Employers must establish and maintain regular paydays. Paydays may not be more than 35 days apart or more than 35 days from the date the employee entered upon their work. Employers may not withhold or delay paychecks as a form of discipline or in exchange for the return of employer-owned items held by the employee.
- Underpayments
When the employer has been notified the employee has been underpaid and there is no dispute, the employee must be paid the undisputed underpaid wages regardless of the cause of the underpayment.
When the underpayment represents less than five percent of the employee’s gross wages, the amount may be paid on the next regular payday. If the underpayment represents more than five percent of the employee’s gross wages, the amount must be paid to the employee within three business days. ORS 652.120(5).
- Methods of payment
Payment of wages must be made in cash or by a negotiable instrument payable on demand without fee or discount at a bank or other place of business in the county where it was issued. An employee may authorize the employer to deposit wages into the employee’s account in a bank, credit union, or savings and loan within the state. ORS 652.110.
Oregon law allows employers to pay wages by direct deposit but the employee can opt out either verbally or in writing. Employers are also able to pay employees by automated teller machine card, payroll card, or other means of electronic transfer as long as the employee voluntarily agrees. The employee must be able to make an initial withdrawal of the entire amount without cost or be able to choose another means of receiving wages which does not involve any cost to the employee. ORS 652.110(5).
The agreement regarding the means of payment need not be made in writing but must be made in the language the employer principally uses to communicate with the employee. The employer may want to document the employee’s verbal consent prior to instituting a particular means of payment. ORS 652.110(6).
Employers who use the direct deposit, automated teller machine card, or payroll card method of paying wages must still provide an itemized statement and meet the deadlines applicable to final paychecks. An employer may provide the itemized statement in an electronic format if the employee expressly agrees. ORS 652.610(1)(c)(B). The final paycheck may be paid by mail, direct deposit, automated teller machine card, or payroll card with the agreement of the departing employee. ORS 652.140(4).
- Electronic wage statements
Employers that implement an electronic wage payment system still need to comply with the rules requiring that payments be accompanied by an itemized wage statement. Paper statements are required unless the employee:
- Expressly agrees to receive the statement electronically; and
- Has the ability to print or store the electronic itemized statement at the time of receipt.
- If an employee fails to submit time sheets as required, may the employer delay payment until the information is received?
No, it is the employer’s responsibility to track hours worked and to pay all employees on regular paydays. Other disciplinary measures may be taken when employees fail to meet expectations, including submission of timesheets.
- Final paychecks
If an employee quits with less than 48 hours’ notice, excluding weekends and holidays, the paycheck is due within five business days, excluding weekends and holidays, or on the next regular payday, whichever comes first. ORS 652.140(2).
Example: An employee quits without notice on Monday, one week before Labor Day. The final check must be paid by the Tuesday after Labor Day, unless a regular payday occurs before that date.
If an employee quits with notice of at least 48 hours, the final check is due on the final day of employment, unless the last day falls on a weekend or holiday. In that case, the check is due on the next business day. ORS 652.140(2)&(3); OAR 839-001-0420.
Example: An employee gives three days’ notice that Saturday will be the last day of employment. The final check is due on Monday.
Example: An employee gives two days’ notice that Friday will be the last day worked. The final check is due on Friday.
If an employee is discharged, the final paycheck is due not later than the end of the next business day. ORS 652.140(1).
Example: If an employee is discharged on Friday, the check is due on Monday by the end of the day. If an employee is discharged on Monday, the check is due by the end of the day on Tuesday.
When an employer and employee mutually agree to terminate the relationship, the check is due by the end of the following business day, as in the case of discharge. ORS 652.140(1).
When employment is related to state and county fairs, and employment terminates on weekends or holidays, the check is due by the end of the second business day after the termination. ORS 652.140(3).
Example: If the last day of the Oregon State Fair is on Labor Day Monday, all employees whose employment ends must be paid by the end of the day on Wednesday.
- My employee gave a two week notice. Our company does not allow an employee who has given notice to work the two week period, and we release the employee from work immediately. Do we have to pay the two-week notice period?
Not unless you have an established practice or policy of paying other employees for the remainder of the two-week notice period. Under Oregon’s final paycheck law, you will need to pay your employee all wages earned but unpaid by the end of the next business day after you release the employee. ORS 652.140(1).
- Our bank requires us to deposit cash into our payroll account for direct deposits three days before our regular payday. Today, no sooner had I transferred the funds, I got an email from a field supervisor saying he’s terminated an hourly employee and requesting an off-cycle final paycheck be forwarded to their branch office. I know we have a deadline here, but how are we supposed pay final wages without paying our ex-employee twice?
Ideally, your bank can do a line-item stop payment on the deposit for the ex-employee, and you can process a final check for payroll along with any additional wages due. If not, you will still need to ensure final wages are timely paid. This may mean processing the paper check even though an additional deposit will be paid to the ex-employee’s account in three days. Your field supervisor should consider requesting a promissory note or other acknowledgment from the ex-employee when the final paycheck is handed over (without making it a condition of payment). That way, you’ll have something in hand to support collection efforts if your bank cannot reverse the deposit later.
- We have an employee who resigned with two weeks’ notice. We understand that final wages will be due on the employee’s final day of employment but her final day is not our regular payday. The employee has been on direct deposit since starting with the company and she said she would prefer a deposit to an old-fashioned payroll check. In fact, she sent our payroll department a message saying that she didn’t mind waiting until the next regular payday, a week after her final work day, to receive the direct deposit. May we accept this employee’s “waiver” to process the final wage payment a week after final wages are due?
Not without some risk. Although employers may pay final wages via direct deposit if “the employee and the employer have agreed to such deposit” the statute does not specifically allow for payment of final wages by deposit after the date by which they are due. ORS 652.140(4). The employee’s waiver may not set aside her right to penalty wages that accrue for untimely payment of final wages.
With two weeks’ notice, your bank may well be able to arrange an off-cycle direct deposit for the employee’s final day of work. It’s worth an ask!
- Collective bargaining agreements
The statute allows an exception from the final paycheck requirements if the contract makes provisions for final pay. ORS 652.140(5).
Example: A union contract provides that final paychecks will be paid on the next regularly scheduled payday. Therefore, in all cases of termination, the final check is due on the next regular payday.
- Seasonal farmworkers
When employment of seasonal farmworkers terminates, wages are due immediately. Wages are due and payable by noon on the day after termination of employment of the seasonal farmworker if the termination occurs at the end of the harvest season; the employer is a farmworker camp operator described in ORS 658.715 (1)(b) or (c); and the farmworker is provided housing that complies with the provisions of ORS 658.705 to 658.850 at no cost to the worker from the termination of work until wages due are paid.
However, if a seasonal farmworker quits without giving at least 48 hours’ notice, wages are due within 48 hours or at the next scheduled payday, whichever is earlier. ORS 652.145
- Payment in case of dispute
If a dispute arises over the amount of wages due an employee, the employer must pay all money the employer agrees is due, without setting any conditions upon payment. The employee retains the right to claim any wages and remedies the employee feels entitled to through a union grievance (if applicable), by filing an action with the court, or by filing a claim with the Bureau of Labor and Industries. ORS 652.160.
- When a commission-paid employee is discharged with sales income yet to be received by our company, when is the final paycheck due?
The check is due by the end of the next business day. However, if the commission agreement expressly provides that commissions on sales are not "earned" by the employee until payment is received by the company, the company must pay all earnings not related to a commission to the terminated employee, but the employer may exclude commissions on sales that have not yet been earned. These may be paid at a later date when the amounts due are known.
- Civil penalty for withholding final wages
If an employer willfully fails to pay any part of an employee’s final wages when due, then, as a penalty, the compensation of the employee shall continue from the appropriate due date, at the same regular hourly rate, for eight hours per day, until the wages are paid or until an action for collection is filed. The maximum penalty is for 30 days compensation. ORS 652.150.
The civil penalty may not exceed 100% of the unpaid wages if the employer pays the wages due within twelve days after written notice of nonpayment is sent to the employer provided the employer has not willfully violated the final pay provisions of the law in the preceding year. The penalty may also not exceed 100% of the unpaid wages if the employee fails to provide written notice of non-payment of wages to the employer.
- Paying employee wages
Oregon’s wage and hour law requires every employer to pay employees all wages due and owing on a regular payday. ORS 652.120(1). As with everything, methods for paying wages have evolved over time. Payment by check and even cash remains a standard practice for some employers (though we’d recommend getting a signed receipt whenever paying wages in cash). In a “paperless” world, however, employers are increasingly moving toward electronic methods for paying employees’ wages.
- Direct deposit
Oregon law permits the payment of wages (without any charge or discount to the employee) by direct deposit. ORS 652.110(3). The caveat here is that employees have the right to request payment by check, and that request can be verbal or in writing.
Switching to direct deposit has saved us a tremendous amount of time and we’re wondering whether we can make payment by direct deposit a condition of taking the job.
We couldn’t recommend it. Although the anti-retaliation provisions of ORS 652 and ORS 653 would not apply to an employer who opts not to hire or to terminate employees because they invoke the right to receive a paper check, that does not mean another legal theory or tort claim couldn’t be filed. In addition, you may miss out on a quality employee who is credit-challenged or uncomfortable having their wages directly deposited.
- Pay cards
Employers may also pay wages through other means like an automated teller machine (ATM) card or a payroll card. The conditions on these types of electronic transfers are a bit more restrictive:
- An employer and an employee must agree to this method of wage payment;
- The employee must have the ability to make an initial, full withdrawal of the net wages due without any cost to the employee; and
- The employee must be able to choose a different means of payment that involves no cost to the employee.
An agreement to pay wages in this way must be in the language the employer typically uses to communicate with the employee and may be revoked in writing. (The agreement is revoked 30 days after the employer received notice – 10 days from a written or verbal notice by a seasonal farmworker - unless otherwise agreed upon.) ORS 652.110(7).
Note that payment by ATM may require special arrangements to ensure an employee can make a full initial withdrawal of the net wages due. Almost all automatic teller machines carry only $20 bills and require withdrawals be made in multiples of $20. Since net wages rarely divide up so neatly, the employer may need to ensure employees have the option to present their card at a teller window to withdraw the full net amount - without incurring a fee.
- Electronic wage statements
Employers that implement an electronic wage payment system still need to comply with the rules requiring that payments be accompanied by an itemized wage statement. Paper statements are required unless the employee:
- Expressly agrees to receive the statement electronically; and
- Has the ability to print or store the electronic itemized statement at the time of receipt.