Oregon’s 79th Legislative Assembly wrapped up its 2018 session early, on March 3 (before the Constitutionally-required sine die on March 11).  The session produced few laws that will have a direct impact on employers, managers or human resource professionals.  Here are the few that made the transition into law:

HB 4154:  Makes contractor liable for unpaid wages, including benefit payments or contributions, of employee of subcontractor at any tier. Permits a joint labor management committee and certain third parties to bring action on behalf of wage claimant against contractor.  PASSED in amended form

SB 1559:  Directs state agencies to establish procedures for employees to anonymously disclose certain information.  Expands reporting channels and protection for whistleblowing by public employees.  PASSED in amended form.

It also could be of interest that some gun-related legislation was passed, and signed on March 5 by Governor Kate Brown.  That new law expands the prohibition of gun ownership to include people convicted of domestic violence against non-married intimate partners (closing the so-called “boyfriend loophole”), and blocks people convicted of misdemeanor stalking from owning a gun.

 

Thanks for staying tuned.  Watch for more posts from our employment law team!

 

Kurt Barker, Jon Napier, and Ben Eckstein

The Oregon Legislature is now halfway through its 2018 session.  This even-year session may be a short one, but its agenda is jam-packed with bills that could impact employers across the state.

Topping most news reports is HJR 203, a bill that would amend the Oregon Constitution by declaring health care is a “fundamental right.”  The bill does not specifically target employers, but critics have emphasized that its financial impacts and funding sources are unclear.  It passed in the House last week, and is headed for a work session in the Senate later this month.  If approved by the Senate, it will appear on the Nov. 2018 ballot.

Here are some other bills under consideration that will impact Oregon employers:

  • HB 4160:  Creates family and medical leave insurance program to provide employee who is eligible for coverage with portion of wages while employee is on family medical leave or military leave. The program is funded by equal contributions by employees and employers not to exceed .5% of an employee’s wages, and would allow employees to take up to 12 weeks of leave per year for specified reasons.

 

  • HB 4154:  Makes contractor liable for unpaid wages, including benefit payments or contributions, of employee of subcontractor at any tier. Permits a joint labor management committee and certain third parties to bring action on behalf of wage claimant against contractor.

 

  • HB 4105:  Imposes penalty on employers with 50+ employees that offer health insurance coverage to employees but have employees working at least 30 hours/week who receive benefits of medical assistance program. Prohibits retaliation against an employee for participating in medical assistance program.

 

  • HB 4021:  Allows certain employers to permit employees to work more than 60 hours in one workweek to cover for employee absences. (This bill relates primarily to mill, factory, and other manufacturing establishments, and their particular limits on employee hours.)

 

  • SB 1559:  Directs state agencies to establish procedure for employees to anonymously disclose certain information. Expands reporting channels and protection for whistleblowing by public employees.  (More news coverage is here.)

 

  • SB 1524:  Prohibits union security agreements between public employer and union. Allows public employees to opt out of union membership and bargain employment terms and conditions separate from collective bargaining agreement.

 

Karnopp Petersen’s employment law team will report more after the session wraps in mid-March.  Stay tuned to see if any of these bills become law!

 

Kurt Barker, Ben Eckstein

A four-year university program in Bend has and continues to be supported by the community as a critical component for the vitality of the Central Oregon region.  A four-year university program with OSU Cascades is necessary to expand access to a skilled workforce and attract living-wage businesses to locate and grow in Central Oregon.

In launching its Net Zero Initiative http://www.osucascades.edu/news/gifts-help-launch-osu-cascades-net-zero-campus-initiative , OSU Cascades demonstrates that it can provide leadership far beyond the “what” in four-year programming.  While the four-year campus location is controversial for certain citizens, the campus location also provides an opportunity to lead in the “how” of campus planning and programming.

The Net Zero Initiative would create a campus whose energy consumption, water use and waste disposal is completely offset by energy production and conservation and water and waste recycling.  A Net Zero campus http://www.osucascades.edu/4/sustainable-campus is not only about the legacy left to future generations, but also provides an opportunity for current residents to participate in and benefit from an industry innovation cluster in green energy and sustainable technologies.  It also improves the competitiveness of the university for high-quality students who can use the campus as a live laboratory.  This, in turn, benefits the skilled workforce and attractive business climate in Bend.  Importantly, the co-location of these facilities and amenities within a clustered campus is likely necessary for such a vision to become a reality.  Such co-location of facilities also demonstrates the true value of a master plan.

Although opponents to the campus assert master planning is necessary for the 10-acre site, two levels of city decision-makers have said that the 10-acre campus can move forward standing alone, without master planning and without any changes to the current zoning for that site.  However, it is likely that current zoning districts that could be applied to the 46-acre site do not contemplate siting all of the facilities necessary for a Net Zero campus.

Unlike the 10-acre site, the master planning provisions will provide an opportunity to comprehensively review the campus plan on the 46 acres, including unusual features associated with the Net Zero Initiative, ensure impacts are addressed appropriately and apply a master-planned district that can facilitate features not otherwise allowed.  In summary, OSU Cascades’ Net Zero Initiative is offering leadership that will benefit the community in a variety of ways.  It will not only ensure a responsible legacy, but will strengthen the four-year university in ways that will directly benefit the Central Oregon economy and communities and will also ensure that a robust master planning process will occur for the campus.

Last year, Oregon became one of the now 26 states to give legal status to a new classification of business entity: the benefit company.  Commonly referred to as “B Corps” (as distinguished from “C Corps” and “S Corps”), status as a benefit company under Oregon law is not limited to corporations—limited liability companies (“LLCs”) can get in on the act too.  In fact, even those “C-Corps” and “S-Corps” that take their monikers from the subchapters of the Internal Revenue Code under which their tax liability is determined can also organize themselves as benefit companies under Oregon law.  This begs the question:  what is a benefit company?

Some Background

Corporate law imposes a duty on management to look out for the best interests of the company’s shareholders.  In other words, management owes a fiduciary duty to shareholders.  In the realm of for-profit businesses, courts have generally equated shareholder “interests” with “profits.” This means that management upholds its obligations by ensuring that all actions are taken have company profits as a primary motive.  For example, in the oldie but goodie Dodge v. Ford Motor Company, Henry Ford was held to have violated this duty by employing more workers, paying them better wages and selling cars for less with the express purpose of doing good, at the expense of maximizing company profits and paying shareholder dividends.

In contrast, charitable corporations and enterprises have long been recognized as a vehicle for accomplishing social good.  These non-profit entities are by definition, however, generally prohibited from distributing profits to their members, officers, or directors.

The benefit company strikes a balance between those traditional entity structures that are either primarily concerned or fundamentally unconcerned with making money.  A benefit company must have publicly disclosed principles and goals of benefiting the community, but also may turn a profit for its owners while doing so.

Organization vs. Certification

First, some terms need to be defined.  Prior to Maryland in 2010, no state officially recognized benefit companies.  To fill this vacuum, the 501(c)(3) non-profit B Lab Company began providing certification as a “B Corporation” for an annual fee.   Akin to the more familiar LEED or Fair Trade labels, the Certified B Corporation label can offer certain marketing and branding benefits but does not have any legal force.  In fact, a company does not need to be officially organized as a benefit company to qualify for certification.  B Lab does, however, also offer certification in connection with providing the statutorily required Third-Party Standard, discussed below.

On the other hand, organizing your company as a benefit company does have legal effect.  Organizing as a benefit company can only be accomplished via registration with a state that recognizes the benefit company form.  In Oregon, identifying your company as a benefit company is accomplished by including the necessary language in filings with the Secretary of State when the corporation or LLC is formed.  Legal registration as a benefit company offers management some protection from claims that they are failing to act in the best (profit) interests of other shareholders/members.  It also entails, however, a higher level of transparency and additional specific annual reporting requirements.

What do I need to do to run my business as a benefit company?

If you’re just starting out, the decision to become a benefit can be made when you first form the business.  Among other things, in order to register as a benefit company certain language must be included in an entity’s formation documents filed with the Oregon Secretary of State.  If you’ve already formed a company but are interested in operating as a benefit company, don’t worry—it’s not too late.  It is possible to convert your traditional corporation or LLC into a benefit company under Oregon law.

Beyond filing the necessary documents with the Secretary of State, in order to register as a benefit company, the business will need to lock down some guiding principles on how it intends to benefit the community and environment, and select a Third-Party Standard against which to measure its actual performance.  In addition to B Lab, there are a number of Third-Party Standard options to choose from.

While there are certainly many reasons to choose to organize a business as a benefit company, it is not right for everyone.  Karnopp Petersen LLP has a number of experienced business advisors that can assist in evaluating the pros and cons, including Ellen Grover who was a member of the Secretary of State’s Benefit Entity Legal Working Group responsible for developing the benefit company legislative concept.   If this is something that you are interested in for your company we would love to have the chance to discuss it with you in more detail to see if it is right for you.