Earlier this month, Oregon passed its own paid family and medical leave act (the act), making it the eighth state in the country to pass such a law. Oregon joins California, Massachusetts, New Jersey, New York, Rhode Island, Connecticut and the District of Columbia in providing paid family and medical leave benefits to employees.

In contrast to other states, Oregon’s new law is particularly expansive. Among other things, the act broadly defines “family,” grants employees a generous amount of leave, and provides 100% paid leave to “low-income workers,” as defined by statute. The act also establishes the Paid Family and Medical Leave Insurance (FAMLI) program to be administered by the Oregon Employment Department to help fund payroll contributions.

Eligibility and Leave Length

Under the new law, employers must provide their employees with a maximum of 12 weeks of paid leave to (i) care for a serious medical condition of the employee; (ii) care for a serious medical condition of the employee’s family member, which broadly includes any spouse, child, parent, domestic partner, grandparent or grandchild of the employee or any individual related by blood or affinity whose close association is the equivalent of a family relationship; (iii) care for or bonding with a newborn, adopted or foster child; or iv) deal with circumstances related to domestic violence, harassment, sexual assault or stalking.

In addition, employees may take up to four weeks of unpaid leave for which the employee may be eligible under the Oregon Family Leave Act (OFLA) and up to two additional weeks of benefits for limitations related to pregnancy, childbirth or a related medical condition.

Notably, leave taken under the act must be taken concurrently with any OFLA leave and with any leave taken under the federal Family and Medical Leave Act. Employees may also use vacation or sick time to supplement their weekly benefit amount, up to 100% of their wages.

Amount of Benefits

The amount of compensation paid to eligible employees is unique to Oregon. Under the new law, benefits are tied to Oregon’s average weekly wage, as determined by the Employment Department (calculated at $1,044.40 for the period July 1, 2019, to June 30, 2020). To that end, the following rules apply:

  • An employee who earns less than 65% of the state average weekly wage will receive 100% of his or her average weekly wage during leave.
  • An employee who earns more than 65% of the state average weekly wage will receive 65% of the state average weekly wage (subject to the exceptions below), plus 50% of the amount by which the employee’s average weekly wage exceeds the state average weekly wage.
  • An employee’s weekly benefit amount is capped at 120% of the state average weekly wage.
  • An employee’s weekly benefit amount may not fall below 5% of the state average weekly wage.
  • Employees also must have received at least $1,000 in wages during the base calculation year to be eligible for the FAMLI program.

Contribution Obligations

Funding for the FAMLI program will be provided through a payroll tax. Like the average weekly wage, contributions will be based on a rate (not to exceed 1% of the employee’s wages) set by the director of the Employment Department each year.

Specifically, the law provides that:

  • Employers with more than 25 employees must contribute 40% of the total rate set by the Employment Department and deduct the remaining 60% from each employee’s wages. However, employers may pay the employee’s portion of the tax as an employer-offered benefit.
  • Employers with fewer than 25 employees are exempt from paying the employer portion of the contribution. However, such employers that elect to contribute will be eligible for grants to help cover the cost of replacement workers.

The FAMLI program will begin receiving contributions on Jan. 1, 2022 and will begin paying claims on Jan. 1, 2023. The Employment Department will also issue rules governing the administration of the FAMLI program on or before Sept. 1, 2021.

Other Key Provisions

In addition to these provisions, the act imposes several additional obligations on employers, including written notice obligations and prohibitions on retaliation against employees taking leave. The act also allows employers to provide benefits to employees through “equivalent plans” if approved by the Employment Department.

Violators of the act face severe penalties, including fines, and individual employer representatives may be subject to personal liability or face civil or criminal penalties.

Conclusion

Given these changes, Oregon employers should prepare now for the act’s implementation. Specifically, employers should familiarize themselves with the act’s requirements and start looking ahead to plan for necessary changes in company policies, payroll processes, accounting and record-keeping requirements, operational changes, and other areas impacted by increased costs.