Oregon Family and Medical Leave Insurance Program
Starting January 1, 2023, Oregon is requiring employers to withhold and pay premiums to the Family and Medical Leave Insurance program. The Paid Leave Oregon program allows employees to take paid time off for qualifying life events and is funded by employee and/or employer contributions. All Oregon employers are required to participate in the program with the exceptions of offering employees an approved equivalent plan or if you are self-employed, a Federal employer, or a Tribal government.
Oregon employees will be able to access paid leave benefits starting September 3, 2023. Eligibility to apply for the benefits is determined after employees have earned at least $1,000 in wages within the state in the prior year. To learn more about the program, visit the Paid Leave Oregon website.
Employer Responsibilities
To conduct business in Oregon, all employers must register with the Oregon Employment Department and obtain a Business Identification Number (BIN). By completing the combined employer’s registration, employers are automatically registered for Paid Leave Oregon.
Employers participating in the Paid Leave Oregon program are required to pay premiums and report to the Oregon Employment Department on a quarterly basis. The 2023 contribution rate is 1% of each employee’s wages, and employees are liable for 60% of the contributions. Employers are liable for the remaining 40% if you are considered to be a “large” employer (meaning you employed 25 or more individuals from the preceding calendar year). Learn more about how to calculate your workforce size by visiting the Paid Leave Oregon website.
In order for Square Payroll to accurately calculate and remit the taxes on your behalf, you will need to indicate your Paid Leave Oregon tax liability. Log in to your online Square Dashboard and go to Payroll > Settings > Tax Info to select one of the following options:
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I employed fewer than 25 individuals in the previous year and will not pay the employer portion of the tax.
Note: Small businesses are not required to pay the employer portion of the premium; we will only withhold the employee contributions of 0.6%.
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My business is exempt from participating in the Paid Leave Oregon program.
Note: Local government employers, Federal employers, nonparticipating self-employed, and employers with approved private plans may qualify for an exemption. Select this if your business is approved for an exemption.
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I employed 25 or more individuals in the previous year and will pay the employer portion of the tax.
Note: Large employers are required to pay the employer contributions of 0.4% in addition to the employee contributions of 0.6%. If you are a small employer and would like to voluntarily pay the employer portion, select this option.
Square Payroll Coverage
Square Payroll supports Paid Leave Oregon premium calculations, withholdings, payments, and reporting.
Employee premiums of 0.6% will be withheld from the employee’s paychecks and withholdings will be reported on their W-2s. Any premiums not withheld from the employee’s paychecks will be collected from the employer to ensure the total amount remitted to Oregon will be correct, and the employer will need to collect the premiums from the employee. Employer premiums of 0.4% will be withheld from employers who indicate they have 25 or more employees.
What Square Payroll Does Not Cover
Square Payroll does not offer the option for employers to cover the W-2 employee’s portion of the Paid Leave Oregon tax that is withheld from the employee’s paychecks. Square Payroll also does not have the option to make contributions and report Paid Leave Oregon taxes on behalf of independent contractors.
Assistance Grants and Reporting Replacement Workers
Employers who have fewer than 25 employees may be eligible for financial help when an employee takes paid time off covered by the Paid Leave Oregon Program. Employers could receive assistance grants up to $1,000 to help with significant wage-related costs or up to $3,000 if you hire a temporary replacement worker while a permanent employee is on leave. Learn more about assistance grants by visiting the Paid Leave Oregon website.
To receive a grant, you’ll need to
Apply in Frances Online.
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Submit documentation as proof that:
You’ve hired a temporary replacement employee.
You’ve incurred wage-related costs, such as overtime or training costs.
Commit to paying the employer contribution rate of 0.4% for at least two years after receiving the grant.
Square Payroll will help you report the number of replacement employees on your quarterly Form OQ (Oregon Combined Payroll Tax Report). To indicate that an employee is a temporary replacement worker:
Log in to your online Square Dashboard and click Payroll > Payroll Team.
Select the employee’s profile.
Scroll down to Tax Settings. and check the box next to This employee is a temporary replacement worker.
If you decide to convert a temporary employee to a permanent employee, you will need to uncheck the replacement worker setting in the employee’s profile.
Note: Your employees’ status on the last day of the quarter will be used to determine the number of replacement workers to be reported on your tax return.