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Blachana, LLC v. Bureau of Labor and Industries

Summarized by: 

Date Filed: 01-16-2014
Case #: S060789
Walters, J. for the Court; Kistler, C.J.; Linder, J.; Landau, J.; Baldwin, J.; and Balmer, J.
Full Text Opinion: http://www.publications.ojd.state.or.us/docs/S060789.pdf

Labor Law: Under ORS 652.414(3) and ORS 652.301(1), the correct test to determine a “successor employee” for the purpose of Wage Security Fund reimbursement is whether it conducts essentially the same business as conducted by its predecessor, using a nonexclusive list of factors set out by the Bureau of Labor and Industries to determine whether a company conducts “essentially the same business.”

The Bureau of Labor and Industries (BOLI) appealed the Court of Appeals reversal of its final order. NW Sportsbar owned and operated a business in Portland for about a year and a half. For the last few months of business NW Sportsbar stopped paying its employees. Shortly thereafter, the owner of the building created a new business, Blanchana, and it reopened a bar in the same location. The unpaid employees made a wage claim, which was eventually paid by the Wage Security Fund. Next, BOLI determined that Blachana was a “successor” employer, and must therefore reimburse BOLI for wages paid from the Wage Security Fund for wage claimants. BOLI’s final order explained that the test to determine a “successor employee” is “whether it conducts essentially the same business as conducted by the predecessor” and included a nonexclusive list of factors that support a successor employee. Blachana fulfilled most, but not all of the successor employee factors, thus BOLI ordered that Blachana reimburse the Wage Security Fund. Blachana appealed and the Court of Appeals reversed holding that Blachana was not liable for the unpaid wages. The Court examined the legislatures intent when defining who is a successor and determined that one who “conducts essentially the same business as its predecessor is liable for wages owed to employees of the predecessor” under ORS 652.414(3) (statue permitting BOLI commissioner to take legal action to recover amounts paid from the Wage Security Fund) and ORS 652.301(1) (statute defining employer as “any successor to the business of any employer”). Therefore, the Court affirmed the decision of BOLI and ordered Blachana to reimburse BOLI for the wages paid to its predecessor’s employees from the Wage Security Fund. Reversed.