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Sick Time Law

 

 
In 2015 the Oregon legislature passed SB 454 requiring all employers to allow employees to earn and use up to 40 hours of protected sick time each year. The law went into effect in January 2016. Nearly every employer in Oregon must comply with the law. All employers must provide up to 40 hours of unpaid protected sick time per year. Employers that employ at least 10 employees in Oregon (six if the employer has operations in Portland) must provide that protected sick time with pay. An employee may not be disciplined or terminated for taking protected sick time.
 
 
Q. What does the sick time law provide?
 
A. "Sick time" is protected time during which an employee is permitted to be absent from work without disciplinary consequences or a reduction in benefits, including but not limited to health care benefits that the employee earns from the employer.
 
"Paid sick time" is sick time that is compensated at the employee’s regular rate of pay and without reductions in benefits, including but not limited to health care benefits that the employee earns from the employer at the time the employee uses the paid sick time.
 
Q. What is a covered employer?
 
A. A covered “employer” is any person or entity that employs one or more employees working anywhere in the state of Oregon. This does not include the federal government.
 
Q. Who is an eligible employee?
 
A. An eligible "employee" is an individual who renders personal services at a fixed rate to an employer. This does not include employees who receive paid sick time under federal law, independent contractors, a participant in a work training program administered under a state or federal assistance program, a participant in a work-study program, railroad workers exempt under the federal Railroad Unemployment Insurance Act, and individuals employed by that individual’s parent, spouse, or child. 
 
Q. What if I have 11 employees, but only for a short period of time as seasonal employees?
 
A. All employees employed by the employer (full-time, part-time, seasonal, and temporary) must be counted for purposes of determining the number of employees. The number of employees is calculated based on the average number of employees employed by an employer during each of any 20 workweeks in the calendar or fiscal year immediately preceding the year in which an employee's sick time is to be taken.
 
If an employer had 20 weeks (not necessarily consecutive) in which the daily average was 10 or more (six or more in Portland), the employer’s employees are entitled to paid sick time. Employers should look at the previous year and determine if there were any 20 weeks over the course of that entire year when the daily average number of employees was 10 or more (six or more in Portland).
 
Q. Is an owner counted for purposes of determining the number of employees?
 
A. Maybe. An employee is defined as “an individual who renders personal services at a fixed rate to an employer if the employer either pays or agrees to pay for personal services or permits the individual to perform personal services.” ORS 653.601(1)(a).
 
A sole proprietor of a business will probably not be an employee, but many businesses are set up as corporations. In those instances it is the corporation, not the individual owners, who are the employers, and the “owners” are employees of the corporation. Generally, if an owner is also getting a W-2, they should be counted as an employee unless some specific exemption applies.
 
Starting January 1, 2018, the following individuals are specifically excluded from the employee count; an individual who is a director of a corporation who has a substantial ownership interest (ownership equal to or greater than the average percentage of ownership of all owners, but not less than 15%), a member of a limited liability company who has a right to vote and a substantial ownership interest, a partner of a limited liability partnership who has a substantial ownership interest, or a sole proprietor of a business. The parent, spouse, or child of such individuals are also excluded from the employee count.
 
Q. Are the owner’s family members counted for purposes of determining the number of employees?
 
A. An individual employed by that individual’s parent, spouse or child is not an “employee” for the purposes of the sick time law.
 
However, one should figure out who the employer really is: Is it the parent, spouse, child, or a corporation? Most businesses are set up as separate legal entities that employ the owners and other employees. If this is the case, then the owner’s immediate family would be counted as employees if they work for the business.
 
Corporations cannot have children or spouses. The law uses the term “individual,” and until the law changes effective January 1, 2018, a cautious interpretation is that ONLY parents, spouses or children of an individual operating as a sole proprietorship are not counted as employees. They should probably be counted, however, if the employer is a corporation, partnership or limited liability company.
 
Starting January 1, 2018, the following individuals are specifically excluded from the employee count; an individual who is a director of a corporation who has a substantial ownership interest (ownership equal to or greater than the average percentage of ownership of all owners, but not less than 15%), a member of a limited liability company who has a right to vote and a substantial ownership interest, a partner of a limited liability partnership who has substantial ownership interest, or a sole proprietor of a business. The parent, spouse, or child of such individuals are also excluded from the employee count.
 
Q. What is meant by a "year"?  How is it measured?
 
"Year" includes any consecutive 12-month period, such as a calendar year, a tax year, a fiscal year, a contract year, the 12-month period beginning on the anniversary of the date of employment, or any other 12-month period the employer customarily uses. 
 
A. How does sick time accrue?
 
Employees accrue one hour of sick time for every 30 hours worked or 1-1/3 hours for every 40 hours worked.
 
Q. When does sick time accrual start? 
 
A. Sick time accrual begins when an employee starts working for an employer. Although employees immediately start accruing sick time, new employees may be required to wait until their 91st calendar day of employment to use sick time.
 
Q. What if an employee accrues more than 40 hours of sick time over the course of a year?
 
A. Effective January 1, 2018, if employees work full-time throughout the course of a year, they will likely have worked enough to accrue almost 70 hours of sick time. Employers are only required to allow employees to use 40 hours in a year, however. The law was amended in 2017 to make clear that an employer may limit the number of paid sick time hours an employee may accrue to 40 hours per year. Employers may also limit carry-over of unused sick time from one year to the next to up to 40 hours a year and cap total accrual balances to 80 hours.
 
Q. Is “front-loading” sick time or paid time off (PTO) allowed?
 
A. Yes. An employer is allowed to “front-load” (give 40 hours of sick time or PTO all at once at the start of the year or when the employee becomes eligible to use sick time) instead of using the accrual method.
 
Q. Is it permissible for an employer to use the front-loading method for full-time employees and the accrual method for part-time employees?
 
A. Yes. An employer may award sick time on an accrual basis for certain categories of employees while front-loading sick time hours for other categories of employees, as long as any distinctions the employer makes are consistent and unrelated to the obligation to provide sick time. For example, an employer may award sick time on an accrual basis for part-time or temporary employees, while front-loading sick time for full-time employees, if it customarily maintains different employment conditions for part-time, temporary, and full-time employees.
 
Q. How many hours of sick time must be front-loaded for employees hired mid-year?
 
A. Employers may front-load a number of hours of sick time that is the pro rata percentage of the hours to which a new employee would be entitled for an entire year based on the number of hours the employee was actually employed by the employer for the year.
 
Twenty hours of sick time would be the correct number of sick time to be front-loaded to an employee whose first day of employment is July 1 for an employer that uses a calendar “year.” If an employer is using the front-load method, the hours may not be prorated based on whether an employee is part-time or full-time, but only if they have been newly hired. The prorated amount of front-loaded sick time is the percentage of sick time equal to the percentage of the “year” left at date of hire.
 
Q. I have employees who work only 20 hours per week. Am I able to front-load them with 20 hours?
 
A. No. Employers who front-load sick time hours must front-load 40 hours at the beginning of the year, unless the employee begins work later in the year.
 
Q. If an employer is using the front-load method, are they required to track accrual rates, carryover entitlements, and usage?
 
A. No. An employer using the front-load system need only provide a certain number of hours (at least 40) to the employee at the beginning of the year, or a prorated amount if the employee begins work later in the year. Under this method, the employee will not accrue additional sick time unless the employer chooses to provide additional time.
 
 
Q. For what purposes may an employee use sick time?
 
Employees are entitled to use sick time for the following purposes:
 
·     To care for the employee or the employee’s family member with a mental or physical illness, injury, or health condition, need for medical diagnosis, care, or treatment of a mental or physical illness, injury, or health condition, or need for preventive medical care;
 
·     To care for an infant or newly adopted child under 18 years of age, or for a newly placed foster child under 18 years of age, or for an adopted or foster child older than 18 years of age if the child is incapable of self-care because of a mental or physical disability, completed within 12 months after birth or placement of the child;
 
·     To recover from or seek treatment for a health condition of the employee that renders the employee unable to perform at least one of the essential functions of the employee’s regular position;
 
·     Absences associated with the death of a family member by:
 
o   Attending the funeral or alternative to a funeral of the family member;
o   Making arrangements necessitated by the death of the family member; or
o   Grieving the death of the family member;
 
·     Absences related to domestic violence, harassment, sexual assault or stalking:
 
o    To seek legal or law enforcement assistance or remedies to ensure the health and safety of the employee or the employee’s minor child or dependent, including preparing for and participating in protective order proceedings or other civil or criminal legal proceedings related to domestic violence, harassment, sexual assault or stalking;
o    To seek medical treatment for or to recover from injuries caused by domestic violence or sexual assault to or harassment or stalking of the eligible employee or the employee’s minor child or dependent;
o    To obtain, or to assist a minor child or dependent in obtaining, counseling from a licensed mental health professional related to an experience of domestic violence, harassment, sexual assault or stalking;
o    To obtain services from a victim services provider for the eligible employee or the employee’s minor child or dependent; or
o    To relocate or take steps to secure an existing home to ensure the health and safety of the eligible employee or the employee’s minor child or dependent;
 
·       In the event of a public health emergency, including but not limited to:
 
o    Closure of the employee’s place of business, or the school or place of care of the employee’s child, by order of a public official due to a public health emergency;
o    A determination by a lawful public health authority or a health care provider that the presence of the employee or the family member of the employee in the community would jeopardize the health of others; or
o    The exclusion of the employee from workplace under any law or rule that requires the employer to exclude the employee from the workplace for health reasons; or
 
·     To donate accrued sick time to another employee if the other employee uses the donated sick time for an authorized purpose and the employer has a policy that allows an employee to donate sick time to a coworker.
 
Q. Who qualifies as a covered family member under the sick time law?
 
A. Covered family members include the employee’s spouse, same-gender domestic partner (as described in ORS 106.300 to 106.340), biological child, adopted child, stepchild, foster child, same-gender domestic partner’s child, parent, adoptive parent, stepparent, foster parent, parent-in-law, same-gender domestic partner’s parent, grandparent, grandchild, and any individual with whom an employee has or had an in loco parentis* relationship.
 
*Persons “in loco parentis” are those with day-to-day responsibilities to care for or financially support a child, or who had such responsibility for the employee when the employee was a child.
 
Q. How much is an employee required to be paid for sick time used?
 
A. Employees entitled to paid sick time, as discussed above, are required to be paid for sick time taken at their regular rate of pay calculated as follows:
 
·     Employees paid a single hourly rate of pay: The same hourly rate the employee would have earned for the period of time in which sick time is used if the employee had worked.
 
·     Employees paid multiple rates of pay:
 
o   The wages the employee would have been paid, if known, for the period of time in which sick time is used; or
o   The weighted average of all regular rates of pay during the previous pay period.
 
·     Salaried employees : The employee’s total wages earned during the pay period covered by the salary divided by the number of hours agreed to be worked in the pay period which the salary is intended to compensate. For an employee paid a salary whose hours of work vary from work week to work week, for the purpose of calculating the regular rate of pay to be used for the payment of sick time, the employee is presumed to work 40 hours in each workweek.
 
·     Employees paid on a commission or piece-rate basis or on the basis of the number of operations accomplished or quantity produced or handled:
 
o    Before January 1, 2018: The employee must be paid the rate of pay agreed upon by the employer and employee.
o    Effective January 1, 2018: The employee must be paid no less than the applicable statutory minimum wage.
 
·     Employees paid an hourly, weekly, or monthly amount in addition to a piece-rate or commission: The rate equivalent to the employee’s hourly, weekly or monthly rate, or the minimum wage, whichever is greater.
 
The regular rate of pay does not include: Overtime, holiday pay, discretionary bonuses or other types of incentive pay, tips, or other premium rates. However, where an employee’s regular rate of pay includes a differential meant to compensate the employee for work performed under differing conditions, such a differential rate is not considered to be a premium rate and must be included.
 
Q. Is an employer required to pay for unused sick time when an employee leaves employment?
 
A. No, the law is clear; an employer is not required to pay an employee for unused accrued sick time upon termination.
 
Q. What if an employer has an existing sick time or paid time off (“PTO”) policy?
 
A. An employer is deemed to be in compliance with the law if it has a sick leave policy, paid vacation policy, paid personal time off policy, or other paid time off program that is “substantially equivalent” to or more generous to the employee than the minimum requirements of the sick time law. In order for a plan to be “substantially equivalent,” the policy must provide employees (at a minimum) with the following: 
 
·     The ability to accrue up to 40 hours of leave time at a rate of one hour for every 30 hours worked or 1-1/3 hours for every 40 hours worked or at least 40 hours of front-loaded time at the start of the year that may be used for sick time;
·     Quarterly reports on available leave balances;
·     The ability for new employees to use up to 40 hours of earned time as sick time after their 90th day of employment; and
·     The ability to carry over up to 40 hours of unused accrued time from one year to the next (unless the front-load method of providing sick time is used).
 
Qualifying absences used under the sick time law may not be the basis for discipline.
 
Q. I own a company that provides 40 hours of PTO to our employees every year on their anniversary date. My employees use their accrued PTO for vacation days, absences due to illness, personal time, doctor appointments, personal appointments, etc. One of our employees used his 40 hours of PTO earlier in the year and he now wants to use eight hours of PTO for an absence on Thursday that he claims was due to illness. He says we owe him 40 hours of sick time because the time he used was for vacation. Do we have to grant paid leave for this absence and other absences during his anniversary year?
 
A. No. If an employee of an employer with a PTO policy that may be used for paid sick time, paid vacation leave, paid personal time off or other paid time off has exhausted all paid and unpaid leave available to the employee, the employer is not obligated to provide additional leave for paid or unpaid sick time. However, the employer may be obligated to provide paid or unpaid sick time under federal or state law that provides for paid or unpaid leave under state and/or federal family leave laws or other laws not related to the sick time law.
 
Q. My business has a PTO policy that I believe is substantially equivalent to the new sick time law. I provide 40 hours of personal time off each year. Do I have to separately track the reasons for taking PTO based on whether the employee is taking it for vacation, for illness, or for some other reasons?
 
A. No, not if you only provide 40 hours of PTO. While there is a requirement in the sick time law that requires an employer to track an employee’s PTO to ensure that the employee receives what is required under the law and to provide written notification at least quarterly as to an employee’s accrual and usage, the law only requires that an employer provide up to 40 hours of sick time per year. If you are only providing 40 hours of PTO, and as long as your employee is able to use the time in the PTO bank--up to 40 hours for qualifying absences under the sick time statute--you have met your obligation and it is not necessary to differentiate between various reasons the employee may have used PTO. Essentially, your employee’s PTO bank of 40 hours could have been available for sick time but for the fact that the employee chose to use it for vacation or a combination of other reasons. 
 
Q. What if I choose to provide more than 40 hours of PTO to my employees? Do I have to differentiate between time taken for qualifying sick time absences and for other reasons?
 
Best practice would be yes, unless you allow an employee to use all of the hours of PTO you provide each year as sick time. Because the sick time law requires that employers provide written notification at least quarterly to employees of their accrued and unused sick time, it would be prudent to track those increments of time that were taken for qualifying reasons under sick time or for other reasons, because otherwise, you would be unable to provide notice to the employee regarding how much time is left to use specifically as sick time.
 
For instance, if an employer provides 80 hours of PTO per year, but only allows an employee to use up to 40 hours of that for reasons related to protected sick time, and an employee used 15 of those hours for sick time, the maximum remaining amount of leave available to the employee for sick time would be 25 hours, but the PTO bank for any other use would be the balance of PTO remaining, or in this case, 65 hours. Because you are required to keep your employee apprised of the amount of sick time accrued and used at least quarterly, you would have to track it separately in order to notify the employee that there are only 25 more hours of PTO to use as sick time this year, even though the total PTO bank is at 65 hours.
 
However, starting January 1, 2018, an employer is only required to track and report the first 40 hours of PTO in a situation described above. Once those first 40 hours have been used, regardless of whether the employee used that time for sick time, there is no further requirement to track the PTO hours. It may still be beneficial to track time used after 40 hours however. Family leave laws (OFLA and FMLA) allow eligible employees to use any accrued paid sick leave, vacation leave or any leave given in lieu of vacation leave (i.e., PTO) during family leave. Employers who have employees with disabilities may also want to track this time for purposes of determining when absences attributable to a disability become an undue hardship.
 
Q. May an employer require medical verification for the use of sick leave?
 
A. Yes, but only in these limited circumstances:
 
·     An employee takes more than three consecutively scheduled workdays of sick time;
 
·     The need for sick time is foreseeable and is projected to last more than three consecutively scheduled workdays; or
 
·     An employee commences sick time without providing notice required by the employer's sick time policy (which may not be more than 10 days’ advance notice for foreseeable use of sick time or more notice than is practicable in the event of an unforeseeable use of sick time); or
 
·     An employer has sufficient evidence to suspect that an employee is abusing sick time, including engaging in a pattern of absenteeism, regardless of whether the employee has used sick time for more than three consecutive days.
 
An employer may not require medical verification in advance of sick time that is expected to last less than three consecutive scheduled workdays.
 
NOTE: The employer is required to pay any associated costs for providing medical verification or certification, including lost wages that are not paid under a health benefit plan in which the employee is enrolled. An employer may not require that the verification or certification explain the nature of the illness or details related to domestic violence, sexual assault, harassment, or stalking that necessitates the use of sick time.
 
Q. I have offices in Oregon and Washington. If my employee accrues sick time in Oregon and then transfers to Washington, am I obligated to allow the employee to use the sick time accrued now that they are working in Washington?
 
A. Oregon does not have jurisdiction to enforce the sick time law once an employee is no longer employed in Oregon. It is not known how another state’s laws might view an employer’s liability for sick time accrued under this law.
 
Q. How does the sick time law apply to temporary employees?
 
Temporary workers hired through a staffing agency are most likely “jointly employed employees” under the law. Joint employers are responsible, both individually and jointly, for ensuring compliance with the provisions of the sick time law and rules. However, in joint employment relationships, the “primary employer” is responsible for providing required notices and sick time to its employees. See OAR 839-007-0005 (1).
 
Staffing agencies that place temporary employees with client employers are most often considered to be the primary employer. If a temporary worker has been employed by a staffing agency prior to being placed with a client employer, the employee is entitled to sick time accrued during the employee’s employment with the staffing agency, as well as sick time accrued while employed by the client employer, both as an employee of the staffing agency and as an employee of the client employer, although the client employer is only liable for sick time accrued while the employee was jointly employed by the staffing agency and the client employer. Neither the primary employer nor the client employer may discriminate against an employee for taking sick time.
 
If a client employer hires a temp on a permanent basis, the safest business practice would be to count all of the temp’s time worked for the client employer for sick time purposes. Many staffing agencies are negotiating agreements with their clients to have sick time accrued while employed by the staffing agency carry over to the contract employer.
 
Q. I operate a manufacturing facility and we have a collective bargaining agreement (CBA) with our workers. I see that there is a CBA exemption in the law, so are we exempt from the sick time law?
 
A. No. To qualify for the CBA exemption in the sick time law, employees must also receive their employment-related benefits through a joint multi-employer-employee trust or benefit plan and be employed through a hiring hall or similar referral system operated by a labor organization or a third party.
 
Q. If an employee is hired from the Employment Department and meets the other conditions in ORS 653.646 (the employee’s terms and conditions of employment are covered by a collective bargaining agreement and employment-related benefits are provided by a joint multi-employer-employee trust or benefit plan), does the exemption from the sick time law in ORS 653.646 apply?
 
A. No. Again, in this context, the employees are not “employed through a hiring hall or similar referral system operated by the labor organization or a third party.” The Employment Department is not a hiring hall or similar referral system operated by a labor organization or a third party.
 
Q. Does the work-study exemption only apply to federal work-study students who receive federal financial aid?
 
A. No. ORS 653.601(1)(c) indicates that participants in work-study programs that provide “students in secondary or post-secondary educational institutions with employment opportunities for financial or vocational training” are not “employees” for purposes of the sick time law. This exception applies to any student employed in a work-study program by a secondary or post-secondary educational institution or to a student in a qualified vocational training program.
 
Q. We provide our employees with 40 hours of PTO each year that may be used for vacation or sick leave. My employee does not want to be paid when he is out sick because he wants to save the time for vacation. Do I have to require the employee to take the day as paid sick time?
 
A. Best practice would be to require the employee to take the day as paid sick time. To do otherwise could lead to problems down the road. But, the law does not mandate that you require employees to take paid sick time. Best practice would be to have the unpaid vacation day discussion once all the employee’s sick time has been used, since vacation time is not protected, instead of risking liability for unpaid sick time an employee is otherwise entitled to use.
 
Q. We use the accrual system for sick time. What happens if an employee takes a day of sick time before any is accrued? Is this protected time? Does the unpaid day count toward the required 40 hours?
 
A. If a new employee takes sick time before any leave has been accrued or before the 91st day of employment, the sick time is not protected under the sick time law and is subject to the employer's regular attendance policies. Also, since the employee had not accrued any sick time yet, the time off does not count against the employee’s right to earn and use up to 40 hours of protected sick time for that year. Remember, though, even if sick time is not protected under this law, it may be protected under applicable OFLA, FMLA, or ADAA regulations.
 
 
Updated July 2017
  
DISCLAIMER 
Nothing on this website is intended as legal advice.  Any responses to specific questions are based on the facts as we understand them, and not intended to apply to any other situations.  This communication is not an agency order.  If you need legal advice, please consult an attorney.  We attempt to update the information on this website as soon as practicable following changes or developments in the laws and rules affecting Oregon employers, but we make no warranties or representations, express or implied, about whether the information provided is current.  We urge you to check the applicable statutes and administrative rules yourself and to consult with legal counsel prior to taking action that may invoke employee rights or employer responsibilities or omitting to act when required by law to act.
 
TECHNICAL ASSISTANCE FOR EMPLOYERS
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PORTLAND, OR  97232
971-673-0824
 
 
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