- Oregon governor Katy Brown (D) signed into law Monday a paid family and medical leave policy that covers 12 weeks annually for all workers who make over $1,000 annually. The law will be funded through a payroll tax (not to exceed 1% of employee wages) where employees pay in 60% of the total rate and employers will cover the remaining 40%. Small businesses are exempt from paying the tax, which will be effective in January 2023.
- Oregon is the first in the country to offer 100% wage replacement for low-wage workers taking leave for family, medical, or safety reasons.
- Oregon is the second state after New Jersey to include victims of domestic violence in its paid family leave law, and defines family broadly, to include "any individual related by blood or affinity whose close association with a covered individual is the equivalent of a family relationship."
Paid leave is on the national legislative agenda with new momentum in this congressional cycle, as Oregon became the eighth state along with the District of Columbia to adopt a paid family and medical leave policy. Research suggests paid family and medical leave improves participation rates for new mothers in the labor force, with corresponding benefits in pay equality, infant and child health, and lower poverty rates.
As more states consider paid leave, legislators and employers continue to disagree on how to fund any federal policy — Republican lawmakers have proposed that employees get access to some of their Social Security income early as a form of paid leave, which would place the burden of paid leave onto workers in delaying their retirement. While the debate plays out on the national stage, employers may feel greater pressure to preempt potential federal laws in offering paid personal leave benefits of their own, especially as they seek to attract and retain talent in a tight labor market.
Twenty-five percent of U.S. workers with moderate to high incomes have access to paid family leave — that number drops to 6% for low-income Americans according to an AEI-Brookings Working Group on Paid Family Leave report. Oregon's offer of 100% wage replacement up to $1,215 weekly for low-wage workers is unique in its scope: by comparison, proposed federal legislation (S. 463) includes a wage replacement rate of 66%, up to $1,000 per week.
Research suggests low-income employees are particularly affected by gaps in state and federal paid personal leave provisions, as they are less likely to be able to forsake a paycheck for medical, familial or caregiving responsibilities. And despite some big-name employers such as Starbucks and Target having expanded paid leave policies in recent years, the benefit is not widely available to hourly workers.
Full wage compensation for American workers in poverty will likely motivate more employees to take advantage of paid leave benefits, while under proposed federal legislation, many may still be unwilling, Rich Fuerstenberg, a senior partner at Mercer, told HR Dive. "If you look at the percentage of Americans who live paycheck to paycheck who need every penny, [with] two-thirds pay it may be difficult to make that choice," he said.
Expansion of paid leave benefits on the state and local levels creates administrative and compliance headaches for HR professionals, especially those working in multi-state employers, who are increasingly outsourcing leave management. For employers on the fence about outsourcing, "one of the leave laws comes along and they're out," Fuerstenberg said. "They need help. They can't do it on their own with their internal resources," particularly when having to coordinate with Family Medical Leave Act and Americans with Disabilities Act regulation in "the day-to-day reality of making all the pieces fit together," he added.