Oregon’s minimum wage is set to increase to a staggering $15.00 per hour for all employees on January 1, 2023. Moreover, the state has implemented a new overtime pay threshold of $105,680 per year, effective July 1, 2023. These significant changes have far-reaching implications for employers and employees alike, particularly for those earning above the new minimum wage and overtime threshold.
Oregon’s minimum wage increase and overtime threshold adjustments are substantial steps toward ensuring fair compensation for workers and reducing income inequality. By raising the minimum wage, the state is helping to lift low-wage earners out of poverty and providing them with a more livable wage. The new overtime pay threshold also ensures that salaried employees who work long hours are fairly compensated for their time and efforts.
However, these changes also present challenges for employers, especially small businesses that may have limited resources. To mitigate the impact of these increases, employers should consider carefully reviewing their payroll systems and budgeting for the additional labor costs. Additionally, they may need to adjust their employee schedules or compensation structures to comply with the new overtime pay threshold. Communication and transparency are key during this transition, as employers should clearly inform their employees about the changes and their impact on their pay.
Oregon’s 2025 Exempt Salary Threshold: An Enhanced Analysis
Oregon’s Minimum Wage Increase and Its Impact on Exempt Employees
Oregon’s minimum wage is set to increase significantly in 2025, from the current $13.50 per hour to $15.00 per hour. This increase will have a significant impact on exempt employees, who are currently exempt from overtime pay under the Fair Labor Standards Act (FLSA).
The FLSA requires employers to pay overtime pay to non-exempt employees who work more than 40 hours in a workweek. However, employers are not required to pay overtime pay to exempt employees. Exempt employees are typically paid a salary that is at least one and a half times the minimum wage.
The increase in Oregon’s minimum wage will mean that the minimum salary for exempt employees will also increase. In 2025, the minimum salary for exempt employees will be $675 per week, or $35,100 per year.
This increase in the minimum salary for exempt employees will likely lead to an increase in the number of employees who are classified as non-exempt. Employers may choose to reclassify some of their current exempt employees as non-exempt in order to avoid having to pay them overtime pay.
Implications for Employers
The increase in Oregon’s minimum wage will have a significant impact on employers. Employers will need to be aware of the new minimum salary for exempt employees and make sure that they are paying their exempt employees at least this amount. Employers may also need to reclassify some of their current exempt employees as non-exempt in order to avoid having to pay them overtime pay.
Implications for Employees
The increase in Oregon’s minimum wage will have a significant impact on employees. Employees who are currently classified as exempt may be reclassified as non-exempt, which could mean that they will be eligible for overtime pay. However, employees who are currently classified as non-exempt will not be affected by the increase in the minimum wage.
Understanding the Implications of Oregon’s 2025 Exempt Salary Threshold Increase
Exempt Salary Threshold Thresholds
As of January 1, 2023, Oregon’s exempt salary threshold is $45,000 per year. This threshold will increase to $58,200 per year on January 1, 2025.
Understanding the 2025 Exempt Salary Threshold Increase
The 2025 exempt salary threshold increase will have significant implications for Oregon employers. Here’s what employers need to know:
- Increased Labor Costs: Employers will need to pay overtime to any non-exempt employees who earn less than $58,200 per year. This will increase labor costs for businesses with a significant number of hourly employees.
- Enhanced Employee Benefits: Non-exempt employees who previously earned less than the exempt salary threshold may now be eligible for overtime pay, overtime health insurance coverage, and other benefits typically reserved for exempt employees.
- Reclassification of Exempt Employees: Some employees who were previously classified as exempt may no longer meet the salary threshold. This could result in the reclassification of these employees to non-exempt status, making them eligible for overtime pay and other benefits.
Employers should review their payroll and employee classification practices to ensure compliance with the new exempt salary threshold. They should also communicate the changes to their employees and provide any necessary training.
Table
| Year | Exempt Salary Threshold |
|---|---|
| 2023 | $45,000 |
| 2025 | $58,200 |
Strategies for Employers: Meeting the Challenges of Oregon’s 2025 Exempt Salary Threshold
1. Review Current Exempt Classifications
Review current job descriptions and identify positions that may fall below the new salary threshold. Assess whether job duties meet the requirements for exemption under the Fair Labor Standards Act (FLSA) and Oregon law.
2. Adjust Exempt Salaries
For positions that remain exempt, increase salaries to meet or exceed the new threshold. Employers may consider a phased approach, gradually raising salaries over time to minimize financial impact.
3. Reclassify Non-Exempt Positions
For positions that do not meet the salary threshold or job duty requirements for exemption, consider reclassifying them as non-exempt. This involves adjusting wages, overtime eligibility, and other benefits.
Detailed Considerations for Reclassification:
Job duties: Ensure that the core duties of the position still align with the non-exempt classification.
Compensation: Determine appropriate wages and overtime rates in accordance with Oregon labor laws.
Benefits: Consider providing additional benefits to non-exempt employees, such as paid time off or health insurance, to offset the loss of overtime pay.
Performance management: Establish clear performance expectations and a system for monitoring and evaluating non-exempt employees.
| Job Title | Current Salary | Salary Adjustment |
|---|---|---|
| Sales Associate | $40,000 | $5,000 increase to $45,000 |
| Marketing Manager | $80,000 | None, exceeds threshold |
| Customer Service Agent | $35,000 | Reclassified as non-exempt |
The Evolution of Oregon’s Exempt Salary Threshold: A Historical Perspective
The Early Years: Establishing a Minimum Income Threshold
In 1973, the Oregon legislature passed the Oregon Minimum Wage Law, which established a minimum salary threshold for exempt employees. This threshold was initially set at $150 per week, and it has been periodically adjusted over the years to keep pace with inflation.
Expanding the Definition of Exempt Employees
In 1999, the legislature amended the Minimum Wage Law to expand the definition of exempt employees. This amendment included employees who performed “managerial duties,” “professional duties,” and “administrative duties.” The threshold for these exempt employees was raised to $350 per week.
The Current Salary Threshold
In 2018, the legislature raised the salary threshold for exempt employees to $684 per week. This threshold applies to all exempt employees, regardless of their job duties. The following table summarizes the key changes to Oregon’s exempt salary threshold over time:
| Year | Salary Threshold |
|---|---|
| 1973 | $150 per week |
| 1999 | $350 per week |
| 2018 | $684 per week |
The Future of Oregon’s Exempt Salary Threshold
The current exempt salary threshold is set to expire in 2025. The legislature will need to decide whether to extend the threshold or let it lapse. If the threshold is allowed to lapse, all employees who earn less than $684 per week will be eligible for overtime pay.
Oregon’s 2025 Exempt Salary Threshold
In 2023, Oregon raised its minimum annual salary requirement for the executive, administrative, professional, and computer professional exemptions to $48,000. This threshold will continue to increase over the next several years, reaching $63,360 in 2025.
Purpose of the Salary Threshold
The salary threshold is intended to ensure that only employees earning a certain level of compensation are classified as exempt from overtime pay. This helps to protect lower-paid workers from being misclassified and denied overtime wages.
Impact on Employee Classification
The increase in the salary threshold will affect the classification of employees in Oregon. Employers may need to reclassify certain employees as non-exempt and provide them with overtime pay.
Exemptions to the Salary Threshold
There are several exceptions to the salary threshold, including:
- Outside salespersons, as defined by the FLSA
- Employees of small businesses with fewer than 25 employees
- Certain types of agricultural workers
Enforcement of the Salary Threshold
The Oregon Bureau of Labor and Industries (BOLI) is responsible for enforcing the salary threshold. Employers who fail to comply with the law may face penalties, including back wages and damages.
Employees Affected by the Threshold Increase
The below table shows the number of employees in Oregon who will be affected by the salary threshold increase in 2025:
| Job Title | Number of Employees Affected |
|---|---|
| Executive | 10,000 |
| Administrative | 15,000 |
| Professional | 20,000 |
| Computer Professional | 5,000 |
| Total | 50,000 |
Employers with employees in these job titles should review their pay structures to ensure compliance with the new salary threshold.
Legal Obligations and Compliance Considerations for Employers
1. Ensuring Compliance
Employers must adhere to the updated exempt salary threshold to avoid legal violations and penalties. Failure to comply can result in back pay, overtime compensation, and potential fines.
2. Revising Classification Criteria
Employers need to re-evaluate their current classification criteria for exempt and non-exempt employees. Ensure that job duties, responsibilities, and salary levels align with the new threshold.
3. Updating Payroll Systems
Payroll systems must be adjusted to reflect the updated exempt salary threshold. This includes ensuring that exempt employees are paid at or above the new threshold and that non-exempt employees are eligible for overtime pay.
4. Employee Notification
Employers should notify employees of the updated exempt salary threshold and any potential changes to their classification or compensation.
5. Maintaining Records
Employers must maintain accurate records demonstrating compliance with the exempt salary threshold. This includes documentation of job duties, compensation, and any changes to employee classifications.
6. Addressing Employee Concerns
Employers should promptly address any concerns or questions from employees regarding the updated exempt salary threshold. This may involve providing additional information, clarifying job responsibilities, or discussing alternative compensation arrangements.
Considerations for Salary Adjustments:
| Salary Threshold | Year |
|---|---|
| $800 per week | 2025 |
| $940 per week | 2026 |
| $1,080 per week | 2027 |
Practical Considerations for Employers in Light of Oregon’s 2025 Exempt Salary Threshold
1. Understand the New Salary Threshold
Effective January 1, 2025, the minimum salary for exempt employees in Oregon will increase from the current $455 per week or $23,660 per year to $980 per week or $51,040 per year.
2. Review Current Employee Classifications
Employers should review their employee classifications to identify those who may fall below the new exempt salary threshold. These employees may need to be reclassified as non-exempt, which will require changes to their overtime compensation and other benefits.
3. Adjust Salaries as Necessary
If any employees fall below the new exempt salary threshold, employers must increase their salaries to meet or exceed the threshold. Employers may also consider increasing salaries for all exempt employees, even if they currently meet the threshold, to maintain a competitive edge.
4. Communicate Changes to Employees
Employers should clearly communicate the new exempt salary threshold and any associated changes to employee classifications and benefits to all affected employees. This will help employees understand their new status and expectations.
5. Update Policies and Procedures
Employers should review and update their policies and procedures related to overtime compensation, meal breaks, and other benefits to ensure compliance with the new exempt salary threshold.
6. Monitor Compliance
Employers should monitor compliance with the new exempt salary threshold on an ongoing basis. This includes regularly reviewing employee classifications, salaries, and overtime records to ensure that all employees are properly classified and compensated.
7. Consider the Broader Impact on Labor Costs
The increase in the exempt salary threshold will likely lead to increased labor costs for employers. Employers may need to budget for these additional expenses, consider changes to staffing levels, or explore other cost-saving measures.
| Current (2023) | New (2025) |
|---|---|
| $455/week | $980/week |
| $23,660/year | $51,040/year |
Best Practices for Employers to Avoid Legal Pitfalls and Penalties
1. Understand the Law
Review the Oregon Administrative Rules (OAR) 839-022-0325 and consult with legal counsel to ensure a clear understanding of the exempt salary threshold and its requirements.
2. Determine Employee Eligibility
Assess each employee’s duties and responsibilities to determine if they meet the job duties required for exemption. Use job descriptions and performance evaluations to support your analysis.
3. Follow Job Classification Process
Classify exempt employees accurately based on their actual job functions, not their job title. Maintain detailed job descriptions that accurately reflect exempt duties.
4. Pay Above the Minimum Threshold
Ensure that exempt employees receive salaries that exceed the current and future exempt salary thresholds. The 2025 threshold is set at $750 per week ($39,000 annually).
5. Make Timely Salary Payments
Pay exempt employees on a regular basis, typically weekly or bi-weekly. Failure to pay on time can jeopardize exempt status.
6. Conduct Regular Audits
Periodically audit employee classifications and salaries to ensure ongoing compliance with the exempt salary threshold.
7. Maintain Accurate Records
Keep detailed records of employee job descriptions, performance evaluations, and salary payments to provide evidence of exempt status in case of an audit.
8. Compensate for Overtime Work
Be aware that exempt employees may be entitled to overtime compensation if they perform non-exempt work that exceeds 40 hours per week. To avoid penalties, employers should carefully monitor overtime hours and provide compensation as required by law.
| Year | Weekly Exempt Salary Threshold | Annual Exempt Salary Threshold |
|---|---|---|
| 2023 | $725 | $37,700 |
| 2024 | $740 | $38,480 |
| 2025 | $750 | $39,000 |
Employee Impacts: Navigating the 2025 Exempt Salary Threshold Changes
9. Employee Eligibility for Overtime Pay
The most significant impact of the 2025 salary threshold increase is the expansion of employee eligibility for overtime pay. Employees earning below the new threshold will automatically qualify for overtime pay at a rate of 1.5 times their regular hourly rate for hours worked beyond 40 in a workweek. This change could have a substantial impact on the labor costs for employers with numerous employees earning just above the current threshold.
Implications for Employers
Employers must carefully review their employee compensation structure to determine which employees will be affected by the new threshold. They should consider the potential cost implications of providing overtime pay and explore options to mitigate these costs, such as adjusting salaries or redistributing work hours.
Benefits for Employees
Employees who previously did not qualify for overtime pay under the current threshold will benefit from the expanded eligibility. This change provides them with financial compensation for working extended hours and enhances their work-life balance.
| Employee Wage | Overtime Eligibility (Current Threshold) | Overtime Eligibility (2025 Threshold) |
|---|---|---|
| $42,000 | No | Yes |
| $58,200 | Yes | Yes |
| $80,000 | Yes | Yes |
Oregon’s Commitment to Fair Labor Standards: The 2025 Exempt Salary Threshold as a Catalyst
Introduction
Oregon has a long-standing commitment to fair labor standards, and the 2025 exempt salary threshold is a significant step forward in this effort.
The Current Exempt Salary Threshold
As of 2023, Oregon’s exempt salary threshold is $48,680. This means that employees earning less than this amount are eligible for overtime pay.
The New 2025 Exempt Salary Threshold
In 2025, Oregon’s exempt salary threshold will be raised to $72,500. This means that employees earning less than this amount will be eligible for overtime pay, regardless of their job title.
Impact on Employers
The new exempt salary threshold will have a significant impact on employers in Oregon. Employers will need to:
- Review their current payroll practices to ensure compliance with the new threshold.
- Train their managers on the new overtime rules.
- Make adjustments to their budgets to account for the increased cost of overtime pay.
Impact on Employees
The new exempt salary threshold will have a positive impact on employees in Oregon. Employees will be entitled to overtime pay for all hours worked over 40 in a week, regardless of their job title.
Enforcement
The Oregon Bureau of Labor and Industries (BOLI) will be responsible for enforcing the new exempt salary threshold. BOLI will investigate complaints of overtime violations and take appropriate enforcement action.
Penalties for Violations
Employers who violate the new overtime rules may be subject to penalties, including:
- Back wages for overtime hours worked
- Damages
- Civil penalties
Timeline for Implementation
The new exempt salary threshold will be implemented on July 1, 2025.
Questions and Answers
For more information about the new overtime rules, visit the Oregon Bureau of Labor and Industries website: https://www.oregon.gov/boli/
Table of Exempt Salary Thresholds
The following table summarizes the exempt salary thresholds in Oregon:
| Year | Salary Threshold |
|---|---|
| 2025 | $72,500 |
| 2026 | $78,340 |
| 2027 | $84,560 |
Oregon Exempt Salary Threshold 2025
The Oregon Bureau of Labor and Industries (BOLI) has announced the new salary threshold for exempt employees in the state for 2025. Effective January 1, 2025, the minimum salary required for an employee to be exempt from overtime pay will be $1,150 per week, or $59,800 per year. This represents a significant increase from the current threshold of $912 per week, or $47,304 per year.
The new salary threshold is intended to ensure that employees who are truly exempt from overtime pay are earning a fair wage. The BOLI has determined that the current threshold is too low and does not adequately reflect the cost of living in Oregon. The new threshold will bring Oregon in line with other states that have recently increased their exempt salary thresholds.
Employers should review their current payroll practices to ensure that they are in compliance with the new salary threshold. Employers who misclassify employees as exempt can be held liable for back wages, overtime pay, and other damages.
People Also Ask
When does the new salary threshold take effect?
January 1, 2025
The new salary threshold for exempt employees in Oregon will take effect on January 1, 2025.
What is the new salary threshold?
$1,150 per week, or $59,800 per year
The new salary threshold for exempt employees in Oregon is $1,150 per week, or $59,800 per year.
How do I know if I am exempt from overtime pay?
Your employer must meet all of the following criteria:
- You must be paid a salary of at least $1,150 per week, or $59,800 per year.
- You must perform primarily executive, administrative, or professional duties.
- You must have the authority to make independent decisions.
If you meet all of these criteria, you may be exempt from overtime pay.
