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Oregon became the latest state to require a certain amount of paid family or medical leave for employees in the state. Under the Paid Leave Oregon program, employers must furnish their employees with up to 12 weeks of paid leave to attend to certain family or medical needs.
All employers with 25 or more employees must pay into the program. Those with 25 or fewer employers don’t have to pay, but they must still collect and submit employee contributions through payroll deductions. This particular point should not be ignored in discussions about paid leave. What many mistakenly consider yet another benefit freebie is actually not free at all.
More About Paid Leave Oregon
Benefit Mall, a general agency offering solutions for insurance brokers, describes Paid Leave Oregon as a state program that pays up to 12 weeks of paid family or medical leave. Employers with their own paid leave programs are free to decline participation in the state program as long as their benefits are equal to, or greater than, what the state offers. But truth be told, the vast majority of employers in the state don’t have their own programs in place.
As such, mandatory paid medical or family leave in Oregon will now be provided through the state program. But where will the money come from? As with anything else related to government, funding will come from state residents. It has to. Government does not generate revenue on its own; it only collects taxes and fees.
The payroll deductions now being assessed against Oregon workers amount to yet another tax. Though the total contribution amount varies based on circumstances, employees are required to pay 60% of the total. The remaining 40% is covered by either the employer with 25 or more employees or state (when the employer has fewer than 25 employees).
Expect Tax Increases
Oregon residents should expect their taxes to increase at some point. Perhaps not this year or next, but the chances are pretty good that employer contributions and payroll deductions will not adequately cover the cost of the program over the long term. The state will ultimately have no other choice but to find new ways to tax state residents and employers to pay for all the leave time employees take.
Stop and think about it. If you spend an entire year paying into the program and getting nothing out of it, what are the chances you will start viewing Paid Leave Oregon the same way you view Social Security? You will find ways to take up to 12 weeks off. And even if you have the integrity to not do so, do not count on everyone else having just as much integrity.
Mandated Benefits Our Never Free
The main lesson in all of this is that mandated benefits from the state or federal government are never free. Any appearance of being free is just a mirage. It is just an illusion. State-mandated medical or family leave is funded by employers and employees first. When funding is inadequate, taxes are raised across the board to make up for the short fall. In the end, the true cost of the benefits ends up being more for the simple fact that government always spends too much.
Oregon has joined the ranks of the states now mandating paid medical and family leave. Which state will be the next one to fall? Time will tell. Regardless, employers and employees will have to pay for such programs in every state that mandates them. It is part and parcel with the whole paid leave concept. Someone has to actually pay for it.
