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Employment Department Conducts its First Town Hall on Paid Family Leave

 

By Randall Sutton, Partner – Employment Law & Litigation Practice Group

The Employment Department conducted its first virtual “Town Hall” to discuss “Contributions” under the new Paid Family Medical Leave Insurance (“PFMLI”) program.  Several other sessions will be offered on other aspects of the new law.  Because this was the first session, it ended up covering a broad range of topics with ample time for Q&A.

 

The bottom line is that we are very early in the process.  The Employment Department is still working on draft administrative rules, which it hopes to circulate for comment in a few months.  With regard to contributions, there are still many issues to sort out.  Priorities for the Employment Department include the timeline and procedures for setting the rate, payroll deductions, reporting, and payment issues.  Lower priorities include sorting out penalties, collection of delinquent contributions, the effect of employer changes in ownership or closures, and managing fraud.  Employees will be eligible for benefits under the PFMLI fund even if the employer is delinquent in making required contributions.  Enforcement will be similar to the current process for collecting unpaid unemployment taxes.

 

The maximum combined employer/employee contribution under the law will not exceed one (1%) percent.  That is a cap, as the actual rate has not been set yet.  Once the rate is established, employers will pay 40% of the rate, while employees will pay 60%.  Small employers (25 and under) will not be required to pay the employer share.  There are lots of issues the Employment Department is sorting out, including what happens when an employee works more than one job, whether an out-of-state employer with a small (under 25 employee) presence will still be liable to pay contributions, etc.  Small business grants will be available for small (25 and under) employers who opt to pay the employer share.

 

Administrative rules should be finalized by September of next year and contributions will begin being collected in January of 2022.  Employers can opt-out of the PFMLI by offering a benefits program at least as generous as is required by PFMLI.  Those employers who create their own program will need to submit the plan to the Employment Department for review and approval and pay a small fee ($250) to cover the cost of the administrative review and approval.  The roll-out of administrative rules by next Fall is important given that employers who wish to implement their own plan will not need to have their plan in place before payroll tax contributions are due in January of 2022.

 

A few other observations of significance:

 

  • The potential for overlap between OFLA and PFMLI has not been fully worked through yet.  However, the current plan is that a leave of absence that qualifies for both PFMLI and OFLA will run concurrently. As to Oregon Sick Leave, the Employment Department has not thought through any potential overlap yet.
  • There will be a number of notice requirements.  Employers will have notice obligations regarding benefits available.  Employees will have notice obligations to request leave in advance whenever possible.  There will also be notice obligations between the employer and the Employment Department.
  • Eligibility rules are still being worked out, but employees will typically be eligible for PFMLI leave once the employee has earned $1,000 in wages upon which contributions were paid within the base year.  Eligibility and use of leave rules for remote work, out of state work, and other alternative working arrangements are still under evaluation.

 

The town hall session and the PowerPoint presented during the session will be posted on the Employment Department website, although it has not been posted as of now.  Here is the link, which also includes registration information for future Town Hall presentations:  https://www.oregon.gov/employ/PFMLI/Pages/Town-Halls.aspx

Randall Sutton is a partner in the Employment Law and Litigation practice groups. Randy is also a member of the Health and Wine & Vine industry groups. The information in this article is not intended to provide legal advice. For professional consultation, please contact Randy at rsutton@sglaw.com at Saalfeld Griggs PC.  503.399.1070. © 2020 Saalfeld Griggs PC