Oregon Appeals Court Looks at Standard for Independent Contractors

Most employers are aware that there are three different statutory tests for determining if an individual is an employee or an independent contractor. One of the elements of the test applied by the Oregon Department of Revenue and Employment Department, among other agencies, is whether the individual is: “free from direction and control over the means and manner of providing the services, subject only to the right of the person for whom the services are provided to specify the desired results.” ORS 670.600(2)(a).

Numerous cases focus on whether oversight of services performed constitutes control over the means and manner of performance, thus indicating an employment relationship. A recent Oregon Court of Appeals case found that setting the rate of pay and determining which job assignments are available to be performed are “not indicative of control” over an individual’s performance of tasks. Instead, “they are aimed at achieving a desired result–a completed assignment at the required time and at a fixed price.” The Court also found that inspection of work performed and requiring correction of defective work before payment, was “directed at ensuring that the desired results have been achieved” and not evidence of direction and control over how the services were performed because, pursuant to Oregon law, the “correction of defective work is a factor indicative of being customarily engaged in an independent business.”

Finally, the Court found that setting non-negotiable rates of pay for cleaning jobs and providing a list of available jobs and a schedule showing when jobs had to be completed was also directed at ensuring desired results – clean houses as of a particular date – and not evidence of direction and control over how the houses were cleaned. Ponderosa Properties, LLC v. Employment Dept., http://www.publications.ojd.state.or.us/docs/A150764.pdf

While the Court’s decision sheds light on the difference between controlling the means and manner of providing services vs. specifying desired results, the question of when an individual is properly classified as an independent contractor always requires a fact based analysis.

Intermittent Leave and Exempt Employees OFLA vs. FMLA

There are a few instances when the Oregon Family Leave and federal Family Medical Leave Act (FMLA) differ materially. One difference is how the laws treat pay for exempt employees taking intermittent leave. Generally, to be exempt, an employees must perform certain duties and be paid a salary. Oregon and federal law permit certain salary reductions that do not result in the loss of an employee’s exempt status. However, the laws differ with respect to salary reductions for partial day absences. The FMLA permits an employer to reduce an exempt employee’s salary for partial day absences, such as where the exempt employee is taking intermittent leave by working ½ days or a reduced daily schedule. In contrast, under OFLA, an employer will “jeopardize the employee’s exempt status if the employer reduces the employee’s salary for the part-day absence.” OAR 839-020-0240(15)(a-b). The result is that even though OFLA does not require an employer to pay an employee on leave, an employer will risk the employee’s exempt status if the exempt employee is not paid their full salary during intermittent leave.

This scenario arises for employers who are subject to OFLA, but not FMLA (for example because they employ 25-49 employees) and to employers who are subject to both laws where an employee has worked enough hours to be eligible for OFLA leave but not enough hours to be covered by FMLA.

Reminder of Changes to COBRA Election Notice

Did you know that your COBRA notice has to tell employees that they might be able to get cheaper health care coverage through the Health Insurance Marketplace under the Patient Protection and Affordable Care Act aka Obamacare?

Last May, the Department of Labor revised its model COBRA election notice to include the following language:

“There may be other coverage options for you and your family. When key parts of the health care law take effect, you’ll be able to buy coverage through the Health Insurance Marketplace. In the Marketplace, you could be eligible for a new kind of tax credit that lowers your monthly premiums right away, and you can see what your premium, deductibles, and out-of-pocket costs will be before you make a decision to enroll.”


What the proposed notice does not tell employees is that if an employee elects COBRA coverage, the employee cannot change their mind and replace their COBRA coverage with cheaper insurance through the Marketplace until the COBRA coverage is exhausted, or until next open enrollment period (which begins in November 2014). At time of the qualifying event, an employee can decline COBRA coverage and apply for a Marketplace health plan (because the qualifying event triggers a special enrollment opportunity), but once COBRA is elected, if the employee wants health insurance, they must continue to pay for COBRA coverage until the next open enrollment period.


Oregon District Court Clarifies When Employer’s Racially Motivated Bad Acts May (or May Not) Create A Hostile Work Environment

Just because an employee is mistreated (maybe even unlawfully mistreated), does not mean the employee has been subjected to a hostile work environment. In Soto v. Donahoe, 2014 U.S. Dist. LEXIS 48997 (D. Or. 2014), Soto, a Hispanic male, was employed by the United States Postal Service. After Soto filed an affidavit in support of a co-worker’s Equal Employment Opportunity (“EEO”) complaint against the Postal Service, the Postal Service changed Soto’s work hours from a day shift to the swing shift. Soto then filed his own EEO complaint. The Postal Service moved for summary judgment. The Oregon District Court dismissed the hostile environment claim, although it allowed Soto to proceed on his claims for unlawful discrimination and retaliation.

The Court explained that a plaintiff in a hostile work environment claim based on race must show: 1) that he or she was subjected to verbal or physical conduct of a racial nature; 2) that the conduct was unwelcome; and 3) that the conduct was sufficiently severe or pervasive to alter the conditions of the plaintiff’s employment and create an abusive work environment. Soto argued that his shift change was motivated by discrimination and retaliation, and that by coming to work every day and experiencing the effects of this discrimination and retaliation he was subjected to a hostile work environment. However, the Court found that, even assuming that changing a person’s shift is verbal or physical conduct of a racial nature, Soto failed to establish that the conduct was sufficiently severe or pervasive to alter the terms and conditions of his employment. “To hold otherwise would mean every act of discrimination or retaliation also creates a hostile work environment.”

The outcome of this employer’s pretrial motions against the employee’s claims is not uncommon. While this employer was able to have the hostile work environment claim dismissed, it still faces claims for racial discrimination and retaliation. Employers must have in place and enforce anti-discrimination and retaliation policies.

A WARN Act Warning

Under the federal Worker Adjustment and Retraining Notification Act (“WARN”) employers with more than 100 employees are required to give 60 days’ advance written notice of impending layoffs. Notice must be given in the event of a plant closing or mass layoff, both of which are specifically defined in the statute.

An employer need not give 60 days’ advance notice in three narrow exceptions: (1) Faltering company – which covers situations where a company has sought new capital or business to stay open and where giving notice would ruin the opportunity to get the new capital or business, and applies only to plant closings; (2) Unforeseeable business circumstances – which applies to closings and layoffs that are caused by business circumstances that were not reasonably foreseeable at the time notice would otherwise have been required; and (3) Natural disaster – which applies where a closing or layoff is the direct result of a natural disaster, such as a flood, earthquake, drought or storm.

If an employer is giving less than 60 days’ notice under one of the three exceptions, the notice must include, among other mandated information, a brief statement of the reason for reducing the notice period. As indicated by a recent ruling in the bankruptcy case of the law firm of Dewey & LeBoeuf, telling employees that layoffs in 5 days are required because of “extraordinary circumstances” facing the firm is NOT a sufficient “brief statement” to justify less than 60 days’ notice. http://blogs.wsj.com/law/2014/04/14/ruling-weakens-deweys-defense-to-former-employee-class-action/

More information about Warn can be found here:




Oregon District Court Enforces “Narrow Exception” Rule of Wrongful Discharge Claims

In Jenkins v. Vestas-American Wind Tech., Inc., 2014 U.S. Dist. LEXIS 47677, 11-15 (D. Or. Apr. 4, 2014), the employee performed construction and maintenance on wind turbine towers. During his employment, the plaintiff sustained several injuries, including a knee injury that required surgery. Plaintiff filed a workers’ compensation claim and several days later went on leave under the Family Medical Leave Act (“FMLA”). When plaintiff’s FMLA leave was exhausted, he did not have clearance from his doctor to return to work. Eventually, plaintiff was terminated because he still did not have medical clearance to return to full duty work. Plaintiff filed a lawsuit asserting various state claims and a wrongful discharge claim.

The Oregon District court granted the employer’s summary judgment motion against the wrongful discharge claim. In so doing, the court explained:

“Absent a contractual, statutory, or constitutional requirement, the general rule is that an employer may discharge an employee at any time for any reason. The tort of wrongful discharge provides a narrow exception, based on public policy, to the general rule that provides a remedy when an employee is discharged for fulfilling an important societal obligation or for exercising an employment-related right of public importance. . . A plaintiff may not, however, bring a claim for the common law tort of wrongful discharge if he has an adequate statutory remedy.”

The court tossed out the wrongful discharge claim because the employee had an adequate remedy under state workers compensation law and, to the extent the wrongful discharge claim was premised on disability discrimination, under the Americans with Disabilities Act. Because the remedies available under the State statute and the ADA encompass the same remedies that would have been available under Oregon common law, the employee’ wrongful discharge claim was preempted—and dismissed.

Pregnant ≠ Fat

Weight Watchers is known for helping its customers lose weight. Yesterday, it became known for paying $45,000 to settle a pregnancy discrimination lawsuit brought by the EEOC. According to the EEOC, Weight Watchers refused to hire a qualified applicant as a group leader because she was pregnant. The applicant, who was a lifetime member of Weight Watchers and had successfully met and maintained her weight goals before becoming pregnant, was told that Weight Watchers did not hire pregnant woman. The EEOC also alleged that Weight Watchers discriminated against the applicant based on her pregnancy-related weight gain when it disqualified her from employment based on its “goal weight” requirement. http://www.eeoc.gov/eeoc/newsroom/release/4-7-14.cfm

Because, with a few exceptions set by some local and state laws, it is not illegal to make a hiring decision based on attractiveness or physical appearance, Weight Watchers’ general hiring requirement that employees/applicants meet a “goal weight” was not challenged by the EEOC. However, when using appearance based hiring criteria, employers need to be careful not to discriminate against applicants because of their race, gender, national origin, disability, religion or other protected class.  For example, Abercrombie & Fitch’s policy of hiring “All American” sales people resulted in a claim that the retailer discriminated against applicants and employees on the basis of race because the “All American” ideal was alleged to exclude non-white applicants/employees.


Men Can Sell Beauty Products Too

Yesterday, the EEOC announced a $354,250 settlement with Ventura Corporation, an employer who was alleged to have engaged in a pattern and practice of refusing to hire men as managers for its wholesale makeup, beauty products and jewelry sales business. Part of the settlement was paid to a male employee who was promoted after complaining about the employer’s discriminatory practices and then set up for failure and termination in retaliation for his complaints. It is likely that one of the motivations for the employer to settle was the judge’s finding that it had engaged in sanctionable conduct by destroying evidence consisting of applications from qualified male applicants and emails from key decision makers. http://www.eeoc.gov/eeoc/newsroom/release/4-3-14.cfm


Employers Face Increased Penalties for Failing to Post Workplace Posters

The U.S. Equal Employment Opportunity Commission (EEOC) has issued regulations that will increase the current maximum penalty for violations of posting requirements. The EEOC requires every employer, employment agency, labor organization, and joint labor-management committee controlling an apprenticeship or other training program covered by Title VII of the Civil Rights act of 1964, the Americans with Disabilities Act, and the Genetic Information Non-Discrimination Act to post notices describing the pertinent provisions of those laws. Such notices must be posted in prominent and accessible places where notices to employees, applicants, and members are customarily maintained. Effective on April 18, 2014, the penalty for failure to comply with the notice requirement jumps by $100 (from $110 to $210).

Can’t sleep? Here’s the Final Rule:


Exempt Employee Absences for Personal Reasons

As we posted last week, generally, if an exempt employee performs any work during the workweek, he or she must be paid their full salary.   One exception is that an employer need not pay an exempt employee for a full day absence from work for personal reasons. For example, if an exempt employee has exhausted their vacation or paid time off, and takes a full day off for a reason other than sickness or disability, the employer does not have to pay the employee for that full day. With a few very narrow exceptions, employers may not deduct for partial day absences for personal reasons, so if the employee takes 2½ days off for personal reasons, the employer may only deduct for the two full days off, not the ½ day.

From a practical standpoint, employers should have a written policy/procedure setting forth how exempt employees should keep track of different kinds of absences from work and when exempt employees will/will not be paid for the different absences.