As we’ve blogged about previously here, here, and here, in 2019, the Oregon legislature passed a paid family and medical leave (“PFML”) law which provides Oregon employees with up to 12 weeks of paid leave for a covered purpose through a payroll tax; Oregon employers with at least 25 employees are covered by the new program. Employer contributions do not begin until 2022, and benefits are not available to employees until 2023. However, the Oregon Employment Department (“Department”) has begun drafting administrative rules to govern the program. The Department released its first set of draft rules on an “informal” basis late last week. The Department will conduct “formal” rulemaking next year.
The draft rules primarily address the definition of “wages” for purposes of determining both the employer and employee contribution to the PFML program. The draft rules address the following specific topics:
- Dividends: dividends paid to corporate officers and shareholders are treated as wages to the extent they are considered compensation for services performed for the corporation.
- Employee Incidental Expenses: meal and travel reimbursements are not considered wages. The draft rules caution, however, that employers should follow the Internal Revenue Service’s (“IRS”) rules regarding documentation of expenses in order to justify excluding these amounts from the wage calculation.
- Pensions: pension payments are not considered wages, and an individual receiving pension payment is not considered an employee.
- Jury Pay: neither jury pay, nor the value of jury-related meals, lodging, or the like, is considered wages.
- Bonuses, Fees, and Prizes: these categories of compensation are considered wages if they compensate an employee for services performed.
- Disability Payments and Accident Compensation: amounts paid by employers to employees during periods of disability, or that are over and above the amount of workers’ compensation benefits paid to an employee under a workers’ compensation insurance plan, are generally considered to be wages. However, lump sums or other compensation to employees for work-related accidents are not.
- Commissions: commissions, including “guaranteed pay” (which we understand to mean payments that are advanced to employees as a draw against future commissions) are wages.
- Severance, Vacation, Holiday, and Sick Pay: all of these categories of compensation qualify as wages.
- Gifts: gifts are generally not included in the definition of wages. Note that “tips or gratuities” are treated as wages, not gifts.
- Remuneration Other Than Cash: the value of non-cash remuneration provided to employees (e.g., room and board) as payment for services is considered to be wages.
- Cafeteria Plans: employee benefits paid through cafeteria plans are generally not included in the definition of wages.
The draft rules are available for public comment through the Department’s website until December 31. However, the Department has signaled that it will accept additional comments on the rules when it engages in the formal rulemaking process.