The Bureau of Labor and Industries (“BOLI”) has published the final Oregon Sick Time administrative rules. These rules are meant to help explain the Oregon sick leave law, Senate Bill 454, which was passed earlier this year and goes into effect on January 1, 2016. For more information about the Oregon sick leave law, read prior posts at Schwabe’s Employment Blog.  While these rules are lengthy, here are the top 10 new points to know:

1. Be ready to comply before the New Year. All employers with employees working in Oregon need to be in compliance with the new law on January 1, 2016. While there are some exceptions, such as employers with specific types of collectively bargained agreements (discussed in #10), these exceptions are extremely narrow.

2. Existing paid time off or other leave policies must meet all of the minimum requirements of the law. While “substantially equivalent” leave policies may be in compliance with the Oregon sick leave law, this is only true if the policy meets every minimum requirement of the law. This includes when employees can use sick time, the rate employees accrue sick leave, the regular rate of pay when an employee takes sick time, what qualifies as a protected absence, conditions of notice and documentation, and employment protections. In other words, do not assume that your existing policy complies with this new law—it most likely does not.

3. Payment for sick leave. Employers must pay employees at the employees’ regular rate of pay when employees use sick leave. The regular rate of pay does not include overtime, holiday pay, bonuses, incentive pay, tips, or other premium rates. However, if you would have paid the employee a shift differential for working under differing conditions (such as working at night), this must be included.

4. Employers with an “undue hardship” may require employees to take leave in increments of 4 hours or more (rather than 1-hour increments). “Undue hardship” means that allowing employees to take leave in 1-hour increments creates a significant difficulty or impracticality for an employer’s business. Factors that demonstrate an “undue hardship” include:

• the number of persons working at the worksite and their ability to relieve the employee using sick time;
• for employers with multiple worksites, the number, type and geographic separateness of the worksites; and
• the effect of providing sick time in hourly increments on worksite operations, such as starting up of machinery, unpredictable workflow, perishable materials, time-sensitive or high-volume operations if directly impacting the public, and the safety and health of other employees, patients, clients or the public.

5. If an employer is relying on the “undue hardship” exception (discussed above), employee notice is required. BOLI will provide an example notice that must be provided to employees regarding the 4-hour increment requirement for leave. If an employer fails to provide this notice, employees may take sick time in increments of 1 hour (rather than 4 hours).

6. Joint employer liability. Any “joint employers” will be responsible, both individually and jointly, for ensuring compliance with the Oregon sick leave law. Whether employers constitute joint employers will be determined based on the totality of the circumstances, including whether one employer performs only administrative tasks for employees versus has the right to hire, fire, assign, direct and control employees, make payroll, and provide/receive a benefit from the employees.

7. Front-loading and paying sick time at the start of the year is permissible. The law provides for an employer to make the entire allotted amount of sick leave available to employees at the start of the year, rather than having to calculate accrual of sick leave per hours worked and carrying over leave from one year to the next. In addition, the rules allow an employer to pay employees the equivalent of at least 40 hours at the start of the year and then allow the employees to use at least 40 hours of sick leave during the year, without having to later pay for sick time as it is used.

8. Calculating the number of employees for purposes of determining whether leave must be paid or unpaid. Employers must count all employees who perform work for the employer in the state of Oregon. If an employer is a “joint employer,” then the employer must count the employees jointly employed by both employers. If an employer maintains a location in a city in Oregon with a population exceeding 500,000 (i.e., Portland), then the employer must provide paid leave if it employs 6 or more employees in Oregon. If an employer does not maintain a location in Portland, it must provide paid leave only if it employs more than 10 employees in Oregon.

9. Employee verification or documentation for the need to take leave must be part of the employer’s written leave policy. Otherwise, an employer cannot take action when an employee fails to provide such documentation. An employer may have a policy that requires verification within 15 days from a health care provider. If the need for leave is foreseeable (such as a regular dental cleaning), the employer may request verification of the need for leave before the employee takes leave.

10. Only very specific collectively bargained agreements (“CBAs”) will be exempt from the law. Simply having a CBA in place does not make an employer exempt. Instead, an employer’s employees must meet all three of the following requirements:

• their terms and conditions of employment are covered by a CBA;
• they are employed through a hiring hall or similar referral system operated by the labor organization or third party; and
• their employment-related benefits are provided by a joint multi-employer-employee trust or benefit plan.

This law is extremely complex. It also requires nearly every employer with employees working in Oregon to revise leave policies, adopt new policies, provide notices, keep records, and/or manage leave and pay differently. We have been closely tracking sick leave and participating in the political and administrative agency conversations regarding this issue. If you need assistance with understanding this law and how to comply, contact us or your trusted legal advisor right away. January 1 is right around the corner.