Lawmakers Pass Paid Leave Law

On July 11, 2019, Oregon lawmakers passed HB 2005, establishing a paid family and medical leave act that will provide partial or full compensation to covered individuals that take family, medical, or safe leave. The bill is now awaiting Gov. Brown’s signature, and she has indicated that she will sign the measure. Oregon would then become the eighth state to pass a paid family leave law and the law would go into effect in January 2023.

Under the act, workers will receive up to twelve weeks of paid time off to recuperate from their own serious illness, to care for new adopted and foster children, or to address a domestic violence situation. The leave is generally funded by a new payroll tax with a 60/40 payment obligation for employees and employers, respectively. Employees will incur a new payroll tax not to exceed 1% of employee wages, up to a maximum of $132,900 in wages. Employers with 25 or more employees will be taxed to cover the remaining 40% of the obligation. Employers with fewer than 25 employees are exempt from paying the tax.

To be eligible for the leave, an employee must have earned at least $1,000 in wages during the previous year. While on leave, many workers will receive full wage replacement. This paid leave is in addition to paid sick leave, workers’ compensation benefits, and any PTO or vacation benefits provided by the employer, but the wage replacement offered under this act must be taken concurrently with Oregon Family Leave Act and federal Family and Medical Leave Act.

Employers should review the act and develop a plan for compliance. We will continue to monitor the Oregon Bureau of Labor and Industries as corresponding regulations assisting with compliance obligations.

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