will now increase annually on July 1, rather than on January 1.

Finally, employers with facilities or employees in more than one county need to know that the new law imposes the minimum wage based on the “employer’s location.” The new law does not define “employer’s location.” As a result, it is not yet certain which wage rates will apply when an employer has operations in counties in different tiers. The new law directs the Commissioner of Labor to adopt rules addressing this issue. Therefore, employers with facilities or employees in more than one county must pay careful attention to the new rules, once adopted, before implementing the minimum wage increases. We plan to update this Advisory when those new rules become available.

In the meantime, here is the break out of the three-tier structure: