2024-2025 Oregon Employment Law Year-End Update

As 2024 comes to a close and we look forward to 2025, we want to highlight recent changes in employment law that may have an impact on Oregon employers. The following provides a summary of events that occurred in 2024 and changes coming in the new year.

Texas Federal Court Overturns DOL's 2024 Overtime Rule Nationwide

As discussed in our recent insight, the United States District Court for the Eastern District of Texas vacated the Department of Labor's ("DOL's") April 2024 rule, which increased the salary threshold required to qualify for one of the white collar exemptions to the federal Fair Labor Standards Act ("FLSA"). The rule gradually increased the threshold from $684 per week ($35,568 annually), to $844 per week ($43,888 annually) effective July 1, 2024. The threshold was set to increase further to $1,128 per week ($58,656 annually) effective January 1, 2025. Additionally, the total annual compensation required to meet the "highly compensated employee" exemption was set to increase to $151,164 effective January 1, 2025.

In light of the Texas court's decision, the DOL's 2024 rule no longer applies to any employer and is unenforceable. This means the requirements will revert back to the DOL's 2019 rule that was in place prior to July 1, 2024. The 2019 rule has a salary threshold of $684 per week ($35,568 annually) and a highly compensated employee exemption salary threshold of $107,432. Oregon also has minimum wage and overtime requirements with its own salary threshold, but it is lower than the federal standard. This means the federal standard generally controls.

Going forward, Oregon employers should therefore ensure that employees are properly classified as exempt and have a salary of at least $35,568 to meet one of the white collar exemptions and a salary of at least $107,432 to meet the highly compensated employee exemption.

Noncompete Agreements Are Still Enforceable Despite the FTC's Rule

In April 2024, the Federal Trade Commission ("FTC") implemented a new rule which would have caused most noncompete agreements to become unenforceable and would have prevented employers from entering into new noncompete agreements with any employee. However, legal challenges against this rule were successful, and the rule did not go into effect on September 1, 2024, as planned.

Oregon employers can therefore still enter into noncompete agreements with employees. However, Oregon updated its noncompete law in 2021 to limit the validity of noncompete agreements unless certain conditions are met. Accordingly, noncompete agreements are only valid in Oregon if the employee either (1) received written notice that the agreement is a condition of employment at least two weeks before employment starts or (2) entered into the agreement upon a bona fide advancement of the employee by the employer. In addition, a noncompetition agreement is also void unless:

• The employee meets the criteria for a salaried exempt employee whose annual income at termination exceeds a minimum amount adjusted each year for inflation ($113,241 for 2024);
• The employer has an interest to protect, such as trade secrets; sensitive, confidential business or professional information; product development plans; launch plans; marketing strategy or sales plans; and
• The employer must also provide to the employee a signed, written copy of the terms of the noncompetition agreement within 30 days after the employee's termination.

Also, as of 2021, the effective term of noncompete agreements can only last 12 months following the end of employment.

Going forward, employers who want to enter into noncompete agreements with employees should ensure they meet Oregon's requirements. Employers should also seek legal counsel if they want to enforce a previously agreed-to noncompete agreement.

Employers Must Pay Overtime to Agricultural Workers Who Work More Than 48 Hours Beginning January 1, 2025

As a reminder, in 2022, Oregon enacted a new law which implemented a progressive hours-worked threshold for when employers of agricultural workers are required to pay overtime. As of January 1, 2023, employers were required to pay overtime to agricultural workers after they work 55 hours in one workweek. Starting January 1, 2025, employers will be required to pay overtime to agricultural workers after they work 48 hours in one workweek. Another increase will take place on January 1, 2027. At that time, employers will be required to pay overtime to agricultural workers after they work 40 hours in one workweek.

The federal FLSA requires employers to pay minimum wage and overtime but exempts "agricultural workers" from the overtime requirement. Oregon, along with many other states, has created overtime requirements in agriculture to fill this gap created by federal law.

Oregon's law applies to employees who work in "agriculture" which generally includes farming, dairying, and raising of livestock, bees, fur-bearing animals, or poultry. "Agriculture" generally does not include harvesting of forest products, but workers engaged in the planting, pruning, and harvesting of Christmas trees are considered agricultural employees.

There are certain exemptions to the requirement to pay overtime in agriculture, one of which is for any individual employed in agriculture whose principal duties are administrative, executive, or professional work, and who performs predominantly intellectual, managerial or creative tasks; exercises discretion and independent judgment; and earns a salary and is paid on a salary basis.

Employers should be prepared to pay agricultural workers overtime if they work more than 48 hours in one workweek beginning January 1, 2025, unless an exemption applies. Employers are encouraged to seek legal counsel to verify whether an exemption might apply.

New Requirements for Employers of Warehouse Employees Take Effect on January 1, 2025

HB 4127 was signed into law on March 27, 2024, and imposes new notice and recordkeeping requirements on employers of employees who work at warehouse distribution centers.

Beginning January 1, 2025, covered employers must provide each employee with written documentation summarizing any quota to which the employee is subject. The documentation must include:

• The quantified number of tasks to be performed or materials to be produced or handled within a defined time period; and
• A description of the potential consequences, including any adverse employment actions, that an employee may face as a result of the employee's failure to meet the applicable quota.

Employers must provide this documentation to employees at the time of hire, within two business days following the date on which the employer changes any quota, and when taking an adverse employment action against an employee for failing to meet a quota. Employers cannot take adverse employment action against an employee without complying with these rules.

The law applies to employers that employ or exercise control over the wages, hours, or working conditions of employees at a single warehouse distribution center with 100 or more employees or one or more warehouse distribution centers in Oregon with a total of 1,000 or more employees. The law applies to employees subject to federal or state laws relating to minimum wage and overtime (non-exempt) who work at a warehouse distribution center. This law does not apply to employees subject to collective bargaining agreements in certain circumstances.

Current and former employees have the right to request certain information if they believe they have been disciplined for failing to meet a quota. This includes the documentation regarding the quota described above and the employee's work speed data for the 90 days immediately preceding the date of the employee's request. To meet their recordkeeping obligations, employers should retain this information for at least three years following the employee's separation from employment.

Accordingly, covered employers who use quotas to measure worker productivity should be prepared to provide employees notice of quotas and establish a system to track employee work speed beginning January 1, 2025.

To discuss more specific questions you might have about these changes to Oregon and federal law, please contact your DWT attorney. We will continue to keep you updated on new developments.