How the change to Oregon overtime law will impact your 2018 hiring plan

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On August 8, Oregon Governor Kate Brown signed additional amendments to Oregon overtime law which go into effect January 1, 2018. From a headcount planning perspective, the most significant change introduced is the limitation on hours worked per week.

Below, we summarize the new law, analyze how this may impact your hiring needs, and discuss solution alternatives.

Who does this change affect?

Any Oregon employer engaged in ‘manufacturing’, which is defined as “process of using machinery to transform materials, substances or components into new products.”

What is the hours per week limit?

Employees may work a maximum of 55 hours per week, unless the employee explicitly requests or consents in writing to work up to 60 hours.

Are there any exceptions?

If a business processes perishable products, It is possible to be granted an “undue hardship period exemption”. This exemption must be explicitly granted and would allow an employee, given written consent, to work up to 84 hours per week over a 4 week period, and up to 80 hours per week throughout the extent of the company’s hardship period.

How will it be enforced?

Employees may file a complaint with BOLI, and would be due damages, while BOLI may assess a penalty of up to $3,000 per violation. This can get expensive quickly!

How will this change my hiring forecasts?

In order to determine the impact on your business & hiring forecasts, first, you’ll need to consider two key inputs:

  1. Average hours per week worked by affected employees during peak season (historically)
  2. Size of peak season workforce

Let’s say that, in 2017, you had a peak season workforce of 200 and that, during this period, the average employee worked 60 hours per week. This would mean that, at peak, your labor force output looked like this:

200 workers * 60 hours/week/worker = 12,000 hours/week output

In 2018, to cover that same output with a  maximum of 55 hours per week, you’ll need:

12,000 hours/week output  = # of workers needed * 55 hours/week/worker

# of workers needed = 218

Sorry if this feels like high school algebra class all over again, but that’s a nearly  10% increase in peak season labor force & 18 additional hires required.  For larger companies or those who have leveraged more than 60 hours/week per employee in the past, the effect will be even greater.

What are my options for filling this incremental headcount need?

The unemployment rate in the Portland area is hovering below 4%, and statewide it isn’t much higher. Clearly, with such a small pool to draw from, finding even 1 additional qualified hire in 2018 can sound like a daunting task.

Fortunately, there are a few third party vendors who can work with your in-house team to help fill the hiring gap:

  1. Indeed: Job board

Pros:

Broad visibility of job posts

Cons:

You pay for clicks on your ad, which may or may not be valuable

Operational overhead to manage resume volume

     2. Express Employment Professionals: Temporary staffing agency

Pros:

Can ramp up & down as necessary due to temporary status

Cons:

Approximately 50% markup on every hour worked can get expensive quickly

Temporary status reduces quality of relationship & turnover can impact full-time employee morale

3. WorkStep: On-demand direct hire solution

Pros:

Access to consistent volume of qualified candidates

Only pay for hires who stay at company (quality-based pricing)

Cons:

Direct hire only model creates an overhead to cycling through headcount

Perhaps we’re biased, but it seems that there are two logical choices available. If an employer is willing to pay a premium to cycle through workers at a high velocity (and aren’t worried about what that does to full-time employee morale), Express or another staffing agency could likely help serve the necessary incremental volume.  

If, on the other hand, an employer prefers to direct employ when feasible, WorkStep is the perfect partner to help solve the staffing challenges associated with the new overtime law changes.

Learn more about WorkStep here: WorkStep for Employers

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