This year marks 50 years since President Lyndon B. Johnson declared war on poverty. Ostensibly, one of the most important weapons in his arsenal was the federal minimum wage. Since 1964, the federal minimum wage has been raised periodically, always with the hope that a minimum wage is synonymous with a living wage.

However, half a century later, many people equate the minimum wage with a poverty wage, while others question whether there should be a minimum wage at all. This is a national debate that often pits workers against business owners.

On the one hand, some workers’ rights groups argue that the federal minimum wage, which has remained at $7.25 per hour for the past four years, is far too low. We now have become familiar with terms like the “working poor” and “poverty wages.” Advocates of a higher minimum wage argue that raising it stimulates economic growth because there is extra spending from workers’ extra earnings.

On the other hand, a number of small businesses say that an increase in the minimum wage hurts job growth. Business owners warn that an increase in the minimum wage results in fewer entry-level jobs and even causes some businesses to go under because they cannot afford to pay their workers’ wages. Additionally, others point out that having a minimum wage prevents people who would be willing to work for less from getting jobs at all. They argue that the minimum wage especially hurts teenagers and young adults with few skills or none.

Legislatures across the nation are proving to be the battleground in this debate. On the federal front, there is a push in Congress to raise the minimum wage in several increments to $10.10 by 2015. However, that effort has faltered and is not expected to gain traction in the foreseeable future.

The focus then turns to the states, and many raised their minimum wage last year. On Jan. 1, 13 states increased their minimum wage by increments ranging from 10 cents to $1 per hour, leading to greater hourly pay for 2.5 million workers, and a $619.2 million boost to economic growth, according to the Economic Policy Institute.

Meanwhile, state legislators are expected to consider minimum wage increases this year in Delaware, Hawaii, Maryland, Massachusetts, Minnesota and New Hampshire, according to the National Employment Law Project. Achieving a pay hike through a ballot initiative is also a possibility in Alaska, Arkansas, Idaho, Massachusetts, New Mexico and South Dakota. The District of Columbia is poised to raise its minimum hourly pay to $9.50 on July 1 – and eventually to $11.50 – as the city council awaits approval from the mayor.

Locally, Washington state, by increasing its minimum wage 13 cents to $9.32 per hour, maintained the highest state minimum wage in the nation. Moreover, Washington Gov. Jay Inslee announced that he is promoting an additional increase to the minimum wage of $1.50 to $2.50 an hour. Oregon ranks second among states, with a minimum wage of $9.10 per hour after a 15 cent increase as of Jan. 1.

Recently, the Northwest has been on the front lines of the minimum wage battle. The city of SeaTac made national headlines last month when it raised its minimum wage to $15 per hour. Although a judge struck down the ordinance’s provision that would have covered more than 4,500 employees at Sea-Tac International Airport, the judge left the remaining parts of the ordinance intact. That leaves 1,600 workers at larger hotels and parking lots in the city of SeaTac as beneficiaries of the ordinance, which also provides for automatic, annual cost-of-living increases to the minimum rate as well as paid sick leave and prohibits tip sharing with supervisory employees or workers who did not provide the service.

As businesses in Oregon wonder about the future of the minimum wage, many signs point to a higher one ahead. The passage of Measure 25, approved by Oregon voters on Nov. 5, 2002, requires the Commissioner of the Bureau of Labor and Industries to calculate an annual adjustment to the minimum wage each September for the following calendar year. The annual adjustment is based on any increase during the previous 12 months in the U.S. city average Consumer Price Index for all urban consumers for all items.

Under this law, the minimum wage is to be rounded to the nearest five cents and take effect on Jan. 1 of the year following each adjustment. Accordingly, under Measure 25, basic increases will continue. Additionally, state leaders may support a more drastic increase in the minimum wage.

“If the minimum wage had simply kept pace with the rising cost of living since the late 1960s, it would be more than $10.55 today,” Oregon Gov. John Kitzhaber and former Washington Gov. Christine Gregoire wrote Jan. 3, 2013 in an op-ed for POLITICO.

No matter what your view is on the proper amount or function of the minimum wage, it is an issue that should be on the radar for anyone doing business in the state of Oregon.

Laura Salerno Owens is an attorney with Barran Liebman LLP. She focuses her practice on employment litigation and advice. Contact her at 503-276-2111 or lsalerno@barran.com.

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In recent years, employment has become one of the most heavily regulated areas. Employment-related litigation clogs the judicial system and makes up a significant percentage of the state and federal courts’ caseload. Even cases that may seem trivial have high verdict potential.

Conducting a human resources audit is one of the best ways to ensure a company is complying with current state and federal employment laws. An audit also can aid enforcement of employment policies.

Employment claims arise out of both action and inaction. For example, a hostile work environment claim could arise out of both action (e.g., offensive touching by a co-worker) and inaction (e.g., a manager who fails to discipline the co-worker who perpetrated the offensive touching).

So, a wise employer will want to make sure that the HR system is working as designed, and that employees are disciplined as evenhandedly as possible. The employer will want to know that it is in compliance with the vast array of federal and state regulations. Planning and prevention are key to minimizing liability.

A timely audit can identify problems so that a company can correct them before they turn into a lawsuit. Failure to audit HR practices can turn into a negligence claim. A timely audit may also help a company identify a potential source of future problems so that it can restructure on its own timeline.

While an HR audit can be invaluable, it is important to keep in mind that the results could be discovered in litigation. Consult with counsel before starting an HR audit.

An HR audit should include these topics:

Compliance threshold

The number of employees often determines whether an employer is subject to certain regulations. For example, both the Uniformed Services Employment and Reemployment Rights Act and Oregon wage and hour laws apply to all employers.

However, the federal Family and Medical Leave Act applies only to employers with 50 employees or more, while the obligation to provide Oregon family leave applies only to employers with 25 employees or more.

Knowing the various compliance thresholds is the first step in conducting an HR audit because it identifies which laws require compliance.

Essential policies

Not all of these policies are essential for all employers, but consider:

• General Equal Employment Opportunity/discrimination

• Anti-discrimination/Anti-harassment

• Family medical leave (essential for employers covered by federal law)

• Wage and hour and payroll policies

• Violence/weapons policies

• Employee monitoring/search/privacy policies

• At-will employment

• Smoking

• Drug and alcohol policies

• Benefit policies (vacations, paid time off, holidays, bereavement leave, severance pay)

• Compensation

• Non-solicitation/Non-distribution

• Trade secrets and noncompetition

• Software control and use

• Business ethics

• Electronic systems use and misuse

• Dispute resolution, grievance and arbitration

Posters

Oregon and federal law requires that certain posters be displayed in the workplace. Visit www.oregon.gov/boli/TA/Pages/Req_Post.aspx to access a list. Take a physical tour of the premises in all locations to see whether all required posters are displayed appropriately.

Drug and alcohol testing

If drug and alcohol testing is performed, review the policy to make sure that it has been updated, particularly with respect to Americans With Disabilities Act amendments and related Oregon statutes. Also, consider how prescription drug use and medical marijuana use will be treated under the policy.

Job safety

All Oregon employers are required to have a safety committee, so make sure one is in place. Also, have appropriate personnel review practices for compliance with OSHA regulations.

Independent contractors

In the last few years, the Obama administration has significantly increased funding for Department of Labor investigators to identify “misclassified” employees in an effort to, among other things, recover lost tax revenue from employers.

Oregon law also has a number of different requirements for classifying independent contractors. Therefore, it is especially important that a company’s relationship with any independent contractor is clearly defined in a contract and conducted in such a way that a state or federal agency will not determine that an independent contractor is in fact an employee.

Auditing the termination process

Review files of terminated employees to see whether the company is:

• Issuing final paychecks on time

• Documenting terminations properly

• Citing proper reasons for terminations

• Providing opportunities for an employee rebuttal

• Providing opportunities for an exit interview

• Receiving returns of company property (keys, credit cards)

• Issuing reminders of any noncompetition, non-solicitation, or confidentiality agreements or policies.

Depending on a company’s industry, additional topics may be useful as well. Across all industries, however, a periodic review and revision of policies and practices can be an effective way to reduce risky lawsuits.

Laura Salerno Owens is an attorney with Barran Liebman LLP. She specializes in employment litigation and advice. Contact her at 503-276-2111 or lsalerno@barran.com. To learn more about conducting an HR audit, register for Barran Liebman’s March 5 Food for Thought breakfast seminar at the Multnomah Athletic Club in Portland. To register, visit www.barran.com or email Traci Ray at tray@barran.com.

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Recent developments in wage and hour law may interest a number of employers.

Oregon law requires employers to provide hourly nonexempt employees who work a shift of five hours or longer a 30-minute uninterrupted meal break. But there has been some debate about what it means to “provide” a meal break.

There are two schools of thought on the issue. On the one hand, there is the “employee” perspective that says if an employee performs any work during a break, then the employer has failed to provide the break. Under this view, even if the employer has a policy that employees are not to perform work during the break, has instructed the employee not to work and does not know the employee is performing the work, it still could face significant liability if the employee in fact performs any work.

On the other hand, there is the “employer” view that it is impossible for employers to ensure that every single employee takes a break; rather, employers can ensure only that the break is available to each employee.

Recently, in Brinker Restaurant Corp. v. Superior Court, the California Supreme Court sided with the employer view. The facts of Brinker show why this decision is significant and could impact Oregon employers.

The defendant in the case was a company that owns and operates numerous restaurants throughout California. The employees who sued the company were current and former hourly nonexempt employees at one or more of the company’s restaurants.

Like Oregon’s law, California’s requires employers to “provide” breaks to its employees. Regarding the issue of meal breaks, the employees proposed a class that would include all current or former employees who worked one or more work periods in excess of five consecutive hours without receiving a 30-minute meal period during which the class member was relieved of all duties, from and after Oct. 1, 2000.

The “meal break” subclass included about 60,000 individuals. Naturally, among those 60,000 people there were a variety of reasons why any given person did or did not take a meal break on any given day. However, the employees contended that class treatment was appropriate, and computer shift records maintained by the company could be used to identify violations and establish classwide liability.

The company argued that a meal period subclass should not be certified because an employer is obliged only to make meal breaks available and need not ensure that employees take such breaks. The company asserted that it had complied with its legal obligation to make meal breaks available, and that many employees took those breaks. And inquiries into why particular employees did not take meal breaks raised individual questions precluding class treatment.

The court agreed with the company. It held that the law requiring that an employer “provide” a meal break only requires that the employer make the break available – that is, relieve the employee of all duty for the designated period – but not ensure that the employee performs no work during the break.

In fact, the court found that the obligation to ensure employees do no work may in some instances be inconsistent with the fundamental employer obligations associated with a meal break: to relieve the employee of all duty and relinquish any employer control over the employee and how he or she spends the time.

However, this does not mean that just having a policy is enough. The Brinker court did clarify that there must be a “bona fide” break. That is, an employer may not undermine a formal policy of providing meal breaks by pressuring employees to perform work during their breaks.

So as a practical matter, what does the Brinker decision mean for Oregon employers? It means that employers with good policies and established practices to enforce those policies may be able to avoid individual and class action liability for meal break violations.

Before Brinker, employers were vulnerable to the rare but real unscrupulous employee who manipulated the flexibility granted to use breaks to generate liability. Now, an employer may be able to avoid paying huge sums in a class action lawsuit if it can show that it gave all employees the opportunity to take a meal break regardless of whether employees actually worked during those breaks.

Some critics have decried the Brinker decision as the end of all meal break class actions. While that conclusion may be overstated, the decision certainly is a win for employers and places limits on their liability.

So, the interesting question for Oregon employers is whether Oregon courts will follow the lead of their southern counterpart and follow this practical interpretation of the law. We will keep our eyes open for new developments in this ever-challenging area of the law.

Laura Salerno Owens is an attorney with Barran Liebman LLP. She provides compliance advice to employers and represents management in employment law litigation. Contact her at 503-276-2111 or at lsalerno@barran.com.

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