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Oregon Paid Family Leave (Effective 1/1/2023)

Oregon has enacted a Paid Family Leave tax. The new tax goes into effect on 1/1/2023.

ReadyPay version 3.50.0.2 has been updated with the new tax codes.

Summary of the law's rules​

  • Contributions shall be paid by employers and employees as a percentage of a total rate determined by the Director of the Employment Department.

  • The total rate may not exceed one percent of employee wages, up to a maximum of $132,900 in wages.

  • Employer contributions shall be paid in an amount that is equal to 40 percent of the total rate determined by the director. An employer shall deduct employee contributions from the wages of each employee in an amount that is equal to 60 percent of the total rate determined by the director.

  • When an employment agency is acting as an employer, the employer contributions required under this section shall be the responsibility of the employment agency.

  • Employers that employ fewer than 25 employees are not required to pay the employer contributions under subsection (1) of this section. (b) If an employer that employs fewer than 25 employees elects to pay the employer contributions under subsection (1) of this section, the employer may apply to receive a grant under section 42 of this 2019 Act.

  • Notwithstanding subsection (1) of this section, an employer may elect to pay the required employee contributions, in whole or in part, as an employer-offered benefit.

  • Oregon's Director of the Employment Department shall establish by rule a method to determine on an annual basis the number of employees employed by an employer. Employers who are unsure if they meet the "under 25 employee threshold" must verify their status with the state.

Additional details are available on the state website.

Tax code setup​

  1. Add the new tax codes (ORPFL and ORPFL-E) to the company.

  2. The default employee rate on tax code ORPFL-E is 0.60%. If the employer chooses to cover the employee portion of the tax, override the rate to 0.00%.

  3. Set the employer rate on tax code ORPFL, based on the employer's responsibility. The default employer rate for ORPFL is 0.00% because employers who have under 25 employees are not required to contribute. You must override the ORPFL tax code rate for employers with 25 or more employees. Such employers must contribute at least 0.40%. For employers who choose to cover the employee's portion, override the ORPFL tax code rate to 1.00%.

  4. Add the ORPFL and ORPFL-E tax codes to the employees subject to the tax.

Adding notes to classify employees​

The Oregon Paid Family Leave requires employers to classify employees who are:

  • Replacement workers that are hired to temporarily replace employees who are out on leave.

  • Oregon residents who perform their work entirely out of the state.

warning

The codes you add in the steps below are case sensitive, and must be entered exactly as shown.

  1. Add a note category of ORPFL to Company Setup > Misc > Note Categories.

  2. Add a note type of Replacement to Company Setup > Misc > Note Types.

  3. Add a note type of Out Of State to Company Setup > Misc > Note Types.

  4. Add the note to any employee who falls into one of these 2 classifications. Use the Effective Date field as the start date of the classification. Use the Next Date as the end date of the classification.

For example: An employer hires a replacement worker on 9/15/2022. The replacement worker is then hired as a permanent employee on 12/22/2023. By end dating the note, the employee will not be counted as a replacement worker in a future quarterly return.

Additional information​

  • The two new tax codes are exempt from Section 125 deduction types.

  • Filing information has not been released by the state.

  • Payments will be quarterly, and payable by check. The state has not announced if ACH Credit will be accepted.

  • Private plans are allowed subject to approval by the state.

  • Employee contributions may be entered in Box 14 of the W2. The state has not announced if this is a requirement.

Questions?​

Contact your Payroll Service Provider.