On March 2, 2016, Oregon Governor Kate Brown signed legislation that will raise the minimum wage across the state through a first-of it-kind three-tiered system based on where the employer is located.  The first increase is scheduled to take effect on July 1, 2016, with annual increases thereafter.  The following chart illustrates the scheduled increases:

Effective Date of Rate Increase Tier 1. Base Rate Tier 2. Rate within Portland’s Urban Growth Boundary Tier 3.  Rate within Nonurban Counties
July 1, 2016 $9.75 $9.75 $9.50
July 1, 2017 $10.25 $11.25 $10.00
July 1, 2018 $10.75 $12.00 $10.50
July 1, 2019 $11.25 $12.50 $11.00
July 1, 2020 $12.00 $13.25 $11.50
July 1, 2021 $12.75 $14.00 $12.00
July 1, 2022 $13.50 $14.75 $12.50


Employees will need to be paid at least the base rate unless the employer is located within the Urban Growth Boundary or a “nonurban county.”  Employers located within the Urban Growth Boundary – an area encompassing the City of Portland and much of the greater tri-county area (Multnomah, Washington, and Clackamas counties) that is managed and periodically expanded by Metro – will need to pay the rate under Tier 2.  Employers located in the “nonurban counties” of Baker, Coos, Crook, Curry, Douglas, Gilliam, Grant, Harney, Jefferson, Klamath, Lake, Malheur, Morrow, Sherman, Umatilla, Union, Wallowa, and Wheeler will pay the lower rate under Tier 3.

Starting July 1, 2023, the base rate will be adjusted annually for inflation.  Tier 2 will be set at $1.25 above the adjusted base rate, and Tier 3 will be set at $1.00 below the adjusted base rate.

The new law does not change the limited statutory exemptions already in place that exempt certain categories of employees from having to be paid minimum wage, such as outside sales persons.  If an employee currently fits the requirements for one of those exemptions, you do not need to increase their pay.  However, the new law may affect how much you pay your salary-exempt employees.  Generally, salary-exempt employees must be paid a salary that is at least equal to what an employee would earn working 40 hours per week at minimum wage.  If you have questions about whether an employee is exempt, or is being paid appropriately, you should consult with legal counsel.

Finally, the law doesn’t prevent cities and counties in the state from establishing a higher minimum wage.  Therefore, you will want to keep abreast of what your local government is doing in this regard.