Rules Governing Oregon’s New Paid Family and Medical Leave Insurance Program and Equivalent Plan Application Process Finalized

On July 22, 2022 and August 22, 2022, the Oregon Employment Department (OED) published its latest rules governing Oregon’s new Paid Family and Medical Leave Insurance (PFMLI) program.  The PFMLI program will be funded by employer and employee contributions in the form of payroll deductions beginning January 1, 2023 and will provide employees with up to 12 weeks of paid time off for leave that qualifies as family, medical, or safe leave, absent undue hardship, beginning on September 3, 2023.  Below is a summary of the more notable rules governing the PFMLI program and how an employer may submit an equivalent plan application.

Quick Refresher on PFMLI

The PFMLI program is broad and covers any employer that employs one or more employees working anywhere in Oregon, but only employers with 25 or more employees will be required to pay into the fund via employer and employee payroll taxes.  Employers and employees will share the cost of the 1% contribution rate; employers will pay 40% of the contribution and employees will pay 60%.  For example, an employer with 25 or more employees that pays $1 million in payroll every year would pay $10,000 into the program, $6,000 of which would come from employees’ earnings and $4,000 of which would come from the employer. The OED determines employer size by looking at all employees in the company, not just employees in Oregon.

Generally, to be eligible for benefits, an employee must have 1) earned at least $1,000 in subject wages in either the base year or alternate base year; 2) contributed to the PFMLI fund during the base year or alternate base year; 3) experienced a qualifying event necessitating family leave, medical leave, or safe leave; 4) current Oregon employment; 5) submitted an application for benefits; 6) not already exceeded their maximum paid leave and benefit amounts; and 7) no current disqualification from benefits, such as being eligible to receive workers’ compensation or unemployment benefits.

Employees who are eligible for PFMLI benefits are entitled to 12 weeks of paid leave for family, medical, or safe leave.  Employees who have limitations relating to pregnancy, childbirth, or related medical conditions, including lactation, are eligible for an additional two weeks of leave.  The rules define family leave as leave to care for and bond with a child during the first year after the child’s birth; medical leave as leave taken for the employee’s own serious health condition or to care for a family member with a serious health condition; and safe leave as leave needed as a result of domestic violence, harassment, sexual harassment, or stalking.

Importantly, if the qualifying reason for leave also qualifies for unpaid leave under the Oregon Family Leave Act (OFLA) or the federal Family Medical Leave Act (FMLA), then the employee must take such leave concurrently, up to 16 weeks of combined paid and unpaid leave in one benefit year (or 18 weeks, if the employee takes leave due to pregnancy, childbirth, or related conditions).

If an employee’s average weekly wage is equal to or less than 65% of the state’s average weekly wage as determined by the OED, then the employee will be entitled to 100% of their average weekly wage while on leave.  If the employee’s average weekly wage is greater than 65% of the average weekly wage set by the OED, then they will be entitled to 65% of the average weekly wage plus 50% of the employee’s average weekly wage that is greater than 65% of the average weekly wage, up to the maximum weekly benefit (which is 120% of the state’s average weekly wage).  The employer is not responsible for paying these wages while the employee is on leave; the PFMLI program will pay these amounts.

Rules Clarify PFMLI Requirements

Process for Applying for Benefits

Beginning September 3, 2023, employees can apply for PFMLI benefits through OED up to 30 calendar days before, or after, the start of leave.

The OED will notify the employer when an employee has applied for benefits, and the employer may respond to the OED if the employee did not provide the requisite notice of the need for leave (as discussed in more detail below). 

Covered Uses (Family Leave)

Employees can use PFMLI benefits for family, medical, and safe leave purposes.

Concerning new child bonding, the rules provide examples of how much leave employees can take when the bonding period crosses two benefit years and when employees take bonding leave for different children. The rules provide that, for a single child, an employee does not get to take 12 weeks of family leave in one benefit year, and 12 weeks of family leave in the subsequent benefit year, even if both proposed absences would occur within 12 months of the child’s birth, placement, or adoption. Instead, family leave taken by an employee in the first benefit year for the new child against how much leave the employee could take in the subsequent bonding year; again, capped at 12 weeks.

If, however, the employee wants to take bonding leave for two or more children, the combined amount of family leave during those two benefit years could exceed 12 weeks. The rules provide an example of an employee having twins, with 10 weeks of bonding leave for one child during the first benefit year, and 12 weeks of bonding leave for the other child during the second benefit year.

Employees can also take family leave to care for a family member with a serious health condition. In this context, the rules define “care” as “physical or psychological assistance.” They define “physical assistance” as attending to a family member’s basic medical, activities of daily living, safety, or nutritional needs when that family member is unable to attend to those needs themselves, or transporting the family member to a health care provider when the family member is unable to transport themselves. The rules define “psychological assistance” as providing comfort, reassurance, companionship to a family member, or completing administrative tasks for the family member, or arranging for changes in the family member’s care, such as, but not limited to, transfer to a nursing home.

Intermittent Leave

Under the PFMLI statute, benefits may be claimed for leave that is taken in increments equivalent to one workday or one workweek. Per the rules, claimants can take either consecutive, or nonconsecutive, periods of leave, in increments that equal one workday or one workweek.

For leave of less than one workweek, the rules provide that the amount of leave claimants can take will equal the average number of workdays they typically work. Moreover, the weekly benefit will be prorated based on the number of workdays of leave taken in the workweek, and the workday benefit amount will be calculated by dividing the weekly benefit amount by the average number of workdays the claimant would typically work in a workweek.

For claimants with more than one employer, the rules require that leave for a workday or workweek must be taken from all employers. For example, if a claimant works for one employer in the morning, and a different employer in the evening, but would only need to take leave during the morning or evening, the individual would not qualify for PFMLI benefits. Similarly, if a claimant splits a four-day workweek equally between two employers, to qualify for a workweek’s worth of PFMLI benefits, the claimant cannot work for either employer during that workweek.

Verification of Eligibility for Benefits

For family leave to care for and bond with a child during the first year after the child’s birth or during the first year after the placement of the child through foster care or adoption, an employee must provide verification reflecting the employee’s name as parent or guardian of the child after birth or placement of the child through foster care or adoption, the child’s name, and the date of the child’s birth or placement.  Such verification may include, but is not limited to, a child’s birth certificate or other document issued by a health care provider of the child or pregnant employee, or a copy of a court order verifying placement or document from the foster care, adoption agency, or social worker involved in the placement that confirms the placement.

An employee seeking medical or family leave for their own or their family member’s serious health condition must submit, in addition to personal information about the claimant or family member, verification of the relevant health care provider, type of medical practice or specialization, and contact information, as well as the approximate date the serious health condition commenced, a reasonable estimate of the duration of the condition or recovery period, and a reasonable estimate of the frequency and duration of intermittent leave and estimated treatment schedule, if applicable.

Finally, an employee seeking safe leave connected to domestic violence, harassment, sexual assault or stalking must provide verification of the basis for the safe leave, including a copy of a police report or a formal complaint indicating that the employee or their child was a victim of domestic violence, harassment, sexual assault, or stalking, a protective order or other evidence from a court or agency that the claimant or child appeared in or was preparing for a related proceeding, or documentation from an attorney, law enforcement officer, health care provider, licensed mental health professional or counselor, member of the clergy, or victim services provider that the clamant or child was undergoing related treatment or counseling, obtaining services, or relocating.  Of note, the rule provides an exception to the verification requirement for good cause shown if, for example, the employee has difficulty obtaining verification due to the lack of access to services or due to concerns for the safety of the employee or their child. In this instance, the claimant can provide a written statement attesting that they are taking qualifying leave.

Employees may be required to provide additional verification to establish eligibility or qualification for benefits and must respond to such requests within 14 days from the date of the request for information if the request is mailed, or within 10 days if the request is sent via telephone message, email, or other electronic means.

Employee Notice to Employers & Employer Notice to Employees

The finalized rules clarify when and how employees must provide notice to their employer before commencing leave. If leave is foreseeable, such as leave needed for an expected birth, planned placement of a child, or scheduled medical treatment, then the employer may require that the employee provide at least 30 days’ written notice.  If leave is unforeseeable, then the employee must give oral notice to the employer within 24 hours of leave beginning and must provide written notice within three days after leave began. For safe leave, employees must provide reasonable advance notice unless not feasible.

An employer requiring “written notice” may require employees to provide the type of leave, explanation of the need for leave, and anticipated timing and duration of leave. Notably, the employer must permit employees to provide notice via handwritten or typed notice, or electronic communications, including text messages and email, that are “consistent with the employer’s known, reasonable and customary policies.” Employees also need not expressly mention the PFMLI program specifically when putting their employer on notice. 

An employer must outline the “written notice” requirements in its written policy and procedures and must provide a copy to all eligible employees at the time of hire and each time the policy and procedure changes. The policy must be in the language that the employer typically uses to communicate with the employee and must include a description of the rule’s penalties that may be imposed by the state for not complying with the employer’s notice requirements.

Employees who fail to provide the required leave notice may incur a penalty amounting to a 25% reduction in the first weekly benefit amount.

Approved Equivalent Plans

Employers that provide paid leave benefits that are equal to or greater than those provided by PFMLI, and employees working for an equivalent-plan employer, do not have to pay contributions to the PFMLI program. Equivalent plans must provide the same or better benefits as the PFMLI program to all full- and part-time, seasonal, and temporary employees and may not be more restrictive or cost employees any more than the base rate established by the OED.  Although the OED does not intend to provide examples of equivalent plans, it has released a checklist and guidebook for employers to consult.   

On September 6, 2022, the OED rolled out equivalent plan applications for employers that already offer paid leave to employees, or are thinking about doing so. Employers must pay a $250 non-refundable fee to apply through the OED’s online portal, Frances Online. A printable equivalent plan application form is located here: Equivalent Plan Application. OED is currently requesting that employers allow at least 30 days for a decision to be made on an equivalent plan application.

To be exempt from paying contributions beginning January 1, 2023, employers must submit their equivalent plan application by November 30, 2022.  If an employer is unable to submit an equivalent plan application by the November 30 deadline, then they may submit a Declaration of Intent acknowledging and agreeing that they intend to offer an equivalent plan.  Employers that utilize the Declaration of Intent option must then submit the equivalent plan application by May 31, 2023.  Equivalent plans will be effective starting on September 3, 2023

Employers that submit an approved equivalent plan application between June 1, 2023 and June 30, 2023 will be exempt from contributing to the PFMLI program beginning October 1, 2023.  If an employer has neither submitted a Declaration of Intent nor an equivalent plan application by June 30, 2023, then the employer will be expected to contribute to the PFMLI program for the full year.  Importantly, employers that submit a Declaration of Intent must still deduct employee contributions and hold them in trust beginning January 1, 2023 until the OED has approved the equivalent plan application.

If the OED denies an equivalent plan application, then the employer must continue to collect and pay PFMLI contributions but may submit an appeal to the OED or Office of Administrative Hearings.

Employers must reapply for approval of their plans annually for the first three years or if any substantive changes are made to their approved plan. After three years, employers will no longer have to re-apply for approval, and their equivalent plans will remain in place until withdrawn or ended.

Next Steps for Employers

Now that these PFMLI rules have been finalized, employers should prepare to review and revise, if necessary, their PFML policies for implementation in 2023 and consider what requirements they want to impose regarding required notice for employees applying to take leave. Employers that wish to be exempt from quarterly contribution requirements beginning January 1, 2023 must submit either an Equivalent Plan Application or a Declaration of Intent by November 30, 2022.  In addition, the OED will likely issue another set of final rules by the end of September 2022. Employers are encouraged to review the PFMLI program’s website, which contains frequently asked questions specifically tailored to employers to ensure compliance.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.