OnPay automatically withholds, drafts, and pays tax contributions to the Paid Leave Oregon program at the standard combined rate of 1% of employee gross wages (.4% paid by employers, and .6% paid by employees), unless you indicate otherwise in OnPay.
The Oregon Employment Department's Paid Leave Oregon (PLO) program allows workers to take paid time off for important life events that impact the health and safety of their family, or themselves. This paid leave program is jointly-funded using tax contributions from employees and employers. The tax rate is 1% of employee gross wages, with employers paying a rate of .4%, and employees contributing at a rate of .6%. These rates apply for all employers and employees in Oregon, with the following exceptions:
- Employers with fewer than 25 employees are exempt from the employer contribution
- Employers may choose to "pick up" a portion of employee contributions, up to 100%
What you need to know
State plan
- Employers can choose to lessen the tax burden for employees by covering the employee portion of this tax
- Employers can choose how much of the employee portion they want to cover, up to 100%
Where to find Paid Leave Oregon in OnPay
In the Payroll tab, click Set up, then Payroll Taxes.
Note: If you pay employees in multiple states, you'll find each state listed under "Payroll Taxes". Select a state to enter your state tax information.
Don't see "Set up" in the Payroll tab?
If you haven't updated to the newest version of OnPay's navigation menu, look for "Payroll Taxes" in the Company tab. More about nested navigation→
Scroll down to "Oregon State Paid Family and Medical Insurance Setup".
Indicating "Employer Exempt"
There's no exemption for the employee portion of this tax, regardless of company size. However, employers with 24 or fewer employees are exempt from paying the employer portion of this tax.
If you employ fewer than 25 employees, you may check the box for "Employer Exempt". OnPay will still draft and pay the employee portion of this tax.
How OnPay handles PLO calculations and payments for exempt employers
When an employer is marked "exempt" for PLO contributions, OnPay takes the following actions during each pay run:
- Calculate and withhold employee contributions from wages (unless 100% covered by the employer)
- File and remit employee tax contributions to the state, reporting the employer as exempt
Covering a portion of employee contributions (employer pick-up)
Employers may choose to lessen the tax burden for their employees by picking up a portion of employee contributions toward this tax, up to 100%. Employers who choose to cover a portion of the employee contribution must cover it for all employees equally.
Employer pick-up
An "employer pick-up" is when an employer pays the employee portion of required paid leave insurance contributions. Because these contributions would normally be deducted from employee pay, an employer pick-up is considered "additional compensation" by the IRS.
As of January 1st, 2026, when employers "pick up" their employees' premium payment for PFML plans, these pick-up contributions are considered taxable income, and are included in subject wage amounts.
How OnPay handles PLO calculations and payments when a portion of employee contributions are covered by the employer
When an employer elects to cover a portion of employee PLO contributions, OnPay takes the following actions during each pay run:
- Calculate the employer PLO contribution amount (unless marked exempt)
- Calculate employee PLO contribution amounts
- Reduce employee PLO contribution withholdings by the rate entered as the "Portion of Employee Contribution Covered by Employer" (up to 100%)
- Increase the employer PLO contribution amount by the total amount of all employer-covered portions
- Withhold remaining employee contribution amounts from wages (unless 100% covered by the employer)
- Draft combined employer and employee tax contribution amounts from company bank account
- File and pay combined employer and employee tax contribution amounts to the state
Covering a percentage of employee PLO contributions
Use the Update button to enter the percent of the total amount of employee contributions you want to cover. By default, this field is marked 0%, meaning you're covering 0% of the total amount of employee contributions.
Enter the first day you want to begin covering this portion of employee contributions. Then, enter the rate of coverage (the percentage of each employee's contribution you want to cover). You can cover as much of employee contributions as you want, up to 100%.
You can enter an exact percent, or fraction of a percent, by including a decimal point in your entry (up to seven places, or ten-millionths).
Once you've entered the effective date, and percent of employee contributions you'd like to cover, click Save.
How to set up a paid leave accrual in OnPay
Go to Payroll, then Set up, and click Accrual Policies.
Click Add in the upper right to open the Policy Setup template.
The Policy Setup template is divided into two parts:
- Policy name and type
- Policy setup
Policy name and type
Give this policy a unique name that sets it apart from other accruals. The name should make it very clear how and when this policy will apply. For this example, we'll make a sick time policy that accrues annually, but we'll explore many more examples later in this article.
Determine the timeframe by which accrued time is earned. Your choices are “Per hour worked,” “Per pay period,” or “Annual on anniversary date” (hire date).
Choose when these hours will expire, if ever. Your choices are “Hours do not expire”, “Hours expire on anniversary”, or “Hours expire on Jan 1st”.
Select the accrual type.
Policy Setup
The Policy Setup is in three periods. This means hours accrued by workers can increase with their tenure in up to three stages. To create a probationary period, where no time is accrued until this introductory period is over, enter "0" per hour, then the number of months in the probationary period. If you don't want accruals to increase, enter the same information in each period. Unused hours will rollover to the next period. We'll explore more examples later.
Note: Setting the "Cap" is not the same as setting a "rollover limit".
- Some businesses limit the amount of unused time off that an employee can continue to hold going into a new year. This is to ensure that employees are taking the time they need to live a balanced and full life, as well as to protect the business from employees taking or cashing out large sums of paid time off all at once. We'll show you how to limit rollover in How to assign time off accrual policies to employees→
First two periods
For the first two periods, enter:
- How many hours can be accrued each year
- For how many months time is accrued at this rate
- The limit, or cap for these hours.
Third period
You don’t need to indicate the number of months in the third period. This period lasts for the remainder of the worker's employment.
Click Create when you're ready to finalize this accrual. Clicking Not Now will close this window, but will not save your progress.
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