Introduction to Employment Law for Oregon Small Businesses

If you would like to discuss employment law issues facing your Oregon small business, and equally importantly how to avoid problems, please feel free to call or email me at:  jimvogele@gmail.com.  I am always willing to discuss affordable hourly or flate rate legal services and advice for Oregon small businesses.

I am an employment lawyer with an office in Portland.  I frequently provide employment law advice and representation to Oregon small businesses across the state. At a certain stage in the life of a business, legal issues relating to employment law have a way of appearing, often when the company reaches double-digit employees and, of course, sometimes earlier.  Warding off these issues before they start, or efficiently resolving them when they do arise, may save yourself a lot of time and money.  

While it's always necessary to contact an employment lawyer who represents Oregon small businesses for legal advice, this article briefly addresses some of the most common employment law issues facing Oregon small businesses.  These issues can run the gamut, but often involve wage and hour law, alleged whistle-blowing, harassment or discrimination claims, and contract enforcement.  The more employees you have, the more potential legal issues that may arise; but even the fledgling Oregon small business can benefit from employment law advice early in the company's evolution.  In addition to litigation, I handle Oregon employment contract, handbook, and policy drafting, review, and consultation.

1.  Introduction:  Employment Laws Applicable to Small Businesses

The most important reality to understand, by way of introduction, is that due to the reach of state law covering nearly every aspect of the employment relationship, there are few areas of employment and virtually no employers in Oregon who are not regulated by employment laws, rules, and regulations.    

A summary of the entire range of employment laws applicable to small businesses is well beyond the scope of this article.  The discussion below summarizes some of the key employment law issues an Oregon small business must understand and properly apply.

2.  Civil Rights / Anti-Discrimination Laws

All Oregon employers, regardless of size, are subject to Oregon anti-discrimination laws protecting employees on the basis of age, race, color, sex, religion, marital status, sexual orientation and national origin protected classes, ORS ORS 659A.030.  Slightly larger employers of 6 or more employees are subject to state disability discrimination laws, ORS 659A.103 et seq, and workers compensation discrimination laws, ORS 659A.040. (almost all employers must carry workers compensation insurance -- the anti-discrimination laws apply to prevent retaliation when an employee invokes the protections of the workers compensation insurance system). 

There are of course federal laws overlapping state laws prohibiting employment discrimination.  Small employers are not subject to some of the federal laws.  But with 15 employees, coverage kicks in under Title VII which bans discrimination and retaliation based on a number of protected classes (including race, color, religion, sex, and national origin) and the Americans with Disabilities Act, the ADA, and with 20 employees coverage applies under the Age Discrimination in Employment Act, the ADEA

Harassment is a form of discrimination.  Meritor Savings Bank, FSB v. Vinson, 477 U.S. 57 (1986).  (sexual harassment held to be a form of sex/gender discrimination).  Just as no employer should ever discriminate against employees or job applicants, no employee should ever be harassed because of the employee's status as a member of a protected class such as age, race, religion, sex, national origin, etc.     

3.  Wage and Hour Laws

Wage and hour laws governing minimum wage, overtime pay, deductions from paychecks, meal and rest breaks, and payment of accrued wages upon termination can be real minefields for the Oregon employer.  The variety of wage and hour statutes and issues, under both Oregon and federal law, are beyond the scope of this brief article.  See, e.g.  ORS Chapter 652 and ORS Chapter 653.  The application of wage and hour law to a specific fact pattern and employer should always be discussed with an experienced Oregon small business employment lawyer.      

4.  Family Leave and Sick Leave Issues

Oregon state sick leave law applies in varying fashion to employers with less than 10 or with 10 or more employees, and also depending on the size of the city (e.g. exceeding 500,000, i.e. Portland) in which the small business is located.  ORS 653.606  Every Oregon employer needs to familiarize itself with sick leave laws. 

Family leave laws do not apply to smaller employers of less than 25 employees.  An employer becomes subject to coverage under the family leave laws with 25 employees under state law, the Oregon Family Leave Act ("OFLA") and 50 employees under the Family Medical Leave Act ("FMLA").  One has to keep in mind, however, that even employers who are not covered by family leave laws can be liable for claims such as retaliation against employees who invoke the protections of family leave laws, even if the employer is smaller than the threshhold for actually providing protected family leave to employees.  See Yeager v. Providence Health System Oregon, 337 Or. 658 (2004).   Likewise, issues relating to family leave can implicate other complex areas of employment law, including discrimination (e.g. disability or gender discrimination) and workers compensation laws.  

5.  Whistleblowing Laws

Employers large and small are covered by whistleblowing laws under Oregon state law, as well as federal law.  This includes an employee's reporting of what is believed in good faith to be a violation of state or federal law, rule or regulation, ORS 659A.199, or of course workplace safety (OSHA) issues.  ORS 654.062.   Recent caselaw has made clear that employer retaliation for reports of violations of law can be actionable whether the reports are made externally, e.g. to a governmental body, or internally. See Brunozzi v. Cable Communications, Inc., 851 F.3d 990 (2017).  So long as a small business employer itself acts in good faith in all its operations, there is no reason to run afoul of whistleblowing laws.  Nonetheless, this area can be tricky to naviagate and any issues should be discussed with an employment attorney.    

6.  Contract Issues, Including Employment Agreements, Handbooks, and Policies

There is no legal requirement for an employer of any size to maintain written employment handbooks and policies or to utilize written employment contracts.  This is different, of course, from the legally-required employment posters and notices available from, e.g., the Oregon Bureau of Labor and Industries ("BOLI"). 

Having handled countless employment law matters on the employee side, I can say that the employer who has taken the trouble to promulgate an employee handbook and some written policies is usually viewed more favorably than the employer who has not done so.  This is to say, the employer's defense will likely be stronger if policies and procedures are in place.  This is particularly true in the areas of discrimination and harassment, due to what is known as the Faragher-Ellerth defense, which provides, in very general terms, that an employer who has not taken adverse action against an employee (such as termination or demotion) and who has promulgated reasonable written policies and procedures for redress of harassment issues, will have a defense if the employee has failed to take advantage of those policies and procedures.   

Of course, once you establish policies, whether stand-alone or in a handbook, it is important to follow those policies, even though you will inevitably include a clause to the effect that the employer is free to change the policies prospectively at any time.  I occasionally see handbook templates that I have been obtained online which include a host of promises and statements that I review very carefully with the small business client to ensure the client understands exactly what representations it is making.  

I also draft employment contracts on a routine basis, including the entire range of restrictive covenants, noncompetition, nonsolicitation, and nondisclosure agreements.  The small business will not necessarily need or want written employment contracts for many of its employees, but there is rarely a downside to confidentiality and nondisclosure provisions.  Also, keep in mind that even an offer letter can be construed as creating contractual obligations.  As with handbooks and other policy statements, it's important to work with an Oregon small business employment attorney for review and assistance of employment contracts and even offer letters.  

7.  Common Law Claims

Every employer, regardless of size, is potentially liable for common law tort claims such as fraud, invasion of privacy, assault and batter, defamation, negligent supervision, or intentional interference with economic relations ("IIER").  These claims do occasionally arise in the employment setting, including for Oregon small businesses.  

8.  Hiring Issues

Civil rights / anti-discrimination laws apply to job applicants as well as to employees.  Discrimination in hiring on the grounds of any protected class membership is unlawful.  Failure to hire cases are certainly not as common as claims relating to termination of employment, but these cases are not unprecedented, and, like any employment claims against small businesses, are an extremely unwelcome and unfortunate development.  Nonetheless, a well-managed small business should have no problem treating all job applicants equally and legally.  If an Oregon small business has any questions about these fundamental civil rights issues, the employer should seek legal advice. 

Other issues that may arise in the hiring context include but are not limited to background checks and drug testing for eligible positions.

9.  Successfully Handling Terminations

Terminations are inevitable.  Most of your workforce will likely be at-will employees.  If there is no provision or promise otherwise, e.g. in an employment contract, all Oregon employees are at will.  Theoretically, termination of an at-will employee should be relatively straightforward.  However, terminations are never easy, particularly in smaller organizations.  Sensitive issues can arise.  As an attorney who is generally on the employee side of the fence, it is suprising how often a well-intentioned employer can create problems for itself by not understanding the law around at-will employment.  It's an area of the law that is technically not complicated, but from a human standpoint, the natural tendency to soften a blow can lead to legal issues or misunderstandings.  With at-will employees, speaking the truth or saying nothing at all about the rationale for a termination is the only best practice option.  Even though an at-will employee can be terminated for no reason, when implementing that simple principle, it's often useful to talk to an Oregon employment lawyer.   

In addition to the termination itself, other related issues, such as employment references, must also be handled properly and legally.  Many employers choose to limit references to the basic information including dates of employment and last job title held.  The law does not require such sparse recommendations, but due to exposure for providing erroneous or even potentially defamatory information, many employers err on the side caution when it comes to employment references.  

Finally, with regard to terminations, separation or severance agreements are something to think about.  I can provide advance planning and preparation of separation agreements.  These agreements typically involve a payment of compensation / consideration in exchange for the employee's release of employment-related legal claims against the employer.  Severance agreements should always be in the employer toolbox, even small employers; consider, e.g., an employee who may have a mistaken belief that a wage and hour violation has occured concerning a relatively smaller sum of less than $1,000 -- if the employee seriously pursues such a claim, e.g. by sending a demand letter or retaining an attorney or contacting the Oregon Bureau of Labor and Industries ("BOLI"), the legal fees for an employment attorney to address such a claim will very quickly outstrip the amount at issue.  

10.  Payroll, Tax and Operations Issues

I mention these topics here only to emphasize that I do not handle payroll issues per se, nor do I provide tax advice or small business formation services (corporate or transactional).  Unless you happen to have in-house expertise, it's best to work with an established service provider and tax adviser to address those important issues.  Likewise, it's critically important to meet your workers compensation and unemployment insurance obligations.  I do not practice workers compensation law.  I occasionally represent employees in unemployment insurance benefit appeals; most small employers tend to have a manager or other employee represent the company in unemployment insurance proceedings if there is truly something to contest.     

There are many services for payroll and human resources support to employers.  With regard to legal advice, any advice is often better than none (the fact you are reading this article suggests you understand that, although as mentioned this article certainly is not legal advice).  But there really is no substitute for a consultation with an Oregon employment attorney with experience representing small businesses.  

11.  Conclusion

A few years ago here in Oregon, I represented an employee who has worked for a non-profit business.  On behalf of the non-profit, an attorney sent a letter of representation.  This attorney's firm boasts in its letterhead and elsewhere that the firm represents exclusively employees.  However, I found on the letterhead that I was sent the firm had changed its logo and/or had a separate letterhead that coveniently said the firm represents employees and non-profits.  Unlike that firm, I take pride in providing legal advice and representation to small business, just as I am proud of the work I do for employees.  Small businesses need competent Oregon employment law advice just as large corporations do.  Many small business owners were employees themselves not so long ago.  And, unlike many large firms who do this sort of work, I run a small business myself.  

Thanks for reading.  This article is, of course, not legal advice and you should always contact an Oregon small business employment lawyer if you have questions or issues.  I am always happy to help.