Oregon sick leave law, Senate Bill 454, mandates five days of paid sick leave for full-time employees in businesses that employ ten or more workers. If the employer has fewer than ten employees, they must provide unpaid sick leave. Portland’s local laws require that employers with six or more employees abide by these rules.
Manually processing time sheets and PTO is a tedious process, and opens you up to expensive penalties if done incorrectly. Protect your business by using a payroll software such as Gusto to easily track sick time accruals, process leave requests, and stay compliant with both federal and state laws. Click here for a free 30-day trial.
How Oregon Sick Leave Law Works
Paid sick leave is time that an employee can take away from their job to attend to their or their family’s medical needs, paid by employers at an employee’s regular pay rate. This can include illnesses, doctor appointments, or family medical issues. It also includes time taken because of circumstances related to domestic abuse or violence.
While not required by federal law, five days of paid sick leave is required in Oregon thanks to Senate Bill 454. The Oregon sick leave law doesn’t apply to federal employees and may not apply to union employees (depending on what their collective bargaining agreement states).
Oregon paid sick leave laws require that:
- Employers with 10 or more employees provide 40 hours of paid sick leave to full-time staff each year.
- Employers with nine or fewer employees must allow them to take up to 40 hours of unpaid sick leave.
- Employees must be made aware of their sick time balances at least once per quarter.
- An employee begins to accrue sick leave on day one of their employment.
- Oregon employees can use their accrued sick leave after 90 days of employment.
- Employees are to be paid for sick leave at their regular rate of pay.
- If employees are paid by commission or by piecework (for example, an assembly line worker who is paid per unit assembled), the rate of sick leave pay is based on the employee’s average earnings (we recommend averaging over at least 90 days).
- Employees may request sick leave paid time off in increments as small as one hour.
- Employees may rollover up to 40 hours of unused sick leave a year.
- Employers may cap sick leave balances at 80 hours a year.
- Rehired employees have a right to reinstate their prior sick leave balances.
- Sick leave documentation (i.e., sick leave accruals and payments) must be retained for four years.
- The sick leave policy must be provided in the employee’s spoken language.
Portland has slightly stricter requirements than the state, requiring employers with six or more employees to pay sick leave.
There are several ways to calculate sick leave—see the examples provided below.
How Oregon & Federal Paid Sick Leave Laws Differ
Federal law doesn’t require sick leave to be paid, but there are laws like the Fair Labor Standards Act (FLSA) that affect how leave should be calculated if it is paid. HR best practices indicate that exempt employees (who aren’t paid overtime) shouldn’t be required to take sick time in less than full-day increments (to avoid undermining their “exempt” status).
The table below summarizes how Oregon sick leave differs from Department of Labor (DOL) guidelines.
Oregon vs. Federal Sick Leave Rules
|Federal Law||Oregon Law|
|Paid Leave||None Required||40 hours (five days) paid sick leave per year for full-time employees|
|Eligibility||None Specified||Full and part-time employees are eligible to use their accrued sick leave after 90 days|
|Pay Rate||No Requirements||Regular rate of pay for prior pay period or average pay rate if paid by commission or piece (but no lower than minimum wage)|
|Accrual Calculation||No Requirements||Part-time: 1 hour for every 30 worked|
Full-time: 1.33 hours for every 40 worked
|Usage||Recommends sick leave not be required to be taken in less than half-day increments by exempt staff||Employer must allow employees to use in increments as low as one hour|
|Carryover Rules||None Required||Up to 40 hours allowed for carryover to the following year and employer can cap at 80 hours|
|Posting||FMLA requires employers of 50 or more to post leave policy||Posting not required|
|Notice||Policy can be provided in employee handbook||Policy must be available to employee|
|Waiting Period||None Required||No waiting period before accruals begin but 90-day waiting period before usage|
|Rehires||No requirement for sick leave balances to be reinstated upon rehire||Rehires within 180 days are to be reinstated with prior sick leave accruals intact (if they worked at least 90 days)|
|Record Retention Rules||If provided, must retain sick leave payment records for three years||Sick leave payment records and policy need to be retained for four years|
|Exclusions||None specified||Does not apply to federal employees and some union employees|
|Terminations||No, unless employer offers to pay out unused sick leave balance upon termination||Unused sick leave does not need to be paid out upon termination|
The DOL doesn’t require paid sick leave, and therefore offers few details on how to set up a sick leave policy. Oregon provides instructions, posters, and seminars on their website to help businesses abide by the Oregon sick leave law.
Federal & State Laws That Affect Paid Sick Leave in Oregon
Oregon increases sick leave requirements over and above what’s required by the Family Medical Leave Act in terms of unpaid leave for employers with 50 full-time employees. In Oregon, up to 40 hours of unpaid leave must be made available to all full-time employees.
FMLA is a federal law that provides unpaid leave to employees who work in companies that employ over 50 people in one location. This typically allows an employee who has worked at least 1,250 hours per year to take time off for their own or a family member’s needs. Oregon laws providing for paid sick leave can help offset an employee’s lost wages while on family medical leave, such as maternity leave.
Other federal labor laws and anti-discrimination laws (like the Americans with Disabilities Act and the Pregnancy Discrimination Act) may also impact how you assess or grant sick leave in Oregon. For example, an employee with a disability will be able to use their sick leave for medical appointments, or a pregnant employee will be able to use sick leave for doctor visits.
How to Calculate Sick Leave in Oregon
Sick leave is calculated at different rates for part-time hourly vs, salaried employees as well as for employees paid based on commission or piece work. Regardless, accruals need to start on the employee’s first day of work. Employers can choose to front-load up to five days per year for full-time staff as long as that sick leave time is granted to new hires as a lump sum on their first day of employment.
Hourly Sick Leave Accrual
The easiest way to calculate accruals for hourly staff is to provide one hour of sick leave for every 30 hours that the employee worked. That includes both regular and overtime hours. It also makes it fair for part-time staff who may work fewer hours but will still accrue sick leave at the same 1:30 rate.
Eli (part-time) worked 42 hours in the bi-monthly pay period. He accrued 1.4 hours of sick leave.
42 hours / 30 = 1.4 hours sick leave accrued in the pay period
Salaried Sick Leave Accrual
For employees who are salaried, you can estimate accruals based on a 40-hour work week by giving each salaried employee 1.33 hours of accrued sick time for every week worked. That ensures that over the course of the year, they’ll reach the 40 hours per year of paid sick leave (five days per year) as required in Oregon.
Kim (salaried) is paid every other week. She earned 2.66 hours of sick leave each pay period.
1.33 hours per week x 2 weeks = 2.66 hours sick leave per pay period
Piece Work Sick Leave Accrual Rate
For workers paid by piece or commission, it’s best to front-load the sick leave at five days per year for full-time staff. To determine the pay rate for sick leave when an Oregon worker is paid by the piece, you’ll need to determine how many pieces the employee was paid for (and at what rate) and then use the average daily rate to pay sick leave. Just be sure the employee’s sick leave pay doesn’t fall under minimum wage on an hourly basis.
Piece Work Example
Cory assembled 450 units over the past 90 days, earning $25 per unit and averaging 7.5 units per day. The five days of sick leave should be paid at $187.50 per day.
7.5 units average per day x $25 per unit = $187.50 a day
Commission Sick Leave Accrual Rate
Calculating sick time rates for commission-based employees is very similar to calculating piece work. Again, it’s best to provide full-time, commission-based employees with five days or 40 hours per year as a flat rate to keep the math simple. To get an hourly rate to pay for sick leave, calculate average commissions divided by average hours worked to come up with an hourly rate to pay.
Lou earned $17,000 in commissions over the past 90 days, while salaried employees worked 510 work hours. Therefore, Lou’s sick leave should be paid at $31.33 per hour.
$17,000 in commissions paid / 510 hours = $31.33 an hour
How to Comply with Oregon Paid Sick Leave Laws
The best way to comply with Oregon paid sick leave laws is to follow the guidelines. They describe documenting your sick leave policy along with other policies, such as time and attendance and vacation policies, in an employee handbook. Then post your sick leave policy in the office or employee break room to share with staff. Keep in mind that your policy needs to be made available in the spoken language your employees use.
Using payroll software to manage your employees’ sick leave balances and correctly pay them out can be a huge time saver. Gusto, our recommended payroll software, has state-specific sick leave laws programmed in so that you automatically adhere to the proper guidelines. Try it free for 30 days.
Oregon Sick Leave Policy Considerations
Oregon provides two options for employers to process sick leave: a front-loaded leave balance of five days or 40 hours a year provided at the start of each year, or an accrual. Front-loading is easier and can be used for both paid and unpaid sick leave. An accrual may be better if you want to avoid abuse of sick leave hours by new hires early in the year.
In fact, you can front-load hours for salary staff and accrue them for hourly staff. Let’s compare both options.
Front-Load vs. Accrual Options for Providing Sick Leave Hours
As a business, it’s your choice—you can pay out any unused sick leave balance at the end of each year in lieu of rolling it over if you provide a front-loaded lump sum amount of 40 hours (five days) at the start of the next year.
Here are the differences between the two options for employees to earn sick leave.
|How Much Sick Leave||Pay out up to 40 hours of unused sick leave at year-end.||Rollover up to 40 hours of unused sick leave to the next calendar year.|
|Is a Lump Sum Required at the Start of the Year||Yes, lump sum must be provided at the start of the year, and new hires must be given sick leave balance upon hire.||No, because sick leave is accrued.|
|Benefit to Employee||Employees who don’t use their sick leave may get a year-end "bonus" if you pay out unused leave.||Employees can rollover up to 40 hours at year-end, so they may have up to 80 hours accrued over two years.|
|Employee Drawbacks||Employees won’t have more than five days of available sick leave if they have a major illness.||Employees lose anything over the 40 hours of accrued sick leave a year if they don’t use it.|
|Benefit to Employer||Employer doesn’t have to worry about rollovers or accruals, so administration is easier.||Employers don’t have to pay for sick leave that’s not used and not rolled over. They may save money.|
|Employer Drawbacks||Paying out unused sick leave at year end may cause a huge year-end payroll.|
You may experience more staff absenteeism early in the year.
|Employer has to calculate accruals each pay period.|
Employers may find employees saving up paid leave and taking more time off at one time when they do use it.
Sick Leave Time Off Increments
Oregon law allows employees to use paid sick leave in time frames as small as one hour. But as a best practice, the one-hour limit should be used only for hourly employees who are non-exempt. Salaried exempt staff should be allowed more flexibility when using paid sick leave, since tracking salaried staff activities by the hour might undermine their exempt status.
Paid Time Off vs. Sick Leave
It’s a best practice in Oregon to track your employees’ sick leave separate from paid time off (PTO) that’s used for vacation. Some companies do this by setting up two leave policies. One for PTO, which is just for vacation or any other purpose, like an employee taking a “mental health day” or time off for a child’s school visit. The other leave policy is for sick leave only.
In Oregon, PTO is not required to be paid out upon an employee termination. Neither is sick leave. However, providing PTO is optional, while providing sick leave is required. If you combine the policies, it may be difficult to keep track of which days are used for what, and how much to roll over each year. For instance, PTO policies are often “use it or lose it.” Sick time is not, since employees are allowed to carry over up to 40 hours a year.
Oregon Cities That Expand on State Sick Leave
Portland is currently the only city in Oregon that has stricter requirements for providing paid sick leave than Oregon requires at the state level. Portland has a Protected Sick Time Ordinance that requires employers with as few as six employees to provide 40 hours of paid sick leave as compared to the state, which doesn’t require sick leave to be paid until the employer reaches a staff size of 10. Both require unpaid sick leave to be made available regardless of employer size.
Oregon Sick Leave vs. Portland
|Unpaid Hours Required|
|Paid Hours Required|
|Number of Employees|
|Accrual Starts On|
As an Oregon business owner, look at your city or county website to find out what the mandatory paid sick leave requirements are, as state and local laws may change at any time. Here’s what Rocket Lawyer CEO Charley Moore adds,
“There has not been an instance of an employer being fined in Oregon yet.
Interestingly, nine counties in Oregon sued the state when the sick leave law came into effect due to an Oregon constitutional provision that does not allow local governments to adopt new programs unless it provides funding; in December 2016 the counties won a legal battle to allow them to opt out of the policy.
An automated timekeeping, payroll and benefits system to track and detail accrued and used sick time may be used to keep track of sick time.”
– Charley Moore, CEO, Rocket Lawyer
Sick Leave Risks to Oregon Employers
Like many labor laws in Oregon, there are risks of not complying with Oregon sick leave laws. In fact, if your business is located in Portland with stricter regulations, you have to comply with both—local (city) sick leave mandates in the location where your employees work as well as the state of Oregon laws. Below are other risks.
Lack of Compliance with Sick Leave Laws
The most common issue that uniformed Oregon business owners might encounter is not realizing they have to offer both unpaid and paid sick leave, or they will be subject to fines and penalties. They also can’t estimate accrued sick time hours based solely on an employee’s salary.
Other sick leave mistakes are a bit less common, but can be costly. Whether terminating an employee for using sick leave (prohibited), failing to keep sick leave records (risky), or expecting an employee “make up” their shift (not allowed), here are examples of risks to avoid regarding managing your sick leave policy.
Don’t Require Workers to Provide Documentation for Sick Leave Until Day 4
Unless you suspect a worker is abusing their sick leave, such as calling in every Monday after a weekend binge, don’t ask for a doctor’s note. In Oregon, this documentation is not required, and it’s a best practice not to ask for any documentation until the employee has been out of the office on sick leave for at least four days. Of course, if the employee asks for more than four days off, and requests that time in advance, such as for surgery, it’s OK to request documentation, per your company leave policy.
Don’t Retaliate Against an Employee Who Uses Sick Leave
If a manager punishes an employee in any way (or worse, fires them) for using available (unpaid or paid) sick leave, your company could be fined! In addition, the employer could also be ordered to pay back pay for any lost wages if the employee had been suspended, demoted, or terminated.
Don’t Discipline an Employee for Using Sick Leave
Oregon doesn’t allow you to discipline an employee for taking time off for sick leave, such as a doctor appointment or illness. However, you are able to discipline them if they fail to notify you per your documented attendance policy (no show/no call), or if they’ve used all their available paid sick and unpaid leave benefit and fail to report to work (unless they’re eligible for or applied for FMLA, in which case your FMLA policy takes precedence).
Don’t Average Sick Time Accruals Monthly
Oregon requires full-time employees working 40 hours a week to be paid sick time at an accrual rate of 1.33 hours for every 40 hours worked. So even if you pay monthly, you still need to determine how many “hours” worked in that month to calculate sick leave accruals. That’s why some Oregon employers prefer to front-load all 40 hours of paid sick leave at the start of each calendar or fiscal year.
Other common risks that employers may encounter regarding administering a sick leave policy in Oregon include failing to abide by record retention requirements or failing to provide required documentation. Don’t make these mistakes:
- Failing to keep sick leave records – Four years of sick leave documents are required in Oregon, such as your leave policy documents, sick leave time off records, and payment records.
- Offering sick leave inconsistently – Failing to provide sick leave in a fair and consistent manner can be risky. For example, if a new employee is allowed to use paid sick leave right away, and others are required by policy to wait until their 91st day before taking paid sick leave, you may find your business accused of discrimination.
- Requiring the employee to “make up” work – According to Oregon law, you can’t request an employee to work another shift to make up work when taking sick leave.
- Not abiding by stricter city regulations – Portland has its own requirements for managing sick leave in terms of the number of employer size.
- Not providing sick leave policy in the worker’s native language – While not common, you may be hiring employees who speak something other than English or Spanish. In Oregon, you have to provide the sick leave policy in their native spoken language.
Check out the Oregon.gov website for additional FAQs related to Oregon’s sick leave laws.
The Bottom Line
One of the benefits of running a business in Oregon is beautiful scenery and tax incentives in many counties. However, Oregon has joined a few other US states, such as California, that mandate sick leave for employees. Therefore, we recommend you consider outsourcing HR and legal compliance tasks to ensure you abide by Oregon regulations and avoid unnecessary labor law audits and fines.
We find the best way to remain compliant with complex labor laws, like those in the state of Oregon and the city of Portland, is to outsource your HR compliance to a proven HR / payroll vendor like Gusto. If you use Gusto’s all-in-one software, it can manage your sick leave policy, time off requests, and sick leave accruals as well. Start a free trial today.