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Oregon Court rules on final paycheck penalty law

November 3, 2011

Oregon Court of Appeals clarifies statute of limitations for final paycheck penalty claims
By Ater Wynne,
Oregon Law Firm

Earlier this month the Oregon Court of Appeals ruled that a three-year statute of limitations for final paycheck penalty claims begins to run at the end of the 30-day penalty period.

ORS 652.140 specifies the time in which the employer must pay an employee’s final wages. ORS 652.150 imposes a daily penalty for late payment of the final wages. The daily penalty is calculated by multiplying the employee’s hourly rate by eight hours. The daily penalty runs for up to a maximum of 30 days, but stops accruing if either (1) the employer pays the wages or (2) the employee sues for the wages.

The statute of limitations for final paycheck claims has been disputed. Employers have argued for the application of the one-year statute of limitations established by ORS 12.130. Plaintiffs have argued for the application of the three-year limitation specified in ORS 12.100(2) with some success at the trial court level. In Russell v. U.S. Bank, the Oregon Court of Appeals applied the three-year limitations period. Further, the court held that the three-year period does not begin to run until the total amount of penalty wages owed to the employee has accrued. In other words, if the final paycheck is not paid for 30 or more days, the claim does not accrue until the 30th day. The court emphasized that “the key point is that the employee’s cause of action . . . is for the penalty wages themselves, not for the earned wages that the employer should have paid the employee on his or her last day of work.”

The employee has a single penalty claim which increases by one day of wages for each day the final wages remain unpaid, up to a maximum of 30 days. In this case, the employee sued three years and eight days after her termination. Because her final wages remained owing after 30 days following her termination, the court ruled that her claim was timely filed.

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