by Scott Herson-Hord, on Jul 28, 2021 12:24:41 PM
Oregon's Paid Sick Time Law under Senate Bill 454 first went into effect January 1, 2016, making Oregon the fourth state to enact mandatory paid sick time. Updates to the paid sick time law were then made in 2018 largely to clarify the annual sick time limits and pay rates for certain types of employees. This year paid sick time coverage was expanded again to include additional events like caring for a child whose school or place of care is closed for a public health emergency like COVID-19.
Every employer in the state is subject to the Oregon Paid Sick Time Law, which is why having a sick time policy in place is so important. This helps your organization stay in compliance with labor laws throughout the state, while also putting protections in place for the company.
Leveraging an Oregon payroll & HR service company like Great Northern Staff Administrators (GNSA) can help your company establish policies, processes, and software to manage and track sick time and stay compliant with legislation.
In that vein, we've put together this article as a resource to guide you through Oregon Sick Time Laws. This will provide the information and tools necessary to help you:
- Optimize your sick leave policy
- Engage employees
- Support managers
- Reduce risk of non-compliance issues or lawsuits
- Effectively manage everything sick time, including: eligibility, accrual rates, carryover rules, pay rates, time off balances, and posting requirements.
Oregon Sick Time Law Overview
Oregon's Sick Time Law - not be confused with the related Oregon Family Leave Act (OFLA) - is part of the wider set of Oregon Labor Laws that govern the state's employment practices. All of which should be clearly documented for employees in Oregon Labor Law Posters and an employee handbook.
Here's an overview of what employers need to know.
Employee Sick Time Entitlement
Beginning on January 1, 2016, the majority of existing Oregon employees became qualified to begin accruing sick time off. Employees hired after that date are eligible to attain sick time off upon their employment start date - a minimum of 40 hours during the calendar year.
An employer's size and location will determine whether the sick time they receive is paid (Greater than 9 Employees in Oregon OR greater than 5 Employees in Portland) or unpaid (anything smaller than the former in either location).
Eligible Employee Types for Sick Time
All full-time, part-time, temporary, and seasonal employees who provide service to an employer are considered employees under Oregon's sick time law and are eligible to receive protected sick time off.
The exceptions to this rule are:
- Employees receiving sick pay under the Family and Medical Leave Act (FMLA)
- State or federally administered work training program participants
- Work-study program participants
- Those employed by their parents, spouse, or child and
- Railroad Unemployment Insurance Act-exempt workers
Employee Sick Time Allowable Uses
Employees can use sick time if they are seeking treatment or recovering from being sick or injured, or have other health conditions. They can also use sick time to
- Care for sick family members that are sick, injured, experiencing mental illness, or visiting the doctor
- Parental leave:
- Care for children, which can include infants, adopted children, or foster children whether under 18 or disabled children over 18
- Care for a child whose school or place of care is closed for a public health emergency
- Seek assistance for domestic violence, harassment, sexual assault, or stalking, and
- Attend or arrange funerals for family members
In certain cases, sick time may even be donated to other employees.
Oregon Employer Requirements for Sick Time
The Oregon Paid Sick Time Law has numerous employer requirements that govern the notification, education, and provision of sick time to employees.
Sick Time Law Notice / Posting Requirements
Employers must post an Oregon Sick Time Poster or comparable notice in a public space where employees can easily view it. This notice should include information on employees' basic sick time rights under the state's law. An official poster is also available in Spanish.
Paid or Unpaid Requirements by Employee Size and Location
Any sized employer needs to comply with this legislation, the only question for your company is whether or not the minimum 40 hours of protected sick time provided is paid or unpaid, which will be determined by your location and number of employees.
- Paid Sick Time Off - must be provided employers if they are:
- Located in Oregon AND have 10 or more employees, or
- Located in Portland AND have 6 or more employees
- Unpaid Sick Time Off - must be provided by smaller employers, so if they are:
- Located in Oregon AND have less than 10 employees, or
- Located in Portland AND have less than 6 employees
In either scenario, employers may require that employees wait until their 91st day of employment to begin using their sick time.
Requirement to Provide Employees with Quarterly Sick Time Balance Statements
In addition to posted notification of the law's overview, employers must give written notification to employees of the sick time they've accumulated, both used and unused. This must be done at least quarterly and balances can be posted in multiple places, such as within employee portals in their payroll software or on each paycheck or pay stub.
How to Structure Your Oregon Sick Time Policy
Oregon's paid sick time law allows employers to choose from two different options when determining how employees can attain sick time off hours.
Both methods can actually be used within the same organization to cover different employee classifications or categories of employees. For example, you can use the accrual method outlined below for part-time staff, and the front-loaded method for full-timers. As long as the distinctions are uniform and don't impact requirements, Oregon's sick leave law allows for flexibility in calculation rules.
1. The Accrual Method
The accrual method skips the need for prorating because hours accumulate as your employees work. Using this calculation-based method to accrue time off, eligible employees must be given one hour of sick time per 30 hours worked (which equates to about 1 & 1/3 hours for every 40 hours worked).
Choosing this method, the accrual of sick time off begins on the first day of an employee's employment and is applicable whether the eligible employee is full-time or part-time.
Once the accrued 40-hour minimum is reached, an employer can either choose to stop adding sick time hours or continue if the sick time policy is more generous than the minimum amount the law requires (using the state required calculation above would add up to about 70 hours in a given year for a full time employee).
Using the accrual method, up to 40 unused hours can be carried over by employee from the previous year into the next year, which can lead to a total of 80 sick hours in one calendar year. However, carry over is not required for the front-loaded method.
2. The Front-Loaded Method
The front-loaded method means full-time employees receive 40 hours of sick time upfront per 12-month year. Depending on the type of yearly tracking you use, prorating may or may not be necessary. For instance, if an employee starts mid-year and you track time by their anniversary date, no prorating is necessary. However, if you track by calendar year starting January 1st, someone beginning employment on July 1st will receive 20 hours of front-loaded sick leave.
Part-time employees are not eligible for the front-loaded calculation method because, under the law, employers must load 40 hours at the beginning of the year. The only exception is if an employee starts work at some point later in the year.
How to Calculate Your Oregon Sick Time Pay Rates
Each employee receiving sick pay in Oregon must be paid at their regular rate of pay, which can be calculated in the following manner:
- Employees with One Hourly Rate of Pay: The employee earns the hourly rate they would have earned for working during the same period that the sick time is used.
- Employees with Multiple Rates of Pay: The employee earns either a weighted average of the regular rates earned during the previous pay period or, if known, the wages they would have earned during the period of time the sick leave is used.
- Salaried Employees: The employee earns the total wages for the pay period covered by the salary, divided by the total number of hours to be worked in the pay period. When total hours vary from week to week, 40 hours should be used to calculate the sick pay.
- Commission, Piece-Rate, and Quantity Basis Paid Employees: The employee earns no less than the minimum wage.
- Hourly, Weekly or Monthly Paid Employees Who Also Receive Commission or Piece Rate Pay: The employee earns either the minimum wage if this is higher, or a rate equal to their hourly, weekly, or monthly rate.
Overtime, bonuses, incentives, tips, and holiday pay are not part of an employee's regular rate of pay, although differential pay such as shift differentials must be included. In addition, employers are not obligated to pay employees who are no longer employed any unused accrued sick time.
Accurate leave management processes are important for calculating and tracking time off and to remain in compliance with the state law.
How To Manage Oregon Sick Time Processes
Managing sick time off or sick leave means following a documented process to stay compliant with Oregon's sick time laws. The process you choose or have access to will directly correspond to the amount of time and number of manual steps you have to take in order to document, administer, and manage sick time to ensure compliance.
1. Manual Sick Time Management Processes
Manual documentation and management typically involve using templates, spreadsheets, and other databases to enter sick time data by hand. For instance, payroll staff might use a Sick Time Notification Template to keep staff informed of their existing bank of sick time. Accruals would typically be tallied with calculators or in spreadsheets. While any sick time information passed from employee time off requests to payroll may be disorganized and come from a variety of sources, such as emails, company forms, and verbal requests.
Another downside to manual entry is that employers must constantly update existing information in order to stay compliant with Oregon's sick time and leave regulations. This method can be cumbersome and somewhat time-consuming. It may also lead to costly compliance issues or calculation errors because the various entries are decentralized and therefore don't "talk to each other" to ensure checks and balances take place.
2. Semi-Automated Sick Time Management Processes
This option automates certain parts of the payroll process, such as recording sick time requests and time off balances using a leave management or time and attendance software. This will typically keep employees up-to-date in an organized manner, but may not seamlessly integrate with a payroll system and require dual data entry.
While some processes are automated, the focus still isn't on full accessibility, deep analytics, integration, or intuitive processing to address regional regulations, which means payroll personnel have to perform extra steps and spend precious time answering employee questions.
3. Fully Automated Sick Time Management
When leave management is fully automated, embedded reports, analytics, and dashboards to help employers stay on track with sick time through closed loop administration. Employers should have built-in checklists with the ability to customize their own steps and processes with built-in notifications and alerts. This should assist with compliance, streamline leave management processes, and reduce any leave leave administration errors.
Employees should also have a access through a self-service interface that allows them to request time off and view sick time information for accrued time, current balances, and time taken through through their smartphone, computers, or other devices.
Sick time data should be updated in real-time upon the approval of any employee requests and flow right into payroll under the correct earning codes, removing the need for traditional preprocessing and making compliance pretty easy.
Costly Consequences of Non-Compliance with Oregon's Sick Time Law
Making sure you're compliant with the state's sick pay requirements might seem a bit complicated at first, but just imagine the headaches that can come from getting caught ignoring or not properly complying with the law.
Here are three major dilemmas you can avoid if you make a little effort to follow Oregon's sick time provisions.
Oregon Sick Time Law Fines and Penalties
Formal complaints can be filed by employees against employers who fail to uphold Oregon's sick pay laws, or who retaliate against them for using sick time by firing them, reducing their hours, or taking other employment action. The Oregon Board of Labor and Industry can issue civil penalties of up to $1,000 per violation. This is in addition to the fees paid to complainants for lost wages and sick pay.
In addition, failure to pay for any sick time used may subject employers to Oregon's penalty wages, which are up to eight times an employee's regular wages.
Legal Defense Fees
In the U.S., a company has a 10% chance of having an employee lawsuit brought against it. According to The Hiscox Guide to Employee Lawsuits, retaliation is the most common charge employees make in lawsuits against small-to-midsize employers. The average defense and settlement costs for such employee lawsuits is a whopping $160,000.
What's even more eye-opening is, if a judgment is successful against an employer, they will be responsible for the employee's legal fees - and successful settlements rose from 19% in 2015 to 24% in 2017.
Bad Press for Employers
Besides the direct costs, noncompliance can leave you vulnerable to more subtle forms of financial depletion. Unfavorable press can make talent scouting a challenge, as more and more candidates research employers on the internet before beginning the interview process or prior to accepting a position.
Staff morale may also dip once word gets out that labor laws aren't being adhered to. A 2017 study by International Business Research found that low morale is significantly tied to low employee motivation and productivity levels, which can negatively impact a company's bottom line.
Keeping compliant may seem a bit challenging, but companies like GNSA can help. With Oregon HR specialists located in the heart of Portland that bring 175 years of combined experience to the table, staying compliant with applicable laws and regulations while minimizing labor costs, reducing costly errors, increasing productivity, and simplifying payroll processes has never been easier.
Guest Author: Scott Herson-Hord
Scott Herson-Hord is the CEO of Great Northern Staff Administrators (GNSA), an Oregon payroll services company that specializes in serving small to mid-size businesses with administrative solutions to streamline back-office processes from benefits to human resources. Starting his career in finance and working more than 10 years as a controller for various companies, Scott leveraged this experience over the next 22 years with GNSA to become one of the pacific northwest’s foremost experts in human capital management (HCM).