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The Oregon legislature recently passed a paid leave law (“Program” or “PFML”), marking the eighth state to provide their workers with paid family and medical leave benefits. Oregon Governor Kate Brown intends to sign the bill.

The Oregon Director of the Employment Department (“Director”) is tasked with promulgating regulations, which are set to be released on or before September 1, 2021. The following is based on the recently enacted bill and may be subject to change based on additional guidance.

 

Compliance Snapshot

  • Oregon recently passed one of the most generous paid leave laws, which provides all Oregon workers with up to 12 weeks of wage replacement and job protection for family and medical leave.
  • The Program will be funded by contributions by employees and employers with more than 25 employees. Contributions will begin on or before January 1, 2020.
  • Oregon workers can start applying for benefits on January 1, 2023.

 

Timeline

Date Event
9/1/2021 Deadline for the Director to issue regulations on the Program
1/1/2022 Employer notice obligation begins
1/1/2022 Employer contributions begin
1/1/2023 Eligible employees can start applying for leave benefits

 

Frequently Asked Questions

 

What are employer obligations under the Program?

  • Employers must deduct and withhold employees’ contributions to the Program.
  • Employers that have more than 25 employees  must make contributions to the Program.
  • Employers must report wages and remit contributions to the Department of Revenue quarterly.
  • Employers must distribute written notice to employees.
  • Employers must provide the same or similar position to employees after taking leave under the Program.
  • Employers can apply for an exception to certain employer obligations if they offer paid family and medical leave benefits equivalent to those under the Program.

 

Which employers are subject to the Program?

All employers, including out-of-state employers, who employ at least one individual in Oregon is subject to the above employer obligations.

 

Which employees are eligible for benefits under the Program?

Generally, all employees who perform work in Oregon, including part-time employees, who earned at least $1,000 in the year prior to taking the leave are eligible for benefits. Independent contractors, volunteers, or individuals who are a part of a work-study program are not eligible for benefits.

 

When can eligible employees take paid leave under the law?

Eligible employees can take up to 12 weeks of paid leave (within a 12-month period) to:

  • Care for a new child from birth, adoption, or foster care within the first year;
  • Care for a family member with a serious health condition; or
  • Care for own serious health condition.

Note: An eligible employee can take up to 14 weeks of paid leave if they experience limitations caused by pregnancy or childbirth.

 

How much will eligible employees receive under the Program?

The amount that an eligible employee will receive is based on the employee’s average weekly wage (AWW) and the state’s AWW when the leave is taken. The state’s AWW is currently $1,044.40.

Low-income employees who earn less than 65% of the state’s AWW will receive up to 100% of their average weekly wage. Employees who earn more than 65% of the state’s AWW will receive the sum of 65% of the state AWW plus 50% of the amount of the employee’s AWW that is greater than 65% of the state AWW.

The minimum benefit is 5% of the state’s AWW ($52.22 based on 2019 state AWW) and maximum benefit is 120% of the state’s AWW ($1,253.28 based on 2019 state AWW).

 

How is the Program funded?

The program will be funded by premiums paid by employees and certain employers. The premium will be determined by the Director but cannot exceed 1% of employees’ wages (up to a maximum of $132,900). The premium will be adjusted annually for inflation.

Employees pay 60% of the premium and employers pay 40% of the premium. Employers with fewer than 25 employees are not required to pay the employer portion of the premiums but can receive a grant if they do so. An employer’s employee count is determined annually and is based on the average number of employees in a 12-month period.

 

Do employers have a reporting requirement under the Program?

Employers must file a report on wages and remit contributions quarterly on a form prescribed by the Oregon Department of Revenue (DOR). The report is due to the DOR before the last day of the month following the end of the quarter.

Penalties: The Director can levy penalties of up to 1% of the total annual wages paid to Oregon employees, put a lien on employer property, or bring a civil action against employers who fail to remit payments.

 

Do employers need to notify their employees of the Program?

Employers must provide written notice to each employee of their duties and rights under the Program in a language that the employer typically uses to communicate to the employee. The Director will release additional guidance on this notice requirement and will make a model notice available.

 

Is there an exemption for employers who provide leave benefits equivalent to those under the Program?

Employers can apply for an exemption if their plan provides equivalent or better family and medical leave benefits to employees as those under the Program. An employer may deduct employee contributions from wages to finance the cost of the plan, as long as the contribution amounts do not exceed those under the Program.

Employers must apply for an exemption from the Director, who will determine the exemption application process at a later date. Employers whose equivalent plan is approved will be exempt from the contribution, reporting, and notice obligations. However, employers who are approved for an exemption must still:

  • Comply with the job protection, anti-discrimination, and anti-retaliation provisions under the Program;
  • Maintain all reports, information and records related to the plan (including payroll and account records), as prescribed by the Director; and
  • Provide notice to employees about the equivalent employer plan.

 

Can employers require employees to use other leave while on the Program?

Employees who take leave under the Program must take it concurrently with unpaid leave provided under the Oregon Family Leave Act (OFLA) and federal Family and Medical Leave Act (FMLA). This means that employees cannot take 12 weeks paid PFML leave and then immediately take unpaid leave under OFLA or FMLA for the same condition.

Employers cannot require employees to use their paid sick leave, workers’ compensation benefits, or any employer-provided paid time off benefits when they are taking PFML leave. However, employers can allow employees to use their paid sick time, vacation leave or any other paid leave in addition to PFML to supplement their wages, up to 100% of their AWW.

 

Summary

Oregon PFML does not take effect until 2023 and employers’ obligations don’t begin until 2022, so employers have time to prepare for the law. Out-of-state employers with employees working in Oregon or who plan to hire Oregon employees should be especially cognizant of their obligations under the Program.

To prepare for the Program, employers should:

  • Determine whether they want to provide their Oregon employees (including part time employees) with leave benefits equivalent to those under the Program and apply for an exemption;
  • Ensure that their payroll department sets up PFML deductions for their Oregon employees once the premium rates are released; and
  • Amend any language in employee handbooks or resources that is inconsistent with workers’ rights under the Program.

The law was recently enacted and more regulations and guidance on how the Program will be implemented will be forthcoming.

 

Additional Resources:

The information and materials on this blog are provided for informational purposes only and are not intended to constitute legal or tax advice. Information provided in this blog may not reflect the most current legal developments and may vary by jurisdiction. The content on this blog is for general informational purposes only and does not apply to any particular facts or circumstances. The use of this blog does not in any way establish an attorney-client relationship, nor should any such relationship be implied, and the contents do not constitute legal or tax advice. If you require legal or tax advice, please consult with a licensed attorney or tax professional in your jurisdiction. The contributing authors expressly disclaim all liability to any persons or entities with respect to any action or inaction based on the contents of this blog.

Emerald Law – Emerald is a Client Compliance Consultant for Sequoia, where she works with our clients to optimize and streamline benefits compliance. In her free time, Emerald enjoys stand-up comedy, live music and writing non-fiction.