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Oregon Supreme Court: No Private Right of Action for Missed Rest

Although the Oregon Bureau of Labor and Industries (BOLI) has promulgated regulations which require every Oregon employer to provide employees ten-minute rest periods for every segment of four hours of work,  the Oregon Supreme Court has held that a violation of BOLI's rest period regulations does not give rise to a private right of action for unpaid wages.  Gafur v. Legacy Good Samaritan Hosp. & Med. Ctr., __ P.3d __ (May 15, 2008).  While Oregon employers should remain vigilant in ensuring employees are provided mandatory rest breaks, the Supreme Court's decision all but forecloses the prospect of class action litigation based on rest period violations.

Background

Employees of hospitals owned by Legacy Health Systems brought a class action wage claim against their employer based, in part, on the employees' assertion that Legacy failed to provide them required rest periods during their work shifts.  The employees sought recovery of back wages and penalties for each rest break they claimed was unlawfully denied.  Under Oregon's wage and hour scheme, recovery on the employees' claims for unpaid wages might have entitled them to the full amount of the unpaid wages, or 10 minutes per violation, per employee, and, potentially, penalty wages equal to each employee's  hourly rate for eight hours per day for up to 30 days.

The trial court dismissed the employees' rest period claims on the grounds that BOLI's regulations did not provide for a private right of action.  However, the Oregon Court of Appeals reversed, holding that Oregon employees are entitled to "four hours of wages for three hours and fifty minutes of work," and employees who worked without a rest break could bring a claim for unpaid wages (including, potentially, penalty wages) for each missed rest period.  Gafur v. Legacy Good Samaritan Hospital, 213 Or. App. 343, 161 P.3d 319 (June 13, 2007).  The court of appeals' decision potentially could have opened the floodgates on class action wage and hour litigation in Oregon, and exposed employers to exorbitant liability.

Supreme Court's Analysis

In its May 15, 2008, opinion, the Oregon Supreme Court reversed the lower court's decision and held that no private right of action exists for missed rest breaks.  The court began with a detailed analysis of both Oregon's wage claim statute, ORS 653.055, and BOLI's regulations on conditions of employment.  The Court noted that the statute permits an employee to recover "wages to which he is entitled," and reasoned that BOLI's rest period regulation does not entitle employees to any payment of wages.  Rather, according to the Court, the rest period rules are akin to rules prescribing minimum conditions of employment that, for example, prohibit employees from lifting excessive weights, or requiring employers to provide sanitary and safe work environments with adequate lighting, ventilation, washrooms and toilet facilities.  "[T]he rest break is intended to benefit the employees' physical and mental well-being," the court stated, and "[n]othing in any of those 'condition of employment' rules suggests any intention on BOLI's part to require employers to pay additional wages in the event of their violation."

The court gave short shrift to the lower court's holding that the rest period rules entitle employees to four hours of wages for three hours and fifty minutes of work.  The Supreme Court rejected the assumption that rest breaks are not "work," and cited related regulations providing that "work" can include such things as waiting time, on-call time, and even sleeping time, in certain circumstances.  In accordance with the courts' and BOLI's general interpretations of "work," the Court found the fact that a 10-minute break is too short a period to permit an employee to use the time effectively for his or her own purpose indicates rest periods are to be considered work time.  The Court wrote:  "It follows that an employee who works four hours and takes a 10 minute rest break within that four-hour period 'works' the same amount of time (for wage and hour purposes) as an employee who works four hours and does not take a rest break.  In each circumstance, the employee is entitled to four hours pay and no more."  After Gafur, missed rest breaks will not give rise to a private right of action for unpaid wages.

Impact for Employers

The Supreme Court's decision means that employees may not pursue wage claims under Oregon's wage claim statute. While this decision limits employers' exposure to class action wage claims and potentially limits employers' liability for such personnel practices, employers should remain vigilant in ensuring compliance with BOLI's rest period rules. Employees continue to have recourse through administrative proceedings insomuch as BOLI is authorized to assess civil penalties of up to $1,000 for rest period violations. In addition, the Court's recognition that rest breaks raise matters related to employees' physical and mental well-being suggests that employees could bring rest break violations to the attention of state or federal OSHA offices, both of which have the authority to assess additional fines. Employers should be familiar with the Oregon meal and rest period requirements. Specific exceptions to the rest period rules apply in certain industries. Where appropriate, employee rest periods should be scheduled and enforced. Employees should be encouraged to take their rest periods and be afforded the opportunity to do so.