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Oregon to Implement Paid Family and Medical Leave Program

Compliance
Article
09/11/2019

On Aug. 9, 2019, Oregon became the eighth state to require a paid family and medical leave (PFML) program for eligible employees. However, unlike programs in California, Connecticut, Massachusetts, New Jersey, New York, Rhode Island, and Washington, Oregon will be the first in the country to offer 100 percent wage replacement for low-wage workers.

Oregon Gov. Katy Brown signed into law House Bill 2005, which created a family and medical leave insurance program to provide partially or fully compensated time away from work to covered individuals who meet certain criteria while the covered individual is on family leave, medical leave, or safe leave.

As Oregon begins administering its PFML program, employers might have questions about its requirements.

Employers will have questions about requirements and compliance for PFML. The following is a list of the most-frequently asked questions (click on the highlighted phrase for more details).

Why did Oregon pass a PFML program?

The reason is spelled out clearly in the opening lines of the new law: employees experience a variety of caregiving obligations that might interfere with work obligations.

As the legislature shared: “It is in the public interest to provide employees and certain other individuals compensated time off from work to care for and bond with a child during the first year after the child’s birth or arrival through adoption or foster care, to provide care for a family member who has a serious health condition or to recover from an employee’s or an individual’s own serious health condition.”

What Oregon employers will be required to comply with the provisions of the new law?

As defined in the Oregon PFML law, there is no minimum employee threshold that determines which size employers are required to follow the requirements. The law will apply to public and private employers with one or more employees. However, the law does not apply to the federal government or tribal government. Self-employed individuals and employees of a tribal government may elect coverage under the law, but are not subject to the new law.

What is the Oregon PFML Insurance Fund and how will it be funded?

The Oregon PFML Insurance Fund is a trust fund established by the new law and is separate and distinct from the Oregon General Fund. The fund will consist of all monies deposited into the fund from employer and employee contributions, penalties from fines, fees, and all other monies deposited into the fund.

Beginning Jan. 1, 2022, contributions will be paid by employers and employees as a percentage of a total rate determined by the Director of the Employment Department.

  • The total rate may not exceed 1 percent of employee wages, up to a maximum of $132,900 in wages.
  • Employer contributions shall be paid in an amount that is equal to 40 percent of the total rate determined by the director.
  • An employer shall deduct employee contributions from the wages of each employee in an amount that is equal to 60 percent of the total rate determined by the director.
  • The director shall set the initial rate and thereafter annual rates for the collection of payroll in a manner such that properly funds the amount anticipated to fund claims and minimizes the volatility of the contribution rates.

There are two exceptions to the percentage of contributions. First, employers that employ fewer than 25 employees are not required to pay the employer contributions. However, if an employer that employs fewer than 25 employees elects to pay the employer contributions, the employer may apply to receive a grant set forth in the Oregon PFML. Second, an employer may elect to pay the required employee contributions, in whole or in part, as an employer-offered benefit.

While additional information about the payment process for of the contributions is forthcoming, the law does identify that employers will be responsible for filing a combined quarterly report of wages earned and contributions paid under this section on a form prescribed by the Department of Revenue. The report shall be accompanied by payment of any contributions due.

When do the Oregon PFML employee benefits take effect?

While the law requires contributions be paid beginning Jan. 1, 2022, employees are not eligible to begin accessing leave benefits until Jan. 1, 2023.

What constitutes an “eligible employee” under the Oregon PFML?

Under the Oregon PFML, and eligible employee is one who has earned at least $1,000 in wages during the base year (defined as the first four of the past five completed calendar quarters proceeding the benefit year) or if an employee has not earned at least $1,000 in wages during the base year, an employee who has earned at least $1,000 in wages during the alternate base year (defined as the last four completed calendar quarters proceeding the benefit year).

The law defines an employee as an individual performing services for an employer for remuneration or under any contract of hire, written or oral, express or implied. The law does not apply to independent contractors, participating in a work training program administered under an Oregon or federal assistance program, participants in a work-study program in a secondary or post-secondary educational institution, a railroad worker exempted under the U.S. Railroad Unemployment Insurance Act, or volunteers.

What are reasons for qualified leave under the Oregon PFML?

Under the new law, eligible leave will include time away from work that can be used for the following reasons, individually or in any combination:

  • To care for and bond with a child through birth, adoption, or foster placement within the first 12 months
  • To care for a family member with a serious health condition – a family member is defined as a child, grandchild, grandparent, parent, sibling, or spouse of employee. Oregon defines spouse as including state registered domestic partner
  • Safe leave

The law makes clear that Oregon PFML will not include leave for active military service or impending active duty in the Armed Forces or the death of a family member, although leave under other state and federal programs might be available for those reasons.

Who is considered a “family member” under the Oregon PFML?

Oregon has adopted one of the broadest definitions of “family member” in a paid family leave program in the United States. Under the Oregon PFML, a family member will include:

  • The spouse of a covered individual
  • A child of a covered individual or the child’s spouse or domestic partner
  • A parent of a covered individual or the parent’s spouse or domestic partner
  • A sibling or stepsibling of a covered individual or the sibling’s or stepsibling’s spouse

or domestic partner

  • A grandparent of a covered individual or the grandparent’s spouse or domestic partner
  • A grandchild of a covered individual or the grandchild’s spouse or domestic partner
  • The domestic partner of a covered individual
  • Any individual related by blood or affinity whose close association with a covered individual is the equivalent of a family relationship

“Parent” is defined as:

  • Biological parents, adoptive parents, stepparents, foster parents, a person who was a foster parent of a covered individual when the covered individual was a minor
  • A person designated as the legal guardian of a covered individual at the time the covered individual was a minor or required a legal guardian
  • A person with whom a covered individual was or is in a relationship of in loco parentis (in place of a parent)
  • A parent of a covered individual’s spouse or domestic partner

“Child” is defined as:

  • A biological child, adopted child, stepchild or foster child of a covered individual or of the covered individual’s spouse or domestic partner
  • A person who is or was a legal ward of a covered individual or of the covered individual’s spouse or domestic partner
  • A person who is or was in a relationship of in loco parentis with a covered individual or with the covered individual’s spouse or domestic partner

How long may an employee be away from work under the Oregon PFML?

A covered individual may qualify for up to 12 weeks of family and medical leave insurance benefits per benefit year for leave taken for any of the following purposes, in any combination:

  • Family leave
  • Medical leave
  • Safe leave

A covered individual who has taken any amount of paid leave available through Oregon PFML may take a maximum of 16 weeks of leave in the benefit year. This can be in any combination of the paid leave available under the paid Oregon PFML (maximum of 12 weeks) and under the unpaid Oregon Family Leave Act (maximum not to exceed 12 weeks). The leave may be taken for any purpose for which leave is allowable under the respective leave programs.

A covered individual may qualify for up to two additional weeks of paid benefits for leave for pregnancy, childbirth or a related medical condition, including but not limited to lactation, for a total amount of leave (paid and unpaid) not to exceed 18 weeks per benefit year.

Any family leave or medical leave taken under the Oregon PFML must be taken concurrently with any leave taken under the Oregon Family Leave Act or under the federal FMLA.

PFML benefits are in addition to any paid leave time under the Oregon Paid Sick Leave law or paid leave provided by the employer (e.g., vacation leave or other paid leave earned by an employee).

What are the benefits available to an employee under Oregon PFML?

The benefits available to an employee are dependent on the employee’s average weekly wage. 

If the eligible employee’s average weekly wage is equal to or less than 65 percent of the state’s average weekly wage, the employee’s weekly benefit amount shall be 100 percent of the employee’s average weekly wage.

If the eligible employee’s average weekly wage is greater than 65 percent of the state’s average weekly wage, the employee’s weekly benefit amount is the sum of:

  • 65 percent of the average weekly wage; and
  • 50 percent of the employee’s average weekly wage that is greater than 65 percent of the average weekly wage

There will be a maximum benefit amount equivalent to 120 percent of the state’s average weekly wage and a minimum benefit amount equivalent to 5 percent of the state’s average weekly wage. Benefits are payable only to the extent that monies are available in the PFML Insurance Fund.

What if an employer in Oregon offers its own paid leave program?

An employer who elects to offer its own benefit plan can seek exemption from the Oregon PFML contributions. To be approved, the employer must show the following:

  • The plan is made available to all employees who have been continuously employed with an employer for 30 days.
  • The benefits afforded to employees covered under the plan are equal to or greater than the weekly benefits and the duration of leave that an eligible employee would qualify under the Oregon PFML.

Employers must apply to opt-out and pay an application fee. the specific amount may not exceed $250, but has not yet been set. If the exemption is approved, neither an employer that provides benefits under an approved plan nor an employee covered under such a plan is required to make the Oregon PFML contributions.

What are the Oregon PFML employer notification requirements?

By Jan. 1, 2022, employers are required to provide written notice to employees of their rights under Oregon PFML. The notice must include:

  • The right of an eligible employee to claim and receive family and medical leave insurance benefits under the Oregon PFML
  • The procedure for filing a claim for benefits
  • That an eligible employee must provide notice to an employer before the employee commences leave, unless the leave needed is not foreseeable, and a description of the penalties for failure to comply with the notice requirements
  • The right of an eligible employee to job protection and benefits continuation
  • The right of an eligible employee to appeal a decision or determination made regarding benefit eligibility by the state
  • That discrimination and retaliatory personnel actions against an employee for inquiring about the Oregon PFML, giving notification of leave under the Oregon PFML, taking leave under the Oregon PFML or claiming Oregon PFML benefits are prohibited
  • The right of an eligible employee to bring a civil action or to file a complaint
  • Confidentiality of any health information related to family leave, medical leave or safe leave provided to an employer by an employee, and that information may not be released without the permission of the employee unless state or federal law or a court order permits or requires disclosure.

This notice must be in the language the employer typically uses to communicate with the employee. The state of Oregon is required to develop and make a model notice that meets the requirements of the PFML available to employers.

What notice is an employee required to provide?

An employer may require an eligible employee to give the employer written notice – including an explanation for the reason the leave is requested – at least 30 days before starting a period of family leave, medical leave, or safe leave.

If the leave in not foreseeable (e.g. an unexpected serious health condition, premature birth of a child, unexpected adoption), this requirement will not be required, but the employee will be required to give oral notice to the employer within 24 hours of the commencement of the leave and must provide written notice within three (3) days after commencement of the leave. An eligible employee who takes safe leave shall give the employer reasonable advanced notice of the individual’s intention to take safe leave, unless giving the advance notice is not feasible.

If an employee fails to provide proper notice, the state may reduce the first weekly benefit amount payable to the employee by up to 25 percent.

Does Oregon PFML include employment protection and an anti-retaliation provision?

Yes. After returning to work after a PFML leave, an eligible employee is entitled to be restored to the position of employment held by the employee when the leave commenced, if that position still exists, without regard to whether the employer filled the position with a replacement worker during the period of leave. If the position held by the employee at the time leave commenced no longer exists, the employee is entitled to be restored to any available equivalent position with equivalent employment benefits, pay and other terms and conditions of employment.

For employers who employ fewer than 25 employees, if the position held by an eligible employee when the employee’s leave commenced no longer exists, an employer may, at the employer’s discretion based on business necessity, restore the eligible employee to a different position with similar job duties and with the same employment benefits and pay.

During a period in which an eligible employee takes PFML leave, the employer must maintain any health care benefits the employee had prior to taking such leave for the duration of the leave, as if the employee had continued in employment continuously during the period of leave.

The law makes it an unlawful employment practice to deny leave or interfere with any right to which an eligible employee is entitled to under the Oregon PFML.

The law clarifies that temporary workers who were hired to replace an eligible employee taking PFML leave do not have rights to be retained by the employer. The employer may terminate or reassign the temporary worker. However, the employer must at the time of hire or reassignment due to a PFML leave, inform the temporary worker of their status as a temporary worker due to a PFML leave.

Next steps

While the contributions and payments under the law will not occur for some time, Oregon employers must be aware of these upcoming changes in employee leaves and benefits. Paychex will continue to monitor for further guidance related to the law.

Kate Hill is a compliance analyst who concentrates on the impact of legislative and regulatory changes on employment law for Paychex, Inc.
This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.