Paid Leave Oregon (PLO) – Oregon’s New Paid Family and Medical Leave Insurance Program

The final for the state’s paid family and medical Leave insurance program, known as Paid Leave Oregon, are expected to be finalized in September of 2022. Payroll taxes begin January 1, 2023 and benefits will become available on September 3, 2023. Employers with employees working in Oregon should familiarize themselves with the program now.

 

Paid Leave Oregon (PLO) is a new program that provides both job protection and paid leave.

• Job protection is required for employees who have worked 90 days for their employer just prior to taking PLO leave.
• Employees are eligible for benefits if they have been paid $1,000 in wages during the 12 months prior to the start of the leave.
• Employers with more than 25 employees must also continue health benefits during leave with the same cost share as if not on leave.
• Qualifying events for PLO:
  • Bonding with a child during the first year after birth, adoption, or foster care placement.
  • Care for a family member who has a serious health condition. Includes a broad definition of family member.
  • Medical leave for an employee’s own serious health condition.
  • Safe leave for issues related to domestic violence, harassment, sexual assault, or stalking for employees and their children.

 

The paid leave benefit will be available in September 2023.  A covered employee may qualify for up to 12 weeks of PLO benefit during a 12-month benefit year, plus an additional two weeks for pregnancy related disability.  The benefit year coincides with the starting date of the leave.

• Amount of benefit. Benefits are based on Oregon’s average weekly wage (AWW), with those earning 65% or less getting 100% of pay.  With AWW as of July 2022 at $1,325.24 (OR updated this to $1224.82 on August 25,2022) that means that anyone earning $44,793.11 (OR updated this to $41,398 on August 25t, 2022) or less would get full pay under this plan.  Those who earn more have benefits based on a formula, that provides high income replacement for most employees.  Additional details on the plan benefits can be found  here
• Concurrent Leave. Any family leave or medical leave taken must be taken concurrently with Oregon Family and Medical Leave Act (OFLA) or the federal Family and Medical Leave Act (FMLA).
• The plan will be funded through payroll taxes.
  • The tax rate for 2023 is set at 1% of the employee’s total compensation (base pay plus overtime, incentive pay, bonuses, etc.) with wages capped at $132,900. Employers contribute 40% of the total rate and employees contribute 60%.  Additional details on the plan funding can be found here

 

Employers with less than 25 employees are not required to pay the employer contribution; however, if an employer elects to pay it, the employer may apply to receive financial assistance to help with the costs of replacing an employee taking paid leave through a grant.  .  Grants cover up to $3,000 per replacement.  Click here for more information on small employer grants.

 

Employers are not required to purchase coverage through the state.  Employers can apply for approval to provide an opt out plan so long as benefits are equal to or greater than the state plan.  Opt out plans must remain in effect for at least one year.  Many life and disability insurance carriers are providing opt out plans on an insured basis.  Employers also have the option of self-insuring.  The Employment Department is expected to begin reviewing applications for opt out plans in September 2022. Employers must submit applications by November 30, 2022 to be exempt from paying state plan contributions January 1, 2023.  Employers can opt out at the beginning of any quarter.  State plan contributions will apply for quarters prior to the employer’s opt out date. Learn more about the application process here.

 

Employer considerations for opting out.

• Using a private carrier to administer the PLO may provide the following benefits:
  • Ease of administration and integration with existing STD and LTD benefits
  • Experienced claims adjudication and reliability in claims payment ability
  • Better coordination between all leaves (FMLA, OFLA, PLO and STD)
  • The carrier will take care of getting the medical certification for the employee
  • Employers have more control over the process and the return to work requirements
• A private carrier PLO plan could also add some employer responsibilities:
  • The employer is responsible for the state approval process for the opt out plan and also for complying with the state requirements for employee premium collection, notices, record keeping and state reporting. Penalties apply for lack of compliance.
  • An opt out plan may provide premium savings for the first year, but the individual employer’s utilization may affect the premiums in subsequent years.
  • Employers opting out for an equivalent PLO plan may be more involved in the claims process and the employee’s experience with the plan.

 

Contact your IMA employee benefits team if you would like assistance exploring the opt out options for PLO.  Additional details about Paid Leave Oregon can be found on the Oregon Employment Department’s website.

 

 

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.