Split Decision in Counties’ Challenge to Oregon Sick Leave Law

Three of the nine counties that sued to be relieved from complying with the Oregon Sick Leave law– Linn, Douglas and Yamhill – have prevailed in their challenge. The other six plaintiff-counties have dropped their challenge. 

A Linn County judge last December agreed with the plaintiff-counties that Oregon’s Sick Leave Law is an unfunded liability. Round One to the plaintiff-counties. My report on that decision is here.

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The Oregon Constitution states that if a local government must spend more than one hundredth of one percent of its budget on an unfunded new program or increased level of service, the local government “is not required to comply” with the law.  Round Two dealt with whether the counties met this spending threshold on the PSL law. A trial had been scheduled for mid-July to resolve that issue.

The case has been settled. The judge had ruled that Linn, Douglas and Yamhill had established the .01% threshold, according to a news report.  The other plaintiff-counties dropped their challenge. The State has reserved the right to appeal the judge’s decision that the Sick Leave Law is an unfunded liability.  

The Oregon Sick Leave Law requires employers with at least ten employees (six in Portland) to provide up to forty hours of paid sick leave annually. Smaller employers must provide unpaid sick leave. This litigation dealt only with the plaintiff-counties as employers. It did not involve private employers. 

 

 

 

 

Cost to Counties of Oregon Paid Sick Leave Law Heading to Trial

Recall my post that a Linn County judge in December 2016 agreed with nine Oregon counties-plaintiffs that Oregon’s Paid Sick Leave Law is an unfunded liability.  The Oregon Constitution states that a county need not comply with a state unfunded liability if the county must spend more than one hundredth of one percent of its budget on the unfunded program.

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The plaintiff-counties claimed that their costs for compliance with the Oregon PSL law exceed the .01% threshold.  For example, Linn County had claimed that it must spend more than $41,000 on the program, substantially more than the $14,000 which is .01% of its budget.

The judge ruled earlier this year that since an expert retained by the State will testify that each of the counties need not spend .01% of their respective budgets on the law, the .01% issue must be resolved at trial. A bench trial is scheduled for July 19, 2017.

Based on a report of the oral argument on the financial threshold issue last December, the judge seemed to be interested in whether allowing employees to accrue paid sick leave is an absolute obligation or a “contingent obligation” since some employees may never work long enough to become eligible for sick time and those that do may use some, none, or all of the accrued time.

This case affects the plaintiff-counties, as employers. It does not affect private employers within Oregon or other Oregon counties.

Nine Oregon Counties Need Not Comply with State Paid Sick Leave Law

Nine Oregon counties need not comply with Oregon’s Paid Sick Leave Law because it is an unfunded liability imposed in violation of the Oregon Constitution, a Linn County Circuit Court judge ruled last week. The ruling affect the nine counties that were plaintiffs in the case, and does not affect the application of the PSL to other employers within those counties.

In 1996, Oregon voters approved a constitutional amendment requiring that the state fund any new program or increased level of service it imposes on a local government. (Art. XI, Section 15). If a local government needed to spend more than one hundredth of one percent of its budget on a new program or increased level of service, the local government “is not required to comply” with the law. Oregon’s Paid Sick Law went into effect on January 1, seal-39732_6402016. Penalties for violations begin on January 1, 2017.

Each plaintiff-county submitted an affidavit establishing that it would cost more than one hundredth of one percent of its budget for administrative expenses relating to the PSL law. These expenses included training costs as well as a “new and separate layer of record keeping, separate annual data input, separate personnel rule changes and employee notification, and a higher volume of tracking employees’ sick leave time.”

The court rejected the state’s argument that the constitutional provision does not apply to employee benefits, citing a 1999 Oregon Attorney General opinion that the constitutional provision would apply to a proposed increase in public employee retirement benefits that was being considered. The state may appeal the judge’s decision.

This ruling is limited to these nine counties, as employers. I suspect that the other 27 Oregon counties and the other local governments are now sharpening their pencils and calculating their costs associated with the PSL law. Additional “piggyback” litigation seems likely.