In response to growing questions about how to treat employees who work remotely, both the Oregon Employment Department and Washington Employment Security Department issued a joint letter to guide employers on how to make the right contributions for paid family medical leave when more than one state is involved.
Prior to January 1, 2023, Oregon employers will start the first steps of implementing Paid Leave Oregon and need to set up for the required contributions from paychecks for the employee benefits which will become available on September 3, 2023 for paid family medical leave. To set up the contributions, employers need to know which employees must contribute to which state program.
Since March of 2020, there are a number of employees who have been working remotely either fulltime or on a part-time basis between Oregon and Washington and other states. This has raised the question of whether the employees are eligible for the Oregon or Washington paid leave benefit.
Place of Performance/Localization
The joint letter outlines the key factors and several helpful examples. Under Oregon law, the question is the “place of performance” for Oregon employees. Under Washington law, the question is whether the employee’s work is “localized” to the State of Washington or another state. As a threshold, for employees who physically perform work fulltime in one state, that state is the “place of performance” or place of “localization.” The wages associated with that physical work are to be reported to the state where the work is physically performed.
However, if employees perform work in multiple states with regularity, including Oregon and Washington, one must consider the “base of operations” and if there is no “base of operations” then from which state does the direction and control come from. It is critical for employers to consider these questions and know the answer before January 1, 2023. If the base of operations or direction and control come from Oregon, then the employee’s wages are reportable to Oregon and vice versa for Washington. Therefore, for most hybrid employees who work a regular schedule of two or three days in the office and then the remaining days at home across the river, the employee’s wages will be reportable in that state where the business is located. The joint letter outlines several more detailed examples.
Next Steps
Prior to January 2023, employers should confirm all remote or hybrid work plans for the 2023 year and identify where to report the wages for paid family medical leave. (This is also a good time to ensure that remote work policies and agreements reflect current terms and expectations.) Also, if employers have locations in multiple states, they should officially designate the base of operations for direction and control and for paid leave programs. The employers should confirm current residential addresses to ensure that it has identified all across state remote work plans. In addition, we encourage employers to notify the employees of the designation and that the employer plans to report wages to Oregon or Washington based on the “place of performance” or “localization” analysis and ask the employees if there are any facts that could impact this analysis.
Farleigh Wada Witt’s Employment group will continue providing updates regarding Oregon’s Paid Family Medical Leave as we all move closer to January.
