What is Paid Leave Oregon?
Effective January 1, 2023, Oregon is set to join 12 other states, plus the District of Columbia, that have enacted family leave laws. Oregon’s Paid Family and Medical Leave Insurance, or Paid Leave Oregon (PLO), will provide paid leave benefits and some job protection and benefit continuation rights to eligible workers in Oregon. This program will be funded through employee and employer-paid payroll taxes. Under PLO, Oregon employees are subject to a payroll tax of 60 of the contribution rate on subject wages, while employers with 25 or more employees, regardless of location, pay 40 percent of the contribution rate. Employers with fewer than 25 employees are not required to contribute the employer portion unless they voluntarily choose to access a grant program. The contribution rate for the calendar year 2023 is one (1) percent of subject wages.
Who is Eligible for PLO Benefits?
The first benefits from Paid Leave Oregon may be drawn effective September 3, 2023. Employees eligible to apply for benefits include those that are located in Oregon, received at least $1,000 of wages the year before, and had a qualifying event. PLO also provides job protection if the employee has worked for their employer for more than 90 days.
Is Participating in Paid Leave Oregon Mandatory?
Private employers, state agencies, and local government agencies with at least one employee in Oregon are required to participate in Paid Leave Oregon. Self-employed or tribal government employees are not covered but may opt into the program. Contributions begin January 1, 2023, unless an exemption is secured. If an employer fails to deduct the employee portion of the contribution for the pay period, the employer is considered to have elected to pay the employee portion.
Alternatives to PLO
If an employer with workers based in Oregon prefers to adopt an equivalent plan to PLO, they must apply by November 30, 2022, to be exempt from paying and remitting the contribution payments to the State of Oregon, beginning with the first quarter of 2023. Equivalent plans may be self-administered by the employer or administered by a third-party insurance company. If an employer is unable to submit an equivalent plan application, they may submit a signed and certified Declaration of Intent to Obtain an Equivalent Plan by November 30. This must acknowledge and agree to certain conditions, including placing employee contributions in trust for the State of Oregon from January 1, 2023, until the Oregon Employment Department has approved the equivalent plan application. Otherwise, the employer should begin withholding employee contributions on the program’s effective date and remit them to the State of Oregon with employer contributions.
The deadline to avoid making contributions to Paid Leave Oregon is quickly approaching and there are many nuances to consider. Please contact your Perkins advisor for further details on this program.