Oregon’s New Paid Sick Leave Law: An Overview

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News, Tax Strategies

The State of Oregon recently passed a new law requiring employers to provide protected sick time to all employees which goes into effect as of January 1, 2016. This new law effects both employers with 10 or more employees and employers with fewer than 10 employees differently so it is important to be aware of the law. Below are key highlights of the new law:

• Overall: Employers that have employees working anywhere in Oregon must implement a sick leave policy that will allow an employee to earn and use up to 40 hours of sick time per year. Sick time is protected and employers must not retaliate or discriminate against an employee who inquires about, requests, or uses protected time.

• Definition of Employee: For the law, the definition of employee is any individual who renders personal services at a fixed rate to an employer if the employer pays or agrees to pay for personal services or permits the individual to perform personal services. Therefore, employees can be full time or part time and receive sick leave. Employees include, but are not limited to:
o An individual who is paid on a piece-rate basis or basis of the number of operations accomplished or quantity produced or handled;
o Individuals who are paid hourly, salary, or commission based;
o Individuals for whom withholding is required;
o Home care workers.

Employees do not include:
o An employee who receives paid sick time under federal law;
o Independent contractor;
o A participant in a work training program administered under a state or federal assistance program;
o Participant in a work-study program that provides students in secondary or post-secondary educational institutions with employment opportunities for financial or vocational training;
o Railroad workers;
o Individual employed by that individual’s parent, spouse, or child.

• Accrual: Sick time must accrue at a rate of at least one hour for every 30 hours worked, unless the employer elects to frontload sick time. Employees begin to earn and accrue sick time as of the first day of employment.

• Carryover: An employee may carry over up to 40 hours of unused sick time from one year to a subsequent year but an employer may limit an employee to accruing no more than 80 hours of sick time and to using no more than 40 hours of sick time in a year. (Recommendation: We recommend that employers clearly define the terms of the sick leave policy in writing and clearly establish the employer’s limits on total hours that can be accrued and used in a year.)

• Use: Employees may use sick time beginning their 91st day of employment and it may be used for the employee’s own physical or mental illness, injury, or health condition (including routine doctor or dentist appointments), as well as for the care of a family member, for absences due to domestic violence, or in the event of a public health emergency. The employee cannot be required to find a replacement worker or work an alternate shift as a condition of, or to make up for, the use of sick time.

• Increments of Use: Employers must allow employees to use sick time in hourly increments unless to do so would impose an undue hardship on the employer and the employer has a policy that allows an employee to use at least 56 hours of paid leave per year that may be taken in minimum increments of four hours.

• Paid Sick Time: Employers with 10 or more employees (or more than 6 employees for Portland employers) must provide sick time as paid. However, the threshold number of employees for paid sick time drops to 6 for employers that maintain any office, store, restaurant or establishment within the City of Portland. Paid sick time must be paid at the employee’s regular rate of pay and without a reduction in benefits.

• Unpaid Sick Time: Employers with fewer than 10 employees (or fewer than 6 for Portland employers) must offer unpaid sick time, but may elect to offer it as paid. (Recommendation: We recommend that employers with fewer than 10 employees track sick leave accrued and used by employees even if it is unpaid.)

• Vacation/PTO: Employers are free to provide for more generous sick leave policies and may comply with the law through vacation or paid time off policies so long as the minimum requirements of the law are met.

• Employee Notice Requirements: Employers may still require their employees to comply with their usual notice and procedural requirements for absences and requesting time off so long as those requirements do not interfere with the employees’ ability to make use of their accrued sick time. However, an employer may not require more than 10 days’ advance notice of foreseeable leave.

• Limited Union Exception: The law provides a limited exception for employees whose terms and conditions of employment are covered by a collective bargaining agreement, who are employed through a hiring hall or similar referral system, and whose employment benefits are provided by a joint multi-employee trust or benefit plan. Other unionized workers who do not fall within this exception must be provided sick time in accordance with the law.

• Calculation of number of employees: The number of employees employed by an employer will be determined by a per day average number of employees for each of the 20 work weeks in the calendar or fiscal year of the employer immediately preceding the year in which the leave is to be taken.

If you have any questions please ask your tax advisor.


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