By Kathryn M. Hindman
Surrounded by California’s and Washington’s paid family medical leave laws, we knew it was possible. Soon it will be a reality. The Oregon legislature recently passed an extremely generous paid Family and Medical leave law that will impact almost every Oregon employer. Fortunately, employers have several years to prepare.
In summary, the new Paid Family and Medical Leave (PFML) law will allow eligible employees to receive paid leave for up to 12 weeks for their own serious health condition (“Medical leave”), for parental leave and other family care (“Family leave”), and for any purpose described in Oregon’s domestic violence law (ORS 659A.272, “Safe leave”); for up to 16 weeks if combined with unpaid Oregon Family Medical Leave (OFLA), and for up to two additional weeks for pregnancy related medical conditions, including lactation for a combined maximum of 18 weeks. Exactly how this will work will be addressed by the Oregon Employment Department. Starting in 2022, Oregon employers must begin remitting premiums that will be used to create a leave fund and submitting quarterly reports. Eligible employees may begin taking PFML and receiving benefits in 2023. This alert summarizes the new law. We will provide updates as rules implementing the law are developed.
What We Know
Oregon’s PFML program is an insurance program that will be administered by Oregon’s Employment Department. In most situations, beginning in 2022, employees and employers with at least 25 employees will pay premiums to a PFML trust to fund the program.
Eligibility – Generally, most employees who earn wages in Oregon will be eligible to apply for PFML benefits. The definition of those covered by the law is broad and includes individuals performing services for employers for remuneration under any contract, but does not include independent contractors, volunteers, and those in certain work study and work training programs. PFML insurance benefits are available for Family, Medical, or Safe purposes to eligible employees, self-employed individuals and tribal employees who contribute to the PFML fund and submit a claim.
Covered Employers – The law applies to almost all employers in Oregon, regardless of size, including private and non-profit employers who employ at least one employee in Oregon, public employers, and successors in interest, but not the federal government.
Family, Medical, and Safe Leave – The law allows leave for three purposes:
Family Leave – To care for and bond with a child during the first year after birth, or placement through foster care or adoption, and to care for a family member with a serious health condition. It does not include leave when a child is ill, does not have a serious health condition, and needs home care (otherwise known as “sick child”), for bereavement, or for spousal deployment purposes covered by OFLA. The definition of a “family member” is broad under the law, and includes a parent, child, or spouse of a covered individual or domestic partner, sibling or stepsiblings, and individuals related by blood or “those whose close associations is the equivalent of a family relationship”;
Medical Leave – For an individual’s own serious health condition; and
Safe Leave – For any purpose for victims of domestic violence, harassment, sexual assault, or stalking as defined in Oregon’s Domestic Violence Law (ORS 65A.272).
Duration of Benefits – Covered individuals may qualify for up to 12 weeks of PFML insurance benefits for Family, Medical and/or Safe leave, and up to 16 weeks in a benefit year for any combination of PFML and unpaid leave under OFLA. Women with pregnancy related medical conditions may take two extra weeks for a total of 18 weeks, and such time includes lactation.
Coordination with Oregon Sick, OFLA/FMLA and Paid Leave – Paid leave taken under OFLA or FMLA for the same purpose will run concurrently with PFML, and are in addition to Oregon Sick time entitlements and other paid leave (like vacation) earned by the employee. Employers may allow employees to access any accrued paid sick, vacation, or other paid leave to replace an employee’s wages up to 100% of the employee’s average weekly wage during PFML. Employees may not recover PFML benefits in any week they are eligible to recover state workers’ compensation or unemployment benefits.
Contributions – All covered employers and eligible employees must contribute to the PFML insurance fund as a percentage established by the Employment Department Director, not to exceed 1% of the employee’s wages, up to a maximum of $132,900 of wages ($1,329 contribution per year). Employers with 25 employees or more will contribute 40% of that premium, and will collect 60% (of that 1%) through a payroll deduction from employee wages. Employers with less than 25 employees are not required to contribute the employer 40% (though are “encouraged” to do so). Employment contributions for those employees working with employment agencies are the responsibility of the employment agency. The Employment Department Director will adjust the maximum amount annually. Employers will be required to file a quarterly report of wages earned by employees, and to pay contributions quarterly on or before the month after the quarter ends. If an employer sells or otherwise ceases business, any payroll contributions become due and payable to the Employment Department within 10 calendar days of that event.
Localization – For those who have employees who work in both Oregon and another state, wages from employees who perform only “incidental work” outside the state, and wages from employees who perform work entirely in Oregon will be counted.
Amount of Benefits – The total amount of benefits an employee recovers will depend on the employee’s wages and contributions to the PFML pool. Those lowest wage earners who make less than 65% of Oregon’s average weekly wage (determined by the Employment Department Director) may receive 100% wage replacement during their leave. Higher earners receive lower PFML benefits based on a tiered system.
Employer Notice – Employers will be required to provide notice to employees of their rights and duties, including their right to receive benefits, the procedure for filing a claim, employer duties to provide notice, employee job protection and benefits continuation, and employee rights to be free from discrimination, bring civil actions, and to have health information kept confidential. The Employment Department will be drafting a model notice for this purpose.
Employee Notice – Employers may require eligible employees to provide written notice up to 30 days before any foreseeable need for leave, and oral notice within 24 hours of the commencement of unexpected leave for a medical condition, premature birth or Safe leave, followed by written notice within three days after commencement of leave.
Protected Leave and Benefits – Employees employed 90 days or more before the start of the leave will receive job protection and continued health insurance during the leave. Employees must be restored to their former positions upon their return from PFML and must receive the same health care benefits they had for the duration of their leave. If the position held no longer exists upon return, employees are entitled to be restored to any available equivalent position with equivalent pay and benefits. However, employers with less than 25 employees, may restore an employee to a different position with similar job duties and the same pay if the position was eliminated during leave.
Collective Bargaining Agreements – Although the law does not require “reopening or renegotiation” of a labor agreement entered into before the Act’s effective date (presumably 90 days following its enactment), there are no exceptions for those employees covered by collective bargaining agreements.
Employer Assistance – The law also provides for grants of up to $3,000.00 for employers with fewer than 25 employees to assist with the cost of hiring temporary employees to cover for an employee out on PFML, and other “wage-related” costs for adhering to the law.
Equivalent Plans – Employers who provide PFML benefits equal to or greater than the weekly benefits and duration of leave, may also apply for approval of their own “equivalent plans” each year.
Administration – The Director of the Employment Department is tasked with establishing the PFML program, adopting rules (by September 1, 2021), and establishing an outreach program. The law provides for employee penalties for failing to remit payments and quarterly reports, and outlines an appeal process for both.
What to Expect
Oregon’s PFML will provide partial to full wage replacement for employees depending on their income, and contribution to the fund, beginning in 2023. For now, employers have some time to get ready for the new law. Until then, employers should begin planning for budgeting the cost of paying premiums if they employ over 25 employees, reviewing payroll and record keeping practices to ensure they have procedures for deducting and remitting employee premiums, educating themselves on the effects of the law on their business, and participating in any upcoming rulemaking processes.
We will continue to keep you informed.