Oregon’s paid family and medical leave insurance program, known as Paid Leave Oregon, or PLO, goes into effect on January 1, 2023, but employers may want to start preparing for and understanding the new law now.

Employers with twenty-five or more employees anywhere in the world and at least one eligible employee in Oregon—including remote employees—must comply with this law’s requirements.

PLO is a state-run wage replacement program meant to compensate employees who need to take time off work to care for and bond with a child following the child’s birth or adoption, to recover from a serious health condition, or to take leave if the employee or the employee’s family member has experienced domestic violence, sexual assault, or harassment.

Employees must be employed to receive benefits, and they cannot simultaneously receive workers’ compensation and/or unemployment insurance benefits.

Employees in Oregon who have earned at least $1,000 in wages in the four out of five quarters before starting PLO leave are eligible to apply for PLO benefits.

Employees who have been employed with an employer for at least ninety days may take job-protected PLO leave. Employees may take twelve weeks of PLO leave per year.

Where the qualifying reasons for taking leave under PLO and leave under the Oregon Family Leave Act (OFLA) or federal Family and Medical Leave Act (FMLA) are the same, the leaves will run concurrently up to a maximum of sixteen weeks of combined leave per year, or eighteen weeks if the employee experiences a pregnancy-related disability. Employees may take PLO leave intermittently in weekly or daily increments.

Employees may choose to exhaust their accrued paid time off or protected sick leave under the Oregon Paid Sick Time Law, before applying for PLO benefits. An employee may also use accrued paid time off and paid sick leave to top off PLO benefits if the weekly benefits are less than the employee’s weekly wages. Employers may not require employees to exhaust paid time off and paid sick time before applying for PLO benefits.

Starting January 1, 2023, employees and employers must contribute to the PLO state fund. Employees will contribute 60 percent and employers will contribute 40 percent of the total contribution rate determined annually by the Oregon Employment Department (OED) that has a statutory maximum of 1 percent of wages.

Employers may choose to pay contributions for both employees and employers as an employee benefit. As of September 3, 2023, employees may begin applying for PLO benefits.

Covered employers might consider taking the following steps to prepare themselves for this new law before January 1, 2023.

Providing Advance Notice to Employees

The OED will release a sample information poster in the near future that employers may post in a public space at the worksite. Until then, employers might consider preparing and giving written notices to employees that they will start seeing PLO benefit deductions from their paychecks.

Employees contribute 60 percent and employers contribute 40 percent of the statutory maximum of 1 percent of employee’s wages, up to a maximum of $132,900 per year. For example, if the employee earns $1,000 per month, then the employee contributes $6 and the employer contributes $4 per month.

Checking Payroll Processing Procedures and Registering for Frances Online

Employers may want to check their payroll processing procedures and register for Frances Online, the OED’s new employer portal for reporting employer taxes, unemployment insurance taxes, and PLO contributions. As of September 6, 2022, Frances Online has replaced Oregon’s payroll reporting system.

Employers may want to work with their payroll processing service provider to ensure that correctly calculated employee contributions are withheld from paychecks starting January 1, 2023.

Considering Whether an Equivalent Plan Might Benefit the Employer

An employer may choose to opt out of PLO if it has an equivalent plan approved by the OED. The OED began accepting applications for equivalent plans through Frances Online on September 6.

As of the date of this article, the Oregon Department of Consumer and Business Services has not approved any insurance products that satisfy PLO’s requirements. Employers might consider asking their insurers if they plan to offer any equivalent plan products.

While there is no deadline to submit equivalent plan applications, the OED recommends employers submit their applications by November 30, 2022, to ensure timely approval by January 1, 2023. Review and approval takes about thirty days. The OED has released a checklist for employers that want to submit applications, and will release an employer toolkit soon.

If an employer intends to submit an application, but is not yet ready, it may submit a Declaration of Intent to Obtain Approval of an Equivalent Plan form through Frances Online certifying that the employer will have an approved equivalent plan by May 31, 2023.

By submitting a declaration of intent, the employer will not have to withhold contributions starting January 1, 2023. However, if the employer’s equivalent plan application is denied, the employer “will be liable for contributions from January 1, 2023[,] until an approved plan is in effect.” The last day an employer may file a declaration of intent is November 30, 2022.

Even if an employer does not choose to use an equivalent plan in 2023, it may submit equivalent plan applications in future years. Similarly, if an employer chooses to cease using an equivalent plan and decides to use PLO in future years, it may submit paperwork with the OED to do so.

Reviewing Existing Leave Policies and Procedures

PLO’s requirements are similar, but not identical, to the requirements of the OFLA and the FMLA, which respectively provide protected but unpaid state leave and federal leave. For example, leave related to domestic violence survivors is covered under PLO, but not under the OFLA or the FMLA.

If an employer does not use an equivalent plan, the OED will administer PLO benefits. The OED will notify the employer when an employee applies for, or is approved to take, PLO leave. The employer administers OFLA and FMLA benefits, and it must track an employee’s use of OFLA, FMLA, and PLO leaves.

Employers might consider reviewing their leave policies and procedures to see whether they need to be updated to comply with PLO’s requirements.

Checking Mandatory Annual Reporting Requirements

All employers, including those using approved equivalent plans, must abide by PLO’s reporting requirements related to employee population and contributions withheld from employee wages.

Employers must renew their applications for equivalent plans every three years. All mandatory reports and applications must be submitted through Frances Online.

The OED is set to finalize rules for PLO administration by September 22, 2022.

A version of this article was previously published by Law360.