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Daily Overtime and Maximum Hours Restrictions in Manufacturing Establishments and Canneries
Manufacturing Establishments
 
Employees “employed in” mills, factories, and manufacturing establishments are subject to maximum work hour provisions and a different calculation of overtime than the majority of non-exempt employees performing work in other occupations and industries. Such employees may work no more than 13 hours in any 24-hour period, and any hours worked over 10 in a day and 40 in a workweek are overtime hours.
 
Although in the past BOLI has interpreted the law to require the payment of overtime to manufacturing employees for BOTH daily and weekly overtime hours worked, legislation enacted in 2017 that became effective August 8, 2017 amended the law to require manufacturing employers to calculate both daily and weekly overtime earned and pay the greater of the two. ORS 652.020(1)(b) and (c). All overtime must be paid at time and one-half the employee’s regular rate.
 
A “manufacturing establishment” means an establishment engaged in manufacturing. “Manufacturing” means the process of using machinery to transform materials, substances or components into new products.
 
The maximum hours restrictions and daily overtime requirements do not apply to employees of sawmills, planing mills, shingle mills, and logging camps unless and until similar laws have been enacted in California, Washington, and Idaho. ORS 652.030; OAR 839-001-0127.
 
In addition, the law provides several exemptions for individuals, including:
  • Security guards,
  • Boiler operators,
  • Employees who, as one of their regular duties, are engaged in the transportation of other employees to and from work,
  • Employees whose primary duty is that of making necessary repairs. This includes employees conducting maintenance on buildings, equipment or machinery,
  • Employees whose primary duty is that of supervising and directing work. This includes supervisors, managers, and persons who are temporarily acting in these capacities in the absence of supervisory employees,
  • Employees whose primary duty is the loading and removal of finished forest products, and,
  • Employees engaged in emergency work in which life or property is in imminent danger. (When the normal production process is interrupted by a breakdown of machinery or unexpected absences of employees, life and property are not normally threatened with harm or destruction. For this reason, the exemption is not applicable to normal routine operational occurrences.
A valid workplace collective bargaining agreement may set aside the provisions of ORS 652.020 if the employee is a party to the collective bargaining agreement, the agreement is in effect at the work site, the agreement contains a limitation on the employees required hours of work, and if the agreement contains a provision for the payment of overtime hours of work.
 
Additional amendments to ORS 652.020 that go into effect January 1, 2018 will require an employer to provide 10 hours of rest between the end and start of shifts and limit the number of weekly hours employees in manufacturing establishments may work to a maximum of 55 per workweek, unless the employee requests or consents in writing to work up to 60 hours in one workweek.
 
An employer may be eligible for an “undue hardship” exemption to these maximum hours restrictions if the employer, in the ordinary course of business, processes perishable products, in which case the employer may permit an employee to work up to 84 hours per workweek for four workweeks; and up to 80 hours per workweek for the remainder of the undue hardship period. Perishable products are defined as any product that may spoil, deteriorate or undergo other material changes that render it unsuitable for the use for which it was produced and includes agricultural crops, meat and fish. Employers may be eligible for more than one undue hardship period in a calendar year, however, 21 workweeks in a calendar year is the maximum number of workweeks that an employer may invoke this provision.
 
In order to claim an undue hardship, the employer must provide notice to BOLI and obtain written consent from each employee that the employer intends to schedule to work in excess of 55 hours in the workweek in a form prescribed by BOLI. 
 
Canneries
 
Employees “employed in” canneries, driers and packing plants not located on farms which primarily process products produced on the farm are also required to be paid for any hours worked over 10 in a day or 40 hours in a workweek at one and one-half times the employee’s regular rate of pay. Like the overtime requirements for manufacturing employers, ORS 653.265 was also amended by HB 3458 effective August 8, 2017 to require only the greater amount of daily or weekly overtime earned by an employee to be paid.
 
Although there is no daily limit to the number of hours employees may work in canneries, driers and packing plants, effective January 1, 2018, such employees may not work more than 55 hours in one workweek unless the employee requests or consents in writing to work more than 55 hours, in which case the employee may be permitted to work up to 60 hours in one workweek.
 
Like manufacturing employers, employers that employ employees in canneries, driers or packing plants may be eligible for an “undue hardship” exemption to these maximum hours restrictions if the employer, in the ordinary course of business, processes perishable products, in which case the employer may permit an employee to work up to 84 hours per workweek for four workweeks; and up to 80 hours per workweek for the remainder of the undue hardship period. Perishable products are defined as any product that may spoil, deteriorate or undergo other material changes that render it unsuitable for the use for which it was produced and includes agricultural crops, meat and fish. Employers may be eligible for more than one undue hardship period in a calendar year, however, 21 workweeks in a calendar year is the maximum number of workweeks that an employer may invoke this provision.
 
In order to claim an undue hardship, the employer must provide notice to BOLI and obtain written consent from each employee that the employer intends to schedule to work in excess of 55 hours in the workweek in a form prescribed by BOLI. 
 
The clarifications and new provisions of HB 3458 do not apply to seafood processors unless the employee is working in a facility that fits the definition of manufacturing establishment under ORS 652.020
 
Q. Do I need to pay both daily and weekly overtime when manufacturing employees work in excess of the daily limit and more than 40 hours in a week?
 
A. Not as of August 8, 2017. Pursuant to House Bill 3458 enacted by the 2017 legislature, when employees who are entitled to and have worked daily overtime have also worked more than 40 hours in the workweek, the employer should calculate overtime wages earned for hours worked on both a daily basis and a weekly basis and then pay the greater of the two.
 
Example 1:
 
Day
Hours
Regular
Daily OT
Weekly OT
Monday
12
10
2
0
Tuesday
8
8
0
0
Wednesday
5
5
0
0
Thursday
5
5
0
0
Friday
11
10
1
1
Total
41
38
3
1
 
Employee's regular rate of pay is $12 per hour.
41 hours worked x $12 = $492.00
3 hours daily overtime x $6 = $18.00
1 hour weekly overtime x $6 = $6.00
 
Because the employee would receive a greater amount of overtime if the daily overtime were paid ($18.00 as opposed to $6.00), that is the amount of overtime you should pay.
 
Total amount owed = $ $510
 
Example 2:
 
Day
Hours
Regular
Daily OT
Weekly OT
Monday
13
10
3
0
Tuesday
13
10
3
0
Wednesday
10
10
0
0
Thursday
12
4
2
8
Friday
11
0
1
11
Total
59
34
9
19
 
Employee's regular rate of pay is $15 per hour.
59 hours worked x $15 = $885.00
9 hours daily overtime x $7.50 = $67.50
19 hours weekly overtime x $7.50 = $142.50
 
Because in this scenario the employee would receive a greater amount of overtime if the weekly overtime were paid ($142.50 as opposed to $67.50), that is the amount of overtime you should pay.
 
Total amount owed = $1027.50
 
Q. We have an employee who performs work on our manufacturing floor part of the week and also as a security guard two to three evenings a week. Since security duties are exempt, do we need to include that time in daily overtime computations?
 
A. It depends. The exempt status of an employee is determined by the type of work the individual performs and the location of the work performed in any one day; therefore, the exempt status of individual employees may vary from day to day. Employees performing exempt and nonexempt work are exempt from the provisions of ORS 652.020 only when they are engaged in exempt work more than 50 percent of their working time in any one day. Stated another way, if exempt duties do not constitute more than 50 percent of the work period, all hours worked that day would be included in daily overtime computations.
 
Q. Our bookkeeper and some other administrative staff work onsite – are they subject to daily overtime or maximum hours restrictions?
 
A. While the general rule applies to all employees “employed in” a manufacturing establishment, not all employees of manufacturing establishments are subject to daily overtime and maximum hours restrictions. Employees who are employed by the same employer but not employed to perform duties in a mill, factory, or manufacturing establishment are not covered by ORS 652.020 because they are not 'employed in' the establishment. In addition, employees who are employed to perform duties that do not include work in connection with production machinery in a mill, factory, or manufacturing establishment (like your administrative staff) are not covered by ORS 652.020, provided they perform their duties in a location that is physically separated from the actual production process by means of an architectural barrier.
 
Q. We operate a seasonal cannery – would my employees be subject to daily overtime?
A. Again, the answer depends. Canneries are potentially subject to more than one overtime rule:
 
Employees who work more than 10 hours per day in canneries, driers and packing plants (excluding such establishments that are located on farms and which primarily process products produced on such farms)
must be paid for any hours worked over 10 at one and one-half times their regular rate of pay under   ORS 653.265.
 
During the 2017 legislative session, ORS 653.265 was amended by House Bill 3458 to make clear that employees employed in canneries or driers or packing plants (excluding such establishments that are located on farms and primarily processing products produced on such farms) are entitled to time and a half for all hours worked over 10 hours per day and over 40 hours per week. Effective August 8, 2017, these types of employers should calculate an employee’s overtime entitlement on both a daily basis (any hours worked over 10 hours in a day) and a weekly basis (over 40 hours worked in a workweek). ORS 653.261(1). After calculating both amounts, the employer is required to pay the greater of the two amounts.
 
Agricultural employers should note that even when a cannery, drier or packing plant is located on a farm, employees must be paid daily overtime if the cannery does not primarily process products produced on such farm. In addition, employees of such plants may still be subject to state and federal overtime requirements for hours worked in excess of 40 in a workweek.
 
Finally, all employers (including cannery operators) should note that the provisions of ORS 652.020 may also require the payment of daily overtime and impose a maximum limit on hours worked each day when operations of the establishment constitute “manufacturing,” i.e., the process of using machinery to transform materials, substances or components into new products.
 
Revised August 2017.