Subsequent Oregon Business Owner Responsible for Unpaid Wages
Under Oregon law, when a business goes under, employees still deserve to be fully compensated for all of the work they have completed. As a result, there is a specific process by which former
employees may go about collecting unpaid wages if their employer closes. If such employees file a claim with the Oregon Bureau of Labor and Industries (BOLI), they may recover up to $4,000 of unpaid wages earned during their last 60 days of work for the now defunct company. Because a closing or closed business generally does not have the financial resources to cover the wages, BOLI pays these former employees from the state’s Wage Security Fund. The Wage Security fund has helped over 14,000 Oregon workers receive more than $14 million since its start in 1986.
However, the existence of the Wage Security Fund does not necessarily let out-of-business owners off the hook. Instead, BOLI may file suit against the owner or other liable party to recover all or some of the wages. Other liable parties include successive owners of the business. Therefore, if an owner sells a business, the liability for the wages remains with the business, not the owner.
State Supreme Court decides “Successor in Business” Case
A recent case made it to the Oregon Supreme Court, questioning whether someone was, in fact, a successive owner. In 2005, Dustin Drago ran a bar and restaurant called the Portsmouth Club in Portland. The next year, he closed the business and stopped paying his four employees, who filed claims with BOLI and were paid from the Wage Security Fund.
The owner of the premises, Janet Penner, attained all of Drago’s assets, personal property, and business name, and re-opened the bar/restaurant as both the Portsmouth Pizza and Pub, and Penner’s
Portsmouth Club. Penner used the same space, equipment, and vendors as the previous owner had used. Therefore, BOLI filed a claim against Penner to recover the sum paid from the Wage Security Fund to the former Portsmouth Club employees. Penner appealed, stating her business was not the same company as Drago’s former business, so she should not be liable.
The Oregon Supreme Court held that “successors” could apply to a broad class, and “all those who continue to operate the same establishment or engage in the same enterprise.” Because Penner ran
the same type of business in the same space with the same equipmentand supplies and a very similar name, the Court found she ran “essentially the same business” as the previous owner. Therefore,
Penner could be held responsible for the unpaid wages.
Even if the business changes hands, employees deserve to receive all of the wages they have earned. If you believe you have a wage or another type of claim against your employer, contact HKM Employment Attorneys today for help.