Recently enacted Oregon HB 2005 creates a state paid family and medical leave insurance (FMLI) program to be funded by both employers and employees. Employers with less than 25 employees are exempt from paying the employer contribution. The Oregon Employment Department will administer the program. (Governor's press release, August 8, 2019.)

Effective January 1, 2022, employers of 25 or more employees will begin paying at least 40% of contributions and withholding up to 60% of contributions from employee wages, up to a maximum 1.0% combined contribution rate on employee wages of up to $132,900 (indexed annually for inflation). Both the contribution rate and taxable wage limit will be determined annually by the Department.

Self-employed individuals may opt into the state FMLI program.

The definition of wages is the same as for state unemployment insurance (SUI) contributions (ORS 657.105), but the taxable wage limit will differ. If employers of less than 25 employees elect to pay the 40% employer portion, they may be eligible for a state grant.

Employers will file a quarterly return with the Department to report covered wages and contributions.

Employee notices

Employers are required to provide written notice to employees about their entitlement to FMLI benefits. The Department will develop a model notice that employers may use.

Family and medical leave insurance benefits

Starting January 1, 2023, up to 12 weeks of paid FMLI benefits (14 weeks if pregnancy related) will be available to eligible individuals, with an additional four weeks of unpaid leave possible. Eligible employee is defined as one who has earned at least $1,000 in wages during the base year. FMLI benefits may be used for family, medical and safe leave purposes. The benefit amount will be determined based on the employee's average weekly wage during the base period, with the benefit amount ranging up to 100% of the employee's average weekly wage, limited to a maximum state weekly benefit amount. FMLI benefits must be used in coordination with unpaid leave taken under the state and federal Family and Medical Leave Act and are in addition to any employer-paid sick time, vacation leave or other paid leave. In any week in which an employee is eligible to receive workers' compensation or unemployment benefits, the employee is disqualified from receiving FMLI benefits.

Eligible employees' positions of employment and benefits with the employer are protected while the employee is on leave if the employee has been employed with the employer for 90 days before commencing FMLI leave.

The law allows employers to alternatively provide the same or better benefits as the FMLI program at the same or lesser cost to employees through a private plan. Private plans must be approved by the Department and meet certain requirements. Employees covered by an approved private plan are not required to contribute to the state's FMLI program.

Ernst & Young LLP insights

Oregon joins a growing list of states (California, Connecticut, District of Columbia, Massachusetts, New Jersey, New York, Rhode Island, and Washington) that have established paid family and medical leave insurance programs.

For the current paid family and medical leave insurance rates, read our special report here.;

For information concerning the tax treatment of paid family and medical insurance, read our special report here.

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