Background information

During the 2019 legislative session, Oregon enacted Oregon House Bill 2005, which became one of the most generous laws granting paid leave for Oregon employees. As a result of this legislation, Oregon “joined the club” of states which have legislation establishing a state insurance program for Paid Family Medical Leave Insurance (PFMLI). The other states include California, Colorado, Connecticut, District of Columbia, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Washington. The Oregon PFMLI program will be administered by the Oregon Employment Department (OED) and funded by both employers and employees.

But alas, Oregon legislators started to consider the realities of the looming deadlines in the midst of a global pandemic, which continues to cause difficulties and divert resources for many state and local governments and realized Oregon’s leaders would be unable to get everything in order in time to hit the deadlines established in the PFMLI law. Thus, HB 3398 was introduced in order to postpone the start of the PFMLI program.

On July 27, 2021, Oregon Governor Kate Brown signed HB 3398 into law, which pushes back multiple aspects of Oregon’s PFMLI program. One such delay is the OED’s deadline for creating rules for the policy and the date that employers and employees will begin paying to fund the program. The fiscal notes for HB 3398 state that the delay in the program’s implementation is meant to allow the OED to develop the rules and processes; build a technology system that will support the program; hire sufficient staff to run the program and set up facilities; and plan community out-reach events to raise awareness about the program.

PFMLI program details

Assuming nothing changes about the program offering, here are the benefit details.

  • Eligible Employees: One who earns $1,000 or more in wages during the base year prior to the leave. Note: Self-employed and tribal governments may opt into the program.
  • Eligible Employers: All employers must participate; however, those with fewer than 25 employees are not required to pay the 40% employer contribution.
  • Reasons for Leave: Bond with a new child, care for ill family members, recover from their own serious illness, and to take safe leave.
  • Covered Medical Conditions: Conditions that are generally covered under Oregon Family Leave Act (OFLA).
  • Amount of Leave: 12 weeks of paid leave (up to 2 additional weeks if pregnancy-related) and 4 weeks of unpaid leave.
  • Family Member Definition: Spouse, child, parent, sibling, grandparent/child, any individual related by blood or affinity who is the equivalent of a family relationship (*all of these are equally applicable to step and domestic partner relations).
  • Base Year: The first four of the last five calendar quarters prior to the start of the leave.
  • Benefit Amount: Determined by the employee’s average weekly wage during the base period, up to a set maximum state weekly amount and can be up to 100% of the employee’s wage.
  • Job Protection: Only employees who have worked for their current employer for 90 days before the start of the leave will have job protection in addition to income replacement.
  • Interaction Between OFLA and FMLA: Leaves that meet the necessary requirements of state and federal leave will run concurrently.

The law will allow employers to provide, through a private plan, equal or better benefits as the PFMLI program, so long as it is at the same or less cost to employees. Private plans must be approved by the OED and meet certain criteria. Employees covered by an approved private plan are not required to contribute to the state’s PFMLI program.

What has been postponed

As a result of the enactment of HB 3398, the following major deadlines have been delayed:

  1. The deadline for the Director of the OED to adopt rules/regulations implementing the PFML program.

The Director of the OED has a one-year extension to adopt rules which are necessary to establish the PFMLI program. The deadline of September 1, 2021 is moved out to September 1, 2022.

These rules are intended to provide clarity on, but not limited to, the following:

(a) Establish an outreach plan for the program to receive input from, and disseminate information to, employers and eligible employees.

(b) Establish a process by which employers may apply for approval of an employer-offered benefit plan.

(c) Establish alternatives by which an employer may determine a benefit year period, including on a calendar year and non-calendar year basis.

  1. Commencement of contributions.

Employee and employer contributions to the program, originally set for January 1, 2022, have been pushed back one full year to January 1, 2023.

  1. The availability of paid leave benefits.

Distributions originally set to begin January 1, 2023 will not be payable until September 3, 2023.

What employers should do

Although the pushed deadlines may seem far out into the future, employers should review the program requirements and begin discussing how they intend to administer contributions or if they intend to provide benefits through a private plan. Again, private plans must be approved by the OED and meet certain criteria, so employers should begin investigating those criteria and begin the process for approval now. Regardless of whether they choose to administer through the state PFMLI plan or offer a private plan, organizations should consider creating (or revising) policies to account for this new paid leave option.

What Guardian is doing

Guardian is in the process of evaluating this new program and determining how it will impact our products and leave administration processes. We look forward to sharing additional information as we work through the details.

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Material discussed is meant for general informational purposes only and it is not to be construed as tax, legal, or investment advice. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.

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