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062315: Legislative Changes for Oregon Employers

Posted Tuesday, June 23, 2015.

Oregon Paid Sick Leave Bill receives final approval. Oregon legislature approves bill requiring automatic IRAs at private employers.

The Oregon House gave final legislative approval to a bill on Friday requiring employers with 10 or more workers to give them up to five paid sick days a year. Governor Kate Brown is expected to sign Senate Bill 454 making it effective January 1, 2016. The bill is detailed, lengthy, and in many respects replicates pieces of the Portland Protected Sick Time Ordinance.

SB 454 states, “Employers that employ at least 10 employees working anywhere in this state shall implement a sick time policy that allows an employee to earn and use up to 40 hours of paid sick time per year.” Employers with fewer than 10 employees must provide the same amount of sick time, but it can be unpaid. The following provides a brief overview of what the new law will require and a few exceptions:

  1. All businesses will be required to provide their Oregon employees with up to 40 hours of protected leave per year.

  2. The law does not apply to properly classified independent contractors, a limited group of employees whose terms and conditions of employment are covered by a collective bargaining agreement, and certain home care workers.

  3. Businesses with more than 10 employees will be required to provide workers with paid leave. Businesses with fewer than 10 employees will be required to provide employees with unpaid leave.

  4. Adding complexity, for employers located in Portland, the threshold number that requires employers to provide paid leave will be 6 employees. In other words, employers located in Portland will be required to provide paid leave to workers if they have 6 or more employees working anywhere in Oregon. If a Portland employer has fewer than 6 employees working in Oregon, it will only be required to provide unpaid leave.

  5. Employees will accrue 1 hour of leave for every 30 hours that they work. Employers can avoid the administrative hassle of accrual calculations if they choose to “front-load” employees with their total sick leave for the year as soon as the employee is eligible to use sick leave and at the start of each subsequent year.

  6. Employees are eligible to use sick time on the 91st calendar day of their employment regardless of the number of hours worked in the interim, so long as it exceeds 30.

  7. The law will cover more than “sick leave.” Employers generally must allow employees to take time off for everything from a family member’s illness to a regular doctor’s visit to assisting a family member with a domestic violence situation.

  8. Employees may take sick leave in increments as small as one hour, unless this causes an undue hardship on the employer and the employer allows employees to take at least 56 hours of paid leave per year in increments as small as four hours for any of the reasons allowed by the new law.

  9. Employers are not required to pay out accrued but unused sick time at an employee’s termination from employment. However, if employees return to the same employer within 180 days, the employer will have to restore the employee’s progress toward eligibility and any accrued but unused sick time.

  10. Employers with paid time off (“PTO”), paid vacation policies, or other similar paid time off programs that are substantially equivalent to or more generous than the requirements of the new law will be deemed to be in compliance with most of the requirements of the law. In addition, if employees use all of their PTO, the employer is not required to provide additional leave based on this law (although other laws may require that an employee receive unpaid leave).

  11. Employers can require that employees follow certain policies and procedures for requesting leave and providing medical verification, but there are strict limitations on when and how this is done.

  12. Employers will be required to provide at least quarterly notice to each employee of the amount of accrued and unused sick time available for use by the employee.

  13. Employers are prohibited from denying, interfering with, restraining, or failing to pay sick time or taking any steps to discriminate or retaliate against an employee who requests or takes sick leave.

  14. The law will preempt all local sick leave laws. Thus, when this law becomes effective, neither the ordinance in Eugene nor the ordinance in Portland will remain enforceable.

There is no need to take action on this new law yet. It will become effective on January 1st, 2016. However, well before the end of the year, you should review your handbook and other policies regarding employee leave. In reality, all employers with Oregon workers will need to make some adjustments to their policies and provide new notices and postings. This new law is complicated. Consult your trusted legal advisor to ensure that you are prepared for next year.

In addition, last week the Oregon State Senate sent the governor a bill requiring automatic IRA’s at private employers by mid 2017. Governor Brown is expected to sign the bill. Oregon’s plan, which is slated to be up and running by July 1, 2017, requires employers that don’t currently offer a retirement savings plan to automatically enroll employees at a default contribution rate to be determined by the Oregon Retirement Savings Board, which will consist members of the state Senate and House, representatives of employers and employees, and appointees of the governor and state treasurer.

The program will contract with professional money managers to provide investment options. Businesses will not be required to make matching contributions to employees’ accounts. Additionally, participants’ fees have not yet been set.