In Pursuit of Profit
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Recent changes to Oregon state law have made payroll management more complicated, requiring a broader awareness of how these changes will affect employee compensation in the coming months. Medical leave provisions, increased pregnancy protections, pay equity fixes, and retirement plan contributions have all been amended in Oregon for 2020. These legislative changes make accurate calculations and withholdings more crucial than ever before to avoid needing to pay back owed wages, delinquent taxes, and incurred penalties.
Paid Family and Medical Leave
As a result of the newly passed FAMLI Equity Act, Paid Family and Medical Leave (PFML) is now in keeping with existing California and Washington law. Under the new legislation, employers in Oregon must provide 12-18 weeks of paid leave to eligible employees for:
Under certain conditions eligible employees may take another four weeks of unpaid leave in top of their paid leave under the Oregon Family Leave Act (OFLA). Benefit compensation during this time is tiered based on how much the employee is making relative to the state’s average weekly wage.
Funding for PFML is achieved through employee contributions to the FAMLI Equity Act fund via payroll withholdings. While the new law does not take effect until 2023, employers will be required to begin payroll withholdings in advance of the offering.
Pregnancy Accommodations and Lactation Protections
Effective as of the first of the year, businesses with six or more employees must provide accommodations to pregnant employees or applicants. Employers must provide reasonable accommodations for known limitations related to pregnancy, childbirth, or lactation. Accommodations may include acquisition of new equipment or modification of existing equipment, more frequent breaks or longer breaks, manual labor assistance, and changes in job duties or schedules.
These accommodations should already be familiar to Oregon businesses because they are currently required to provide these types of accommodations to qualified employees with disabilities under the Americans with Disabilities Act. Previously, employers were required to provide 30-minute breaks for the expression of breastmilk, but HB 2593 removes this cap, allowing longer breaks for employees as needed.
Despite these accommodations being familiar, changing active work time, work schedules, or job assignments can affect payroll calculations for other employees as the business balances the needs of pregnant employees with operational needs. While some employees are pregnant or breastfeeding other employees will likely need to be utilized more heavily to maintain a consistent output, changing payroll calculations across the workforce, especially at smaller businesses where there are fewer overall employees.
Pay Equity Consistency
Oregon’s pay equity changes are not new legislation, but rather a series of fixes to its existing Equal Pay Act. These fixes aim to eliminate wage differentials by requiring that employers pay like employees comparably. Employers must compensate employees at the same rate for comparable work unless a seniority system, merit system, or other factor exists to justify the difference. Paying employees differently for like work without a bona fide reason can constitute the basis for a discrimination lawsuit, providing even more incentive to eliminate payroll calculation errors due to employee misclassification or other issues.
Oregon Retirement Savings Plan
OregonSaves requires employers not offering their own retirement savings plans to make regular payroll deductions from employee wages to deposit into a state fund. While OregonSaves went into effect back in 2017, some Oregon employers still have not complied. Effective as of the first of the year, employers will be penalized $100 per year for every eligible employee that has not had a chance to participate. The ongoing financial cost associated with not staying abreast of payroll withholding requirements is another example of why businesses are choosing to outsource these functions to payroll providers.
If you missed any of these new requirements and need help updating your payroll procedures, please contact Todd here today! We have a team who can help!