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New Oregon Laws Impacting Employers in 2021

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The Oregon Legislature passed a number of bills this session that may affect employers, including new restricting noncompetition agreements, expanding employment and school district discrimination definitions related to hairstyles and dress codes, and updating the Oregon Family Leave Act to address pandemic-related issues. Outlined below are changes employers should know about.

Noncompetition agreements (SB 169)

The Legislature again amended Oregon’s law regulating noncompetition agreements (ORS 653.295). Under the law, an employer may impose a noncompetition agreement only when satisfying specified criteria, including (a) notice that it required a noncompetition agreement two weeks before commencing employment or upon a bona fide advancement, (b) the employee is exempt or excluded from overtime laws, (c) the employer has a “protectable interest,” (d) the employee meets certain income limitations, and (e) written notice of the terms of the noncompetition agreement within 30 days of termination. There is a carve-out for criteria (b) and (d), which is waived if the employee is paid a minimum amount set by statute during the noncompetition period.

Under the bill, agreements entered on or after January 1, 2022 are further restricted as follows:

  • Noncompetition agreements not compliant with the statute are void and unenforceable. Previously, noncompliant agreements were voidable.
  • To be enforceable, the noncompetition agreement must be in writing and the employer must provide a signed, written copy of the agreement to the terminated employee within 30 days of termination. Previously, oral and unsigned written statements could suffice.
  • Noncompetition agreements are valid for only 12 months. Previously, agreements were valid for 18 months.
  • The employee’s annual gross salary and commissions must exceed $100,533, adjusted annually for inflation. The prior version indexed the amount to 50% of the median family income, slightly lower in 2021 than the new amount.
  • The bill revises the minimum amount of payment during the noncompetition period to satisfy the carve-out for employees who do not meet the overtime exclusion (criteria (b) above) and income minimum (criteria (d) above). To satisfy this carve-out, the employee must be paid during the noncompetition period the greater of (1) 50% of the employee’s gross base salary and commissions at the time of termination, or (2) $100,533, adjusted for inflation. This is basically the same as before although the index is defined differently.
  • The statute continues to be inapplicable to agreements not to solicit employees or customers and bonus restriction agreements.

Hairstyles and dress codes (HB 2935)

The Legislature expanded the state’s employment discrimination law, ORS 659A.001, to protect certain hairstyles. It did so by defining “race” to include “physical characteristics that are historically associated with race, including but not limited to natural hair, hair texture, hair type, and protective hairstyles.” And it then defined “protective hairstyle” to mean “a hairstyle, hair color, or manner of wearing hair that includes, but is not limited to, braids, regardless of whether the braids are created with extensions or styled with adornments, locs, and twists.”

The bill also limited the carve-out that permitted dress codes in ORS 659A.030(5) to one that “does not have a disproportionate adverse impact on members of a protected class to a greater extent than the policy impacts persons generally.” This revision seems to eviscerate the traditional business necessity defense to disparate impact claims.

School district discrimination (HB 2935)

HB 2935 also redefines discrimination in education in public school districts provided for in ORS 659.850 to align with the expanded definition of race to include hairstyles and dress codes as provided in the amended statutes outlined above.

Further, HB 2395 requires that interscholastic activity organizations which districts join to facilitate programming and scheduling must implement “equity-focused” policies. Such policies must prohibit discrimination as defined in ORS 695.850 and permit students “to wear religious clothing in accordance with the student’s sincerely held religious belief and consistent with any safety and health requirements and to “balance the health, safety, and reasonable accommodation needs of participants on an activity-by-activity basis.”

Oregon Family Leave Act (OFLA) amendments (HB 2474)

The Legislature expanded OFLA rights to address three issues that arose from the pandemic:

  • Any employer with at least one employee will be subject to OFLA during a public health emergency as defined in the bill, subject to certain exceptions. The exceptions are for an employee who was employed for fewer than 30 days prior to commencing leave or who worked an average of less than 25 hours per week in the 30 days prior to commencing leave.
  • Provides special break-in-service provisions for meeting employee eligibility requirements if the employee (1) was eligible at the time of separation and was reemployed within 180 days of separation, or (2) was eligible at the beginning of the temporary cessation of scheduled hours of 180 days or less and who returned to work at the end of the cessation period. The bill provides for restoration of time worked by an employee when the employee returns to work after the separation or temporary cessation period.
  • Expands the definition of “sick child” to include care for the employee’s child whose school or day care is closed due to a public health emergency. Allows employers to request verification of the need for leave due to such closure.

Hiring, retention, and vaccine bonuses excluded from equal pay (HB 2818)

Effective June 23, 2021, vaccine incentives, hiring bonuses, and retention bonuses are temporarily removed from the definition of “compensation” for purposes of pay equity requirements. This change sunsets on March 1, 2022. There is a separate provision, which does not sunset, excluding vaccine incentives for immunizations to an infectious disease for which a public health emergency is declared.

Gender identity (HB 3041)

Gender identity is defined and included as protected class in several employment-related statutes, including ORS 652.210, ORS 653.547, and throughout ORS ch. 659A.

Child care accommodation (SB 716)

An employer is prohibited from retaliating against an applicant or employees asking for a schedule that meets child care needs. But, the employer is not obligated to accommodate such requests. This bill takes effect upon passage.

Rebuttable presumption of retaliation against employees who make health or safety complaints (SB 483)

SB 483 creates a rebuttable presumption of retaliation if an employer fails to hire or discharges an employee within 60 days of making a health or safety complaint under ORS chapter 654. The employer may rebut the presumption by a preponderance of the evidence.

Extends time to file BOLI complaint of retaliation for reporting unsafe working conditions (HB 2420)

The time period is extended from 90 days to one year for filing a retaliation complaint with BOLI for reporting unsafe working conditions under ORS chapter 654.

Mandating driver’s license (SB 569)

It is now an unlawful employment practice within ORS chapter 659A for (1) an employer to make a driver’s license a condition of employment, unless the ability to legally drive is an essential function of the job or is related to a legitimate business purpose, or (2) to refuse to accept alternative identification documents for verifying identification and employment authorization under federal immigration law.

Class size (SB 580)

The Legislature added “class size and caseload limits to the definition of employment relations in the Public Employee Collective Bargaining Act (PECBA) applicable to bargaining for K-12 schools receiving federal funds for low-income families. For such schools, proposals addressing class size and caseload would be mandatory for bargaining. In doing so, the legislature chipped away at a key component of the 1995 reforms of the PECBA.

Police misconduct arbitrations (HB 2930)

The Legislature amended various PECBA provisions related to arbitration of police misconduct cases. First, the Legislature directed the Employment Relations Board to appoint a person to arbitrate such cases from a “list of qualified, indifferent, and unbiased persons. Second, arbitrators are required to make determinations in accordance with uniform standards created by a newly established Commission on Statewide Law Enforcement Standards of Conduct and Discipline. Third, the bill created such a commission, authorized it to create such standards, and specified the composition of the commission. Fourth, the bill repealed recent legislative initiatives making it mandatory to bargain over discipline guides. Fifth, the bill bars the arbitrator from changing the discipline if the arbitrator finds that the misconduct occurred so long as the disciplinary action imposed was in accordance with the uniform standards developed by the Commission.

If our team can assist you with these issues, help develop or update your policies, or defend you should a dispute arise, please don’t hesitate to call us.

Disclaimer: This article is not legal advice. It is provided solely for informational and educational purposes and does not fully address the complexity of the issues or steps business must take under applicable laws.