Oregon Minimum Wage Increase Effective July 1, 2016 Frequently Asked Questions and Resources for Nonprofits Download copy of tip sheet
On March 2, 2016, Oregon Governor Kate Brown signed into law the first geographically-tiered minimum wage increase in the country. This law calls for three sets of incremental increases in the state minimum wage between July 1, 2016 and June 30, 2023, after which the rates will be annually adjusted for inflation. The tiered approach is intended to address the different costs of living across the state. Employees and employers in Portland’s Urban Growth Boundary (UGB) will see the largest annual increases, while employers in non urban counties will see the smallest.
NAO is dedicated to keeping nonprofits up to date on how this law will affect them and their employees. Unfortunately, because the law is new and largely unprecedented, there is much that has not yet been decided until the rulemaking phase is completed. We want to provide this update to give you the latest information that is available. We will keep you updated as more information and resources become available.
What minimum wage increase rate will apply to my location?
|July 2023**||$1 less than the standard minimum wage||Adjusted annually based on the increase, if any, to the US City average Consumer Price Index for All Urban Consumers||$1.25 more than standard minimum wage|
*The county classification system used in the law and by BOLI designates those counties that fall within the "standard rate" for minimum wage and those that have higher and lower rates due to costs of living in those areas.
**Starting in 2023, the rates will be annually adjusted for inflation.
Nonurban Counties (aka “frontier counties”, “low density counties”) include: Baker, Coos, Crook, Curry, Douglas, Gilliam, Grant, Harney, Jefferson, Klamath, Lake, Malheur, Morrow, Sherman, Umatilla, Union, Wallow, and Wheeler
Standard Counties (aka “nonrural counties”, “medium density counties”) include: Benton, Clatsop, Columbia, Deschutes, Hood River, Jackson, Josephine, Lane, Lincoln, Linn, Marion, Polk, Tillamook, Wasco, Yamhill, and the portions of Multnomah, Clackamas, and Washington counties located outside of Portland’s Urban Growth Boundary.
Portland UGB (aka “Portland Metro”, “high density counties”) include: the portions of Multnomah, Clackamas, and Washington counties located inside Portland’s Urban Growth Boundary (the urban growth boundary of a metropolitan service district organized under ORS chapter 268).
- What we know: The annual breakdown of the rate increases from 2016 until 2022 is as follows1, with each increase taking place on July 1:
- What we do not know: The language of the law indicates that the specific rate will be based on the “employer’s location”2, but it does not explain how that location is determined.
What if my nonprofit has multiple locations?
- What we know: The state’s labor commissioner will develop guidelines to answer this question.3 At present, we believe that the intent behind the law is to pay employees based on where they work. According to the Portland Business Journal, employers with employees in different areas of the state should be prepared to pay different minimum wages based on their employees’ locations. Employers can also elect to offer the higher minimum wage for all locations.4
- What we do not know: It is uncertain how the law will be applied to this particular issue. For one thing, the commissioner will have to consider employees who may work in multiple areas with different rates. Organizations who have employees spread across different zones or who travel to different zones regularly should continue to pay close attention as the law unfolds.4 The Bureau of Labor and Industries (BOLI) intends to hold a rulemaking hearing and will post proposed rules here. Once the rules are posed, BOLI will take public comment through April 29, 2016.5
Do my employee benefits count towards the calculation of the minimum wage value?
- What we know: Employer paid benefits (health, dental and eye insurance; retirement distributions, cash fringe, etc.) do not count towards the calculation of the minimum wage value.
- What we do not know: Can that change in the future? We hope so! NAO has been advocating on behalf of nonprofits across the state to give important feedback to lawmakers on how this law will affect nonprofits. Benefits are a crucial component of the compensation package to employees and should be counted as part of the total value of employee compensation. Many nonprofits provide these benefits and others find it difficult to provide these for their employees. NAO believes that employer paid benefits may be one of the first places that nonprofit employers look for cost cutting to make up changes in new staffing costs. With the rising costs of health care, it would be counter-intuitive to have someone’s salary rise by 50 cents, but their costs for health care be an even greater burden on their weekly paycheck. NAO will continue to work with Oregon’s nonprofits and policy makers to include benefits as part of the calculation as this law goes through future revisions.
What can I do to prepare?
- Begin thinking about how this may alter your organization’s compensation as a whole. An increase in the minimum wage can reduce the competiveness of other positions’ compensation. This is commonly known as wage compression. For example, employees already above the new minimum wage might feel that they deserve a raise as well, especially if coworkers previously paid less than them are suddenly making comparable wages. Do you need to or would you be able to raise their wages as well? If not, consider how best to communicate your limitations or compensation strategy.
- If you already offer starting wages above the minimum wage to entice top talent, you may need to adjust these rates in order to keep the pay competitive.
- Keep an eye out for the new minimum wage poster. You’ll need to obtain and post it, even if your pay already meets the new minimum wage.
When will we know more?
- BOLI intends to hold a rulemaking hearing and will post proposed rules here. Once the rules are posed, BOLI will take public comment through April 29, 2016.
Where can I get help?
- Want to learn more about the minimum wage increase? Call our friends at Mammoth HR or visit them at MammothHR.com. Contact: Kym Whitten Phone: 503-332-0551 If you are an NAO member, click here to sign up for Mammoth HR services for a great discount.
- Ask BOLI your questions directly: Phone: 971-673-0824 Email: firstname.lastname@example.org
- Get legal advice: Contact your attorney, our friends at Miller Nash, Graham & Dunn Employment Attorneys, or contact the NAO Helpline for a list of additional legal professionals.
- Contact NAO: Helpline@nonprofitoregon.org and continue to look for new updates, webinars and trainings on this topic from NAO.
- Oregon Minimum Wage Rate Summary, BOLI: https://www.oregon.gov/boli/WHD/OMW/Pages/Minimum-Wage-Rate-Summary.aspx
- Senate Bill 1532, 78th Oregon Legislative Assembly – 2016 Regular Session: https://olis.leg.state.or.us/liz/2016R1/Downloads/MeasureDocument/SB1532
- Oregon Adopts Tiered Minimum Wage Increase Effective July 1, 2016, Davis Wright Tremaine LLP: http://www.dwt.com/Oregon-Adopts-Tiered-Minimum-Wage-Increase-Effective-...
- Traps for the Unwary in Oregon’s New Minimum Wage Law, Portland Business Journal: http://www.bizjournals.com/portland/blog/2016/03/3-traps-for-the-unwary-...
- “Show Me the Money!” New Oregon Laws Require Higher Pay and More Transparency, Miller Nash, Graham & Dunn LLP, Attorneys At Law: http://www.millernash.com/show-me-the-money--new-oregon-laws-require-hig...
Developed in Partnership with Mammoth HR
Information provided by NAO is for general purposes only and should not be construed as legal advice or a substitute for legal advice. If you wish to be certain about the proper course of action for your organization, please consult a licensed attorney.