Paid Leave Oregon – Employer Action Required for OR Workers

Employers who have workers in OR should be aware of two important deadlines approaching. Contributions to the state funded program must begin on January 1, 2023, unless the employer files a Declaration of Intent (DoI) to opt out or has submitted an equivalent plan application. The deadline to take either of these actions for is November 30, 2022.

Which employers must file a DoI? Employers who wish to opt out of the state paid leave program on January 1, 2023.

The DoI is used to notify the state of OR that an employer will not be paying premiums to the state because they are seeking an equivalent plan. The deadline to file is November 30, 2022.

What if an employer fills out a DoI, but later decides to use the state program? In this instance, the state of OR will require all unpaid contributions for the state program to be paid by June 30, 2023. Contributions due will be retroactive to January 1, 2023.

In addition, interest and penalties will be assessed on retroactive premiums. In the event that an employer is unsure if a private plan will ultimately be purchased, it’s best that the employer withholds contributions from employees’ pay starting 1/1/23. Those funds do not get submitted to the state and must be held separately from employer assets. Once the equivalent plan is approved, employee contributions for any time prior to September 2023 would need to be returned to employees.

How does an employer file a DoI with the state? Employers must register with OR’s Frances portal and then complete the DoI form.

What if an employer already has a private plan that’s been approved by the state? At the time of this writing, OR has not approved any equivalent plans, although, several carriers have indicated that they will file for approval in the coming days.

If the plan is approved by the state, does an employer need to take additional action? Yes, the employer must submit an equivalent plan application.

The state has indicated that the deadline to submit an equivalent plan application for a January 1, 2023 approval date coincides with the DoI deadline which is 11/30/22. However, if the deadline is missed, an employer can submit an equivalent plan application at any time which can be approved prior to the start of each quarter after January 1.

Note: At the time of this writing, OR has not approved any equivalent plans. Several carriers have indicated that they will file for approval in the coming days, but it is still unclear if OR will approve an equivalent plan by the plan application deadline of November 30, 2022.

What options do employers have at this time?

1. Pay into the state program starting 1/1/23 and rely on the state to fund and administer the leave
2. Employers filing a DoI by 11/30- withhold employee contributions in a separately held account from employer assets, but continue pursuing and ultimately gain approval for an equivalent plan
3. Employers filing a DoI by 11/30 – do not withhold contributions and do not pay into the state, but continue pursuing and ultimately gain approval for an equivalent plan
4. Employers submitting an equivalent plan application, but not a DoI – withhold and pay into the state until equivalent plan application approval

We’ve summarized the upcoming deadlines and corresponding actions below.

November 30^th: DoI or Equivalent Plan Application Deadline for 1/1/23:  For employers who want to opt out of the state paid leave program starting January 1, 2023, the deadline for filing an equivalent plan application or DoI is November 30^th, 2022.

Employers who have not made a decision should contact their Employee Benefits consultant to discuss options. If an employer has not made a decision by 11/30/22, the only option for January 1, 2023 is to pay into the state program. Additional information on opting out is available in our September 20^th Alert.

January 1^st Program Requirements:

All employers with employees working in Oregon should be planning for the upcoming January 1^st requirements.

• Employee Notification – Employers Participating in The State Plan
  • Post the model notice poster at each worksite. The notice must be provided electronically or by mail to any remote workers.
  • Notify employees that payroll deductions will begin January 1^st The state has not yet provided a model notice. Employers may want to consider including on of the fact sheets from the Resources section of the PLO website.
  • Provide new hires a PLO notice and the required employee contribution at the time of hire.
• Employee Notification – Employers Opting Out of The State Plan
  • Prepare a notice that describes the benefits of the equivalent plan. The notice must be posted at each worksite and provided electronically or by mail to any remote workers.
  • Communicate to employees that the paid leave program will be a private plan and include timing of payroll deductions.
  • Provide new hires a notice regarding the equivalent plan and the timeline for when employee contributions will begin.
• Payroll Deductions
  • Employers with an approved DoI or approved equivalent plan application (submitted to the state prior to November 30, 2022) are not required to begin payroll deductions on January 1, 2023. Payroll deductions for an equivalent plan may begin in September of 2023 when the equivalent plan is effective.
    • CAUTION: If the employer does not have an approved equivalent plan by June 30th, they will be responsible for all contributions and applicable interest/penalties, retroactive to January 1, 2023.
    • CAUTION: Employee contributions cannot be collected retroactively if the employer fails to secure an approved equivalent plan.
    • Employers have the option of collecting employee contributions in January to set those funds aside in an account held separately from employer assets. Once the equivalent plan is approved, employee contributions for any time prior to September 2023 would need to be returned to employees.
  • Employers participating in the state plan should be prepared to take employee deductions and set aside the employer contribution (if they have 25 or more nationwide employees) beginning January 1, 2023.
  • All employers should register with the Oregon Frances Online system for combined payroll reporting that will include PLO.

Let your IMA Benefits team know if you have any questions.  We review affordability every year with our applicable large employer (ALE) clients and are happy to assist as you strategize for your plan year beginning in 2022.

IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information.

This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.