Title: Gafur v. Legacy Good Samaritan Hospital

State: oregon

Issuer: Oregon Supreme Court

Document:

FILED: May 15, 2008
IN THE SUPREME COURT OF THE STATE OF OREGON
ELIZABETH GAFUR
and LINDA WING,
on their own behalf and on behalf of all similarly situated,
Respondents on Review,
v.
LEGACY GOOD SAMARITAN HOSPITAL AND MEDICAL CENTER;
LEGACY HEALTH SYSTEM;
LEGACY MERIDIAN PARK HOSPITAL;
LEGACY EMANUEL HOSPITAL & HEALTH CENTER
and DOES 1 THROUGH 10,
Petitioners on Review,
and
LEGACY MOUNT HOOD HEALTH CENTER,
Defendant.
(CC 0407-07139; CA A130070; SC S055175)
En Banc
On review from the Court of Appeals.*
Argued and submitted March 3, 2008.
Timothy R. Volpert,
of Davis Wright Tremaine LLP, Portland, argued the cause and filed the brief
for petitioners on review.  With him on the brief were Carol J. Bernick and
Kevin H. Kono, Portland.
Jacqueline L. Koch,
of Bailey, Pinney & Associates LLC, Vancouver, Washington, argued the cause
and filed the brief for respondents on review.  With her on the brief was J.
Dana Pinney, Vancouver, Washington.
Brian R. Talcott, of
Dunn Carney Allen Higgins & Tongue LLP, Portland, filed a brief for amicus
curiae Oregon Restaurant Association.
David H.
Wilson, Francis T. Barnwell, and Kathryn M. Hindman, of Bullard Smith Jernstedt
Wilson, Portland, filed a brief for amici curiae Oregon
Association of Hospitals and Health Systems, Portland Business Alliance, Oregon
Business Association, Oregon Association Chiefs of Police, Oregon State
Sheriffs Association, Special Districts Association of Oregon, Association of
Oregon Counties, and League of Oregon Cities.
David F. Rees and
Joshua L. Ross, of Stoll Stoll Berne Lokting & Shlachter P.C., Portland,
filed a brief for amicus curiae Oregon Trial Lawyers Association.
Stacie F. Beckerman,
Assistant Attorney General, Hardy Myers, Attorney General, and Mary H.
Williams, Solicitor General, Salem, filed a brief for amicus curiae
Bureau of Labor and Industries.
GILLETTE, J.
The decision of the
Court of Appeals is reversed in part.  The judgment of the circuit court is
affirmed.
*Appeal from Multnomah County Circuit Court, John A. Wittmayer, Judge. 213 Or App 343,
161 P3d 319 (2007).
GILLETTE, J.
This
is a class action wage and hour case in which plaintiffs, employees of
hospitals owned by Legacy Health Systems, seek, among other things,
compensation for required meal and rest breaks that they contend defendants did
not provide them during work periods.  Defendants (1) filed an
ORCP 21 motion to dismiss various of plaintiffs' claims for relief on the
ground that, although employees have a private right of action for unpaid
wages, the applicable statute does not make that private right of action
available for meal or rest period violations of the kind asserted by
plaintiffs.  The trial court agreed that the statute does not provide a private
right of action for either type of violation; it granted defendants' motion to
dismiss and denied plaintiffs leave to replead. (2) 
Plaintiffs appealed to the Court of Appeals, which affirmed the trial court's
ruling as to the alleged meal period violations, but reversed the trial court's
ruling as to the alleged rest period violations.  
Gafur v. Legacy Good
Samaritan Hospital, 213 Or App 343, 347-49, 161 P3d 319 (2007).  Defendants
sought review of that decision to the extent that it reinstates petitioners'
claims for compensation for rest period violations. (3)  We allowed
review and now reverse that part of the decision of the Court of Appeals.  
Because
this case comes to us on a motion to dismiss for failure to state a claim under
ORCP 21 A(8), (4)
we accept as true all well-pleaded allegations of fact in the complaint and
give plaintiffs the benefit of all favorable inferences that may be drawn from
the facts alleged.  Babick v. Oregon Arena Corp., 333 Or 401, 407, 40
P3d 1059  (2002).  However, we disregard any allegations that state conclusions
of law.  See Nadeau v. Power Plant Engr. Co., 216 Or 12, 15, 337
P2d 313 (1959) (court disregards conclusions of law because they are nullities
that do not present any issue).  Respecting the rest period, plaintiffs alleged
as follows:
"34.  ORS 653.261 provides for minimum employment
conditions to be established by the Commissioner of the Oregon Bureau of Labor
and Industries.  Defendants were required [to] provide [their] employees with a
paid rest period of not less than ten * * * minutes for each period of
four hours in which the employee worked, or worked the major part of the four
hour period.  OAR 839-020-0050.  
"35.  Defendants failed to provide Plaintiffs and all
other similarly situated employees (Rest Period Class) members uninterrupted
rest periods of not less than 10 minutes when and as required, in violation of
ORS 653.261 and OAR 839-020-0050, and failed to pay Plaintiffs and similarly
situated class members for those breaks not provided.  
"36.  As a result of Defendants' failure to provide
uninterrupted rest periods as required, Plaintiffs and similarly affected class
members are due wages for those rest periods which defendants failed to provide
within the six year statute of limitations period."
The only
factual allegations in the quoted portion of the complaint are (1) that
defendant failed to provide plaintiffs with 10-minute rest breaks for every
four hours that they worked, and (2) that defendant "failed to pay
[p]laintiffs * * * for those breaks not provided."  All of the remaining
allegations are legal conclusions.  In addition to the pleadings, the parties
agree that plaintiffs were paid at the appropriate rate for four hours of work
for each four-hour work period in which defendant did not provide them a rest
break.
As
noted, defendants moved to dismiss the rest period claims in the original
complaint and the trial court granted the motion.  Plaintiffs appealed that
ruling to the Court of Appeals, arguing that (1) the applicable rule, OAR
839-020-0050(1)(b), (5)
entitles them to four hours pay for every three hours and 50 minutes worked and
(2) because defendants failed to provide them the required 10-minute rest
period, plaintiffs actually worked ten minutes in each four hour period for
which they were not compensated.  Plaintiffs argued, further, that, because
compensation for work provided is "wages," as that word is defined in
ORS 653.010(10), defendants necessarily paid plaintiffs less wages than they
were owed.  The Court of Appeals agreed, and reversed the contrary ruling of
the trial court.  
We
turn first to an examination of the relevant statutes.  As noted, this is a
wage claim under ORS 653.055.  That statute authorizes an employee who is not
paid all the wages to which he is entitled to bring an action to recover those
unpaid wages, plus penalties: 
"(1)  An employer who pays an employee less
than the wages to which the employee is entitled under ORS 653.010 to 653.261
is liable to the employee affected:
"(a)  For the full amount of the wages, less
the amount actually paid to the employee by the employer; and
"(b)  For civil penalties provided in ORS
652.150."
"Wages"
are defined elsewhere in the statutes as "compensation due to an employee
by reason of employment."  ORS 653.010(10).  The word
"employment" is not defined in the statutes, but the word
"employ" means "to suffer or permit to work" (excluding
voluntary or donated services).  ORS 653.010(2).  Under ORS 653.055, then, the
extent to which an employee is "entitled" to wages depends on whether
and for how long he or she was suffered or permitted to "work."
The
inclusion of the reference to ORS 653.261 in section (1) of ORS 653.055 in connection
with the phrase "the wages to which an employee is entitled" suggests
that the legislature intended ORS 653.261 to confer on employees some kind of
an entitlement to wages.  ORS 653.261 provides:
"(1)  The Commissioner of the Bureau of
Labor and Industries may adopt rules prescribing such minimum conditions of
employment, excluding minimum wages, in any occupation as may be necessary for
the preservation of the health of employees.  The rules may include, but are
not limited to, minimum meal periods and rest periods, and maximum hours of
work, but not less than eight hours per day or 40 hours per week; however,
after 40 hours of work in one week overtime may be paid, but in no case at a
rate higher than one and one-half times the regular rate of pay of the
employees when computed without benefit of commissions, overrides, spiffs and
similar benefits.
"(2) Nothing contained in ORS 653.010 to
653.261 shall be construed to confer authority upon the commissioner to
regulate the hours of employment of employees engaged in production,
harvesting, packing, curing, canning, freezing or drying any variety of
agricultural crops, livestock, poultry or fish.
"(3) Rules adopted by the commissioner
pursuant to subsection (1) of this section do not apply to individuals employed
by this state or a political subdivision or quasi-municipal corporation thereof
if other provisions of law or collective bargaining agreements prescribe rules
pertaining to conditions of employment referred to in subsection (1) of this section,
including meal periods, rest periods, maximum hours of work and overtime.
"(4) Rules adopted by the commissioner
pursuant to subsection (1) of this section regarding meal periods and rest
periods do not apply to nurses who provide acute care in hospital settings if
provisions of collective bargaining agreements entered into by the nurses
prescribe rules concerning meal periods and rest periods."
The statute
does not, by its terms, directly entitle employees to anything, much less
wages.  Rather, it authorizes the commissioner of the Bureau of Labor and
Industries (BOLI) to promulgate rules "prescribing such minimum conditions
of employment, excluding minimum wages, in any occupation as may be necessary
for the preservation of the health of employees," including, but not
limited to, "minimum meal periods and rest periods, and maximum hours of
work." 
At
the same time, section (1) of the statute contains two direct references to
wages.  The first reference is a prohibition:  BOLI is forbidden to promulgate
rules concerning minimum wages. (6) 
The second reference concerns overtime pay:  "[A]fter 40 hours of work in
one week overtime may be paid, but in no case at a rate higher than one and
one-half times the regular rate of pay of the employees when computed without
benefit of commissions, overrides, spiffs and similar benefits."
Defendants
argue, at the outset, that the only wage claim that ORS 653.261 arguably
authorizes is for overtime pay violations, because that is the only
"wage" issue mentioned in the statute.  ORS 653.261, they argue, does
not and cannot authorize BOLI to promulgate rules that create wage claims for
violations of minimum conditions of employment.  That is so, in defendant's
view, because the phrase "conditions of employment" necessarily deals
with what employers may allow or require employees to do while they are
working, and that is not a wage issue.  One of the amici points out, relatedly,
that the rest break reference in ORS 653.261 does not even require that rest
breaks be paid, much less create an entitlement to additional wages for missed
rest breaks.  It follows, defendants assert, that, to the extent that OAR
839-020-0050 purports to create an entitlement to wages for rest break
violations, it exceeds BOLI's statutory authority.
We
need not decide whether defendants' point is correct.  Assuming (without
deciding) that BOLI has authority to create a wage entitlement for such
violations, we conclude that BOLI did not do so in OAR 839-020-0050 with
respect to required rest breaks.  
To
explain our point, we turn to an examination of OAR 839-020-0050,  using the
same interpretive framework with respect to administrative rules that we use
with respect to statutes.  See 
Tye v. McFetridge, 342 Or 61, 69,
149 P3d 1111 (2006) (in interpreting administrative rule, court's task is same
as involved in determining meaning of statute: to discern meaning of words
used, giving effect to intent of body that promulgated rule).  We begin by
considering the text of the rule itself, together with its context, which
includes other provisions of the same rule, other related rules, the statute
pursuant to which the rule was created, and other related statutes.  Id. 
If the meaning of the rule is clear at that level, then further inquiry is
unnecessary.  Id.  
OAR
839-020-0050(1)(b) provides, with respect to rest breaks:  
"(1) Except as otherwise provided, every
employer shall provide to each employee an appropriate meal period and an
appropriate rest period.
"* * * * * 
"(b) 'Appropriate rest period' means: A
period of rest of not less than ten minutes for every segment of four hours or
major part thereof worked in one work period without deduction from the
employee's pay.  The period of rest must be in addition to and taken separately
from the time allowed for the usual meal period.  Insofar as feasible,
considering the nature and circumstances of the work, such period of rest is to
be taken by an employee approximately in the middle of each four hour (or major
part thereof) segment.  The rest period is not to be added to the usual meal
period or deducted from the beginning or end of the work period to reduce the
overall length of the total work period."
"(A) The provisions of section (1) of this
rule regarding appropriate rest periods do not apply when all of the following
conditions are met:
"(a) The employee is 18 years of age or
older; and
"(b) The employee works less than five hours
in any period of 16 continuous hours; and
"(c) The employee is working alone; and
"(d) The employee is employed in a retail or
service establishment, i.e., a place where goods and services are sold
to the general public, not for resale; and
"(e) The employee is allowed to leave the
employee's assigned station when the employee must use the restroom facilities.
"* * * * * 
"(4) As used in this rule, 'work period'
means the period between the time the employee begins work and the time the
employee ends work, and includes rest periods, and any period of one hour or
less (not designated as a meal period) during which the employee is relieved of
all duties."
The
Court of Appeals accepted plaintiffs' assertion that, because OAR
839-020-0050(1)(b) entitles employees to rest breaks "without deduction
from the employee's pay," it necessarily follows that that provision
entitles them to four hours' pay for three hours and 50 minutes of work.  Gafur,
213 Or App at 349.  That conclusion is unwarranted and, indeed, as we explain
below, we think that the prohibition on deductions from pay cuts the other
way.  Certainly, nothing in that rule requires additional wages for
missed rest breaks.  
Underlying
plaintiffs' assertion, and the Court of Appeals' conclusion, is the unspoken
assumption that rest breaks are not "work."  While that assumption
might be valid in colloquial parlance, the text of the rule, its context, and
related statutes demonstrate that "work" is a term of art for
purposes of wage and hour laws, and it includes rest breaks.  First, OAR
839-020-0050 itself defines a "work period" to include rest breaks:  
"(4) As used in this rule, 'work period'
means the period between the time the employee begins work and the time the
employee ends work, and includes rest periods, and any period of one
hour or less (not designated as a meal period) during which the employee is
relieved of all duties."
(Emphasis
added.)  The fact that an employer may not deduct wages from the employee's pay
for the rest break also supports the idea that employees are working during
rest periods, even if they are not performing duties at that time.  
If
further confirmation were needed, the context of OAR 839-020-0050(1)(b)
supplies it.  Related regulations establish that employees are not required to
be "working" (in the colloquial sense) the entire time that they are
considered to be "working" for purposes of wage and hour laws.  For
example, OAR 839-020-0041, dealing with "waiting time," provides that
employees who are required to "wait" as part of their jobs are
considered to be working, so long as "the time spent waiting belongs to
and is controlled by the employer and the employee is unable to use the time
effectively for the employee's own purposes."  OAR 839-020-0041(1). 
Similarly, an employee who is required to remain on-call on the employer's
premises or so close thereto that the employee cannot use the time effectively
for the employee's own purposes is "working" while on-call.  OAR
839-020-0041(3).  And, under OAR 839-020-0042(1), employees who are required to
be on duty for less than 24 hours are considered to be working even though they
are permitted to sleep or engage in other activities when not busy.  By the
same token, the fact that a 10-minute rest break is too short to enable an
employee to use the time effectively for his or her own purposes suggests that
the employee is "working" for purposes of the wage and hour laws. (7)
As
discussed above, ORS 652.261 authorizes BOLI to issue rules prescribing "minimum
conditions of employment * * * as may be necessary for the preservation of the
health of employees."  The part of OAR 839-020-0050 that deals with rest
breaks is such a rule.  It specifies that rest breaks should be taken by employees
"approximately in the middle of each four hour" shift; they may not
be added to meal periods or deducted from the beginning or end of work periods
to reduce the overall length of the shift; and employees may not be docked pay
for taking them.  All of those features indicate that the rest break is
intended to benefit the employees' physical and mental well-being.  Other rules
prescribing minimum conditions of employment prohibit employees from being
required to lift excessive weights, OAR 839-020-0060, and require employers to
provide a sanitary and safe work environment, with adequate lighting,
ventilation, washrooms and toilet facilities, among other things.  OAR
839-020-0065.  Nothing 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. (8)
Having
considered the text of ORS 653.055, ORS 653.261, and OAR 839-020-0050 in
context, we conclude that an employee who takes a rest break does not stop
working for wage and hour purposes.  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 wages 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.  See
ORS 653.055(1) (providing wage claim for wages to which employee is
"entitled").  Therefore, in this case, employees who were not
provided rest breaks during a four-hour shift but were paid for four hours of
work for that shift have not been paid "less than the wages to which the
employee is entitled" under ORS 653.261 or OAR 839-020-0050(1)(b), and may
not pursue a wage claim under ORS 653.055.
BOLI
has filed an amicus brief in this court in which it argues that it
intended, in promulgating OAR 839-020-0050(1)(b), to allow employees to collect
wages for missed rest periods and that, properly interpreted, that is what the
rule provides.  Specifically, BOLI argues that the phrase "without
deduction from the employee's pay" in the definition of a rest period in
OAR 839-020-0050(1)(b) means that employees are entitled to four hours pay for
three hours and 50 minutes of work and that, consequently, an employee who has
not been provided with a rest break can initiate a wage claim for the 10
minutes of services provided but not compensated.  BOLI asserts, further, that
that "interpretation" of the rule is plausible and, therefore, is
entitled to deference by this court.  See Don't Waste Oregon Com. v. Energy
Facility Siting, 320 Or 132, 142, 881 P2d 119 (1994) (appellate court
defers to agency's plausible interpretation of its own rule).  
As
BOLI goes on to recognize, however, this court defers to an agency's
interpretation of its own rule only as long as that interpretation "cannot
be shown either to be inconsistent with the wording of the rule itself, or with
the rule's context, or with any other source of law."  Id.  As is
evident from the above discussion, we have concluded that BOLI's interpretation
is inconsistent with the wording of the rule and its context.    
In
addition, we observe that nothing in BOLI's brief suggests that it has, in the
past, "interpreted" OAR 839-020-0050(1)(b) in the way that it now
espouses.  It does not offer a past case or policy statement or any other
evidence that it ever intended OAR 839-020-0050(1)(b) to have the meaning that
it now advocates.  In fact, BOLI acknowledges that it has never sought wages
for employees who have missed rest periods; rather, it has always enforced the
rule by seeking civil penalties against employers that have violated its
provisions.  
In
essence, BOLI's argument in the present case amounts to no more than an
assertion that the Court of Appeals opinion was correct.  We do not view that
as an interpretation to which we owe deference.
All
of that is not to say that employees do not have any recourse for violations of
the rest break requirements.  ORS 653.256(1) authorizes BOLI to "assess a
civil penalty not to exceed $1000 against any person who willfully violates ORS
* * * 653.261 or any rule adopted thereunder." (9)  In
addition, BOLI has the authority to seek criminal prosecution of  employers who
violate the rest break requirements.  See ORS 653.991 ("Violation
of any provision of this section or ORS 653.010 to 653.545 or of any rule
adopted by the Wage and Hour Commission under ORS 653.307 shall be punishable
as a misdemeanor.").  
Based
on the foregoing, we think that it is clear from the text and context of
controlling statutes and rules, and we therefore hold, that OAR
839-020-0050(1)(b) requires employers to provide minimum rest breaks but
violation of that requirement does not give rise to a wage claim under ORS
653.055 for additional wages based on missed rest breaks.  Accordingly, plaintiffs'
allegations that defendants failed to provide them with rest breaks and failed
to pay them "for those breaks not provided" would not, if true,
establish that plaintiffs were paid "less than the wages to which [they
were] entitled under * * * ORS 653.261."  The trial court correctly
dismissed plaintiffs' rest break claim for failure to state ultimate facts
sufficient to state a claim.  The contrary conclusion  of the Court of Appeals
was error.  
The decision of the Court of Appeals
is reversed in part.  The judgment of the circuit court is affirmed.
1. Plaintiffs originally brought their action against several hospitals
owned by Legacy Health Systems as well as Legacy Health Systems itself.  The
trial court dismissed all defendants except Legacy Meridian Park Hospital and
Legacy Health Systems.  Plaintiffs have not challenged that ruling.
2. Notwithstanding that the trial court did not give plaintiffs leave to
replead, plaintiffs thereafter filed an amended complaint, asserting, among
other things, breach of contract claims for missed meal and rest periods.  The
trial court dismissed those claims because plaintiffs did not have leave to
replead them.  The correctness of that ruling is not before us.
3. Plaintiffs have not challenged the part of the Court of Appeals
decision affirming the trial court's ruling respecting the alleged meal period
violations, and that matter also is not before this court.
4. ORCP 21 A provides:
"Every defense, in law or fact, to a claim
for relief in any pleading, whether a complaint, counterclaim, cross-claim or
third party claim, shall be asserted in the responsive pleading thereto, except
that the following defenses may at the option of the pleader be made by motion
to dismiss: * * * (8) failure to state ultimate facts sufficient to constitute
a claim."  
5. The text of OAR 839-020-0050(1)(b) is set out below, ___ Or at ___
(slip op at 7-8).  
6. The legislature provides for minimum wages in ORS 653.025.
7. Under
OAR 839-020-0004(20), all time that an employee necessarily must be on the
employer's premises is considered "work":  
"'Hours worked' means all hours for which
an employee is employed by and required to give to the employer and includes all
time during which an employee is necessarily required to be on the employer's
premises, on duty or at a prescribed work place * * *."  
In fact, BOLI's own website states that employers may require
employees to remain on the premises during rest breaks.  Breaks: Meal And
Rest Period, Technical Assistance: FAQ,
www.boli.state.or.us/BOLI/TA/T_FAQ_Restandmeal.shtm. 
Clearly, BOLI considers rest breaks to belong to and be controlled by the
employer.  
8. By
contrast, OAR 839-020-0030 specifically provides that overtime wages must be
paid.  That rule provides that, subject to enumerated exceptions, 
"all work performed in excess of forty (40) hours per
week must be paid for at the rate of not less than one and one-half times the
regular rate of pay when computed without benefits of commissions, overrides,
spiffs, bonuses, tips or similar benefits pursuant to ORS 653.261(1) * *
*."
9. BOLI has promulgated rules expressly authorizing the assessment of
civil penalties for meal and rest period violations.  See OAR
839-020-1010(1)(j) and (l) (providing for such assessment).  Further, OAR
839-020-1000 provides, "Each violation is a separate and distinct
offense.  In case of continuing violations, each day's continuance is a
separate and distinct violation."