Managing Risk

What Restaurant and Lodging Businesses Need to Know

Opening a new restaurant or lodging property during a booming economy is no walk in the park. Opening a restaurant or lodging business (or reopening a hotel or restaurant) at the tail end of a global pandemic can be even more complicated, like making the perfect chocolate lava cake (“It’s molten!”). To navigate the legal minefield ahead, new restaurant and lodging property owners and senior managers should keep the following wage and hour laws on the front burner.

MINIMUM WAGE AND OVERTIME

Generally, federal and state law requires that employers:

• pay employees at least Oregon’s minimum wage, with few exceptions;

• pay overtime at the rate of 1.5 times the employee’s regular rate of pay for all hours worked over 40 in the workweek; and

• maintain records with accurate information about every employee’s hours worked and wages earned.

Oregon's minimum wage depends on work location. As of July 1, 2022, the minimum wage is:

• $12.50 per hour in non-urban areas (e.g., Baker, Coos, Curry, and Douglas Counties);

• $13.50 per hour in standard areas (e.g., Benton, Deschutes,

Lane, and Marion Counties, and parts of Clackamas,

Multnomah, and Washington Counties outside of the urban growth boundary); and

• $14.75 per hour in the Portland metro area (within the urban growth boundary, including parts of Clackamas, Multnomah, and Washington Counties).

Oregon law requires that the minimum wage be the same for adults and for minors.

To be clear, some restaurant and lodging employees—e.g., general managers, assistant managers, and executive chefs—may be exempt from these minimum wage and overtime requirements. But most restaurant and lodging employees will be entitled to earn (1) a minimum wage for every hour worked and (2) overtime for hours worked over 40 hours in a workweek.

Tipped Employees

While the Fair Labor Standards Act (FLSA) allows restaurants to use a payment system known as “tip credit,” this payment system is illegal in Oregon. ORS 653.035(3). Tips cannot be counted against an employee’s hourly pay. Restaurants, however, can require employees to pool tips with other workers.

MEALS AND BREAKS

There are a number of requirements for meals and breaks. Here are some of the basics:

• For each eight-hour work period, an employee gets the following breaks free from work responsibilities: (1) two 10-minute paid rest breaks, and (2) one 30-minute unpaid meal break.

• Employees get reasonable breaks as needed to express milk (and a private space that is not a bathroom to pump) until a child is 18 months old. Employers are required to make reasonable efforts to provide a private location where the employee can express milk.

• These are the minimum requirements, and an employer can give its employees longer breaks.

PAYMENT OF WAGES

Regular Paychecks

Under Oregon law, employers must pay employees all wages due and owing on a regular payday. Paydays may not be more than 35 days apart or more than 35 days from the date the employee started their work. Also, employers may not withhold or delay an employee’s paycheck as a form of discipline or in exchange for the return of employer-owned items held by the employee.

Final Paychecks

Restaurant and lodging property owners and senior managers should know the strict requirements that apply to the payment of final wages when an employment relationship is terminated. These requirements include:

• If an employee quits with less than 48 hours’ notice (not including weekends and holidays), the employee’s final paycheck is due within five business days or on the next regular payday, whichever comes first.

Example: An employee quits without notice on Monday, one week before Labor Day. The final check must be paid by the Tuesday after Labor Day, unless a regular payday occurs before that date.

• If an employee quits with at least 48 hours’ notice, the employee’s final check is due on the employee’s last day of employment, unless that day is a weekend or a holiday. In that case, the employee’s check is due on the next business day.

Examples: An employee gives three days’ notice that Saturday will be their last day of employment. The employee’s final check is due on Monday.

An employee gives two days’ notice that Friday will be the last day worked. The employee’s final check is due on Friday.

• If the employee is let go or fired, the employee’s final paycheck is due by the end of the next business day.

Examples: If an employee is discharged on Friday, the employee’s final paycheck is due by end of the day on Monday.

If an employee is discharged on Monday, the employee’s final paycheck is due by the end of the day on Tuesday.

There are serious consequences for failing to meet final paycheck requirements. Employers that do not pay final wages when they are due risk the imposition of a penalty wage equal to eight times the employee’s regular rate of wage for each day that final wages go unpaid up to 30 days.

If an employer fails to pay final wages, with certain exceptions, the employer may limit its liability to 100 percent of unpaid wages by paying final wages within 12 days of written notice from the employee that wages remain due.

Restaurants and lodging establishments should also watch out for penalties; Oregon law provides a $1,000 civil penalty for willful failure to pay wages at termination as well as costs, interest, and attorney’s fees.

Deductions

Oregon law allows deductions from paychecks if legally required (e.g., taxes) or if an employee voluntarily agrees in writing and the deduction is for the employee’s benefit (e.g., transportation). The paycheck must show the amount and purpose of each deduction.

Direct deposit

Payment methods have changed over time. While payment by check (and even cash) remains a standard practice for some employers, employers are increasingly moving toward electronic methods for paying employees’ wages. Fortunately, Oregon law allows the payment of wages (without any charge or discount to the employee) by direct deposit. But restaurants and lodging establishments should remember employees have the right to request payment by check, and that request can be verbal or in writing.

Conclusion

Navigating wage and hour issues when opening and running a restaurant or lodging property can be daunting. To avoid wage and hour and other employment law nightmares, consider consulting with an employment attorney who can help you develop a successful and legally compliant plan for your restaurant or lodging establishment in 2022.  IVÁN RESENDIZ

GUTIERREZ

ABOUT Iván Resendiz Gutierrez, a partner of Miller Nash LLP, is an employment and appellate attorney serving the needs of public and private clients in Oregon and Washington. Iván can be reached at ivan. resendiz@millernash.com or at 503.205.2377.

1 Chef Carl Casper (played by Jon Favreau) in Chef (2014). 2 In addition to the laws discussed in this article, restaurant and lodging property owners and senior managers should also review laws regarding employing minors and predictive scheduling. 3 Employers can use the Urban Growth Boundary Lookup tool on Oregonmetro.gov to see whether an address is in the urban growth boundary or one of the urban or rural reserves.

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