January 1, 2016

Oregon’s New Sick Leave Law

By Rory B. Tosh, CPA

Oregon’s sick leave measure is now law. Governor Kate Brown signed SB 454 in June of 2015. The law takes effect January 1, 2016.

If you employ even one employee in the State of Oregon, you must provide sick leave (paid or unpaid), with a few limited exceptions. The rules are:

  1. If you employ 10 or more, you must accrue 1 hour paid for every 30 hours worked or 1 1/3 hours for every 40 hours worked.
  2. If you employ less than 10, you must accrue 1 hour unpaid for every 30 hours worked or 1 1/3 hours for every 40 hours worked.
  3. Employers are allowed to frontload the 40 hours of sick time for employees, and are therefore relieved of the recordkeeping requirements above.
  4. The rules change slightly if you are located in a city with a population exceeding 500,000 (Portland). Replace the 10 in #2 and #3 above with 6.

The number of employees for the above is ascertained by determining the per-day average number of employees for each of the 20 workweeks in the calendar or fiscal year immediately preceding the year in which the leave is to be taken.

If you have an existing policy for sick, vacation or PTO that is equivalent or more generous it is deemed compliant with this law.

Employees who are hired on or after January 2, 2016, begin earning sick leave immediately, but cannot use it until their 91st calendar day of employment. Those already employed when the law takes effect, January 1, 2016, can use sick leave as soon as accrued.

The general rule is that you must allow employees to carry over unused sick time from one leave year to the next. However:

  • An employer may adopt a policy that limits an employee from using more than 40 hours of sick time in a year
  • The employer may adopt a policy that limits an employee to accruing no more than 80 hours of sick time.
  • You can cash out the employee at end of year with mutual consent between employer and employee, and employer credits the employee with the amount of sick time available under the law at the beginning of the next leave year.
  • Oregon sick leave has no cash value upon termination, but if you rehire an employee within 180 days of separation from employment, you must restore the employee’s unused sick leave balance.

An employee doesn’t necessarily have to be sick in order to use sick leave. Employees may use sick leave not only for their own illness, injury, or health condition, but also for that of a family member.

  • If the need to use sick time is foreseeable: The employer may require reasonable advance notice not to exceed 10 days prior to the date of the sick time.
  • If the need is unforeseeable: The employee shall provide notice as soon as practicable and generally must comply with employer procedural requirements if those do not interfere with the ability of the employee to use sick time.

The employer shall provide written notification at least quarterly to employee of amount accrued and unused sick time available for use by the employee.

An employer may not require an employee to: Search for or find a replacement worker; or work an alternate shift to make up for the use of sick time.

Every employer in Oregon is affected by this new law, and every employer in Oregon needs to get out in front of this law before the Oregon Bureau of Labor and Industries (BOLI) begins issuing civil penalties for violations that occur on or after January 1, 2017. The new law is complex, and no doubt will be a learning process for employers across the state.

Rory Tosh is a tax professional with 20+ years of experience in public and private accounting. He is a member of the American Institute of Certified Public Accountants and the Oregon Society of Certified Public Accountants (OSCPA.) He is also a longtime member of the OSCPA Tax Strategy Committee. More about Rory here.