Opinion: What Employers Need to Know About Oregon’s Paid Family-Leave Law

Many workers will receive full-wage replacement during their absence. 

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Over the summer, Oregon lawmakers enacted the nation’s most generous paid-leave program, and Gov. Kate Brown signed it into law. House Bill 2005 will provide 12 weeks of paid leave to just about every employee in the state (even if you only have one employee).

This leave will be funded by a new payroll tax paid by both workers and employers with 25 or more employees.

While the law does not kick in until 2023, what do Oregon employers need to know about this groundbreaking new law?

Oregon is the eighth state in the country to pass a paid family-leave law. However, Oregon employers will not be surprised to learn that the law is the most progressive in the nation’s history in several respects.

First, the law will not only provide 12 weeks of paid time off for new parents and those who need to care for a seriously ill family member or for the employee’s own serious health condition, it will also provide paid leave for victims of domestic violence, harassment, stalking or sexual assault.

Oregon is only the second state after New Jersey to include victims of domestic violence in its paid family-leave law.

The second facet that makes this law unique is the broad coverage it provides. Once the law goes into effect, almost all workers in the state, including part-time workers, will receive paid leave.

The only requirement for an employee to be eligible for paid leave is that the employee must have earned at least $1,000 in wages during the previous year. Such broad coverage means that essentially all employers will have some compliance obligations under the new law.

Further, the law broadly defines family to include spouses, domestic partners, children, parents, siblings, grandparents, grandchildren and “any individual related by blood or affinity whose close association with a covered individual is the equivalent of a family relationship.”

Under Oregon’s new law, many workers will receive full-wage replacement during their absence. Weekly benefits will be capped at $1,215, which means that many lower-income workers will see no financial impact on their livelihoods if they miss work for any qualifying reasons.

Higher-income employees will receive a percentage of their ordinary pay.

Moreover, the new state law provides a job guarantee for workers taking leave. It is now illegal for an employer to permanently replace the worker during their absence. The employee must be restored to their position upon their return, even if the employer filled the position with another employee during the absence.

Employers with fewer than 25 employees can provide a returning employee with a different position with similar job duties and pay.

For large employers, if the position no longer exists, the employer will be required to restore the returning worker to any available equivalent position with equivalent levels of pay, benefits, and other terms and conditions of employment. 

The big question most employers have: Who pays for this new leave? The law will be funded through a payroll tax that cannot exceed 1% of employee wages, up to a maximum of $132,900 in wages, with employees paying 60% of the total rate and employers covering 40%.

Businesses with fewer than 25 employees will be exempt from paying the tax.

There is also a small favor to all employers embedded in the law: Leave must be taken concurrently with Oregon Family Leave Act and federal Family and Medical Leave Act leave, meaning that workers cannot stack their paid and unpaid leave periods one after the other.

That said, the leave is in addition to paid sick leave, workers’ compensation benefits and any paid time off or vacation benefits provided by the employer.

Stephen M. Scott is an associate with national labor and employment law firm Fisher Phillips.

Alexander A. Wheatley is an associate in the firm’s Portland office.

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