By: Randall Sutton

The Oregon Sick Time law is almost as vague as it is complicated. The many pages of statutes and regulations fail to cover some key points and raise many questions, requiring employers to read between the lines when structuring sick time and PTO policies. Fortunately, the Oregon legislature has dropped a toe into the pool of wisdom on sick time compliance and come up with a few new rules to clarify things. Although the bill has not been signed into law yet, it has passed the Senate and House and is sitting on the Governor’s desk.

In light of these changes, this is a great time for employers to revisit and update their sick time, PTO, and vacation policies. The big news is a much-needed clarification for employers who use PTO or paid vacation time to cover their responsibility to provide paid time under the Oregon Sick Time law. The new bill also addresses a number of other issues that needed clarification.

Summary of Changes:

  • Clarifies that an employer who provides more than 40 hours of substantially equivalent paid leave can characterize the additional leave as unprotected and need not apply Oregon Sick Time requirements.
  • Clarifies that employers can cap the total accrual of sick time to 40 hours per year.
  • Clarifies that employees who are compensated solely on a piece rate/commission basis can be paid minimum wage when using sick time.
  • Clarifies that when employees are paid a fixed wage (hourly, weekly etc.) plus commission, sick time is paid at the greater of either the employee’s fixed wage or minimum wage.
  • In determining whether a small company is big enough to provide paid sick time, owners and directors (and their parents, spouses and children) need not be counted. An “owner” is someone with at least a 15 percent stake in the company.
  • Employers maintaining seasonal farm stands and temporary construction office trailers located in the Portland Metro Area are only required to provide paid sick time if they employ 10 or more employees. Other Portland Metro employers must pay for sick time if the employer has at least six Portland employees.

Big News Regarding “Substantially Equivalent” Vacation & PTO Policies

One of the most far reaching clarifications relates to “substantially equivalent” paid time off.  Under Oregon law, employers have a lot of flexibility in awarding paid time off for vacation and other non-protected reasons. So long as the policy is “substantially equivalent,” the paid time may also be used to meet the employer’s obligation to provide paid Sick Time. To be substantially equivalent, the paid time policy must provide accrual, use and carryover at the same (or better) rate as required by law.

When the original Sick Time law went into effect, employers who offer paid time off that is more generous than the minimal amount required by law were left scratching their heads – how much of the time already offered is now protected time? Did employers now have to comply with the legal requirements under the Sick Time Law for all hours offered to employees? Enter Senate Bill 299. As clarified by this  2017 bill, only the first 40 hours of any substantially equivalent paid time off policy are considered protected leave.

For example, suppose an employer’s policy offers 60 hours of PTO to all employees for any purpose. After the first 40 hours are used, PTO must be scheduled in advance and can be arbitrarily denied based on business needs. The employee takes a vacation to Hawaii for a week. A couple of months later, he gets sick and, during the middle of the busiest time of year, wishes to immediately use his remaining 20 hours of PTO. The use of PTO can be denied under the employer’s policies, as the remaining 20 hours of PTO are not protected under the law and the employer is not required to grant paid leave for that purpose. Keep in mind that this rule only applies to the use of paid time off. Under the above scenario, the employee might still be entitled to unpaid leave if his absence qualifies under the family leave or disability laws.

This bill is out of the legislature and sitting on Governor Brown’s desk ready for signature. It will be effective immediately upon passage.

What to do Now?

For employers who offer paid time off, it is important to revise your policy to clarify that only the first 40 hours of paid time are considered protected time subject to the Oregon Sick Time law. The new rule also opens the door to potential restructuring of paid time off policies, so that different rules can apply to the accrual and use of additional paid time off. In addition, small employers should consider whether they are still covered under the exceptions for corporate owners and their immediate families.

Randall Sutton leads the firm’s Employment Law & Litigation practice group. The information in this article is not intended to provide legal advice. For professional consultation, please contact Randall Sutton at Saalfeld Griggs PC.  503.399.1070.  rsutton@sglaw.com.