Processing payroll in Oregon has a lot of moving parts. Before paying an employee in the state, you must consider several variables, including the minimum wage, hours worked, overtime, allowed deductions, payroll tax, and more.
Understanding federal, state, and even local payroll laws in places like Portland is essential to avoid disputes with employees and the government. Keep in mind that if you do not have the resources or bandwidth to understand the legislation or comply with it, an Oregon payroll service might be right for you.
Here are vital items employers in Oregon need to know about payroll.
Oregon Minimum Wage
While the current federal minimum wage is $7.25 per hour, Oregon minimum wage figures are much higher, and can be dependent on a specific locale or city. The minimum hourly rate effective July 1, 2021 is $12.00 in nonurban areas, $12.75 in standard counties, and $14.00 in the Portland metro area.
Oregon minimum wage law requires you to pay the most beneficial rate to the employee, which is the state minimum wage. The minimum wage requirement applies to all paid workers, including minors and employees on official training. It increases every July 1st, but this trend will change after 2022.
Starting July 1, 2023, the state's minimum wage will increase depending on inflation as per the Consumer Price Index. This inflation-based minimum wage rate is becoming increasingly common in many other states now as well.
Workdays and Hours Worked Requirements in Oregon
A workday, according to Oregon minimum wage law, is a fixed period of 24 consecutive hours. On the other hand, a workweek is a specified period of seven successive days that occurs regularly.
Businesses have to pay employees for all hours worked. Oregon's minimum wage law defines hours worked as all hours an employed person commits to their employer. This includes the time an employee is on duty at the employer's premises or engaged away.
Further, Oregon recognizes work requested as well as suffered or accepted unrequested work as hours worked. If an employer doesn't want a worker to perform work, the employer must ensure the employee doesn't do it.
Payroll Tax in Oregon
Oregon requires employers in or operating within Oregon to withhold tax from wages paid to residents working in or outside the state. They must also do the same for nonresidents who deliver services in Oregon.
An employer in Oregon needs to register for a business identification number (BIN) before ever paying employees. Corporations without workers should have a BIN to report remuneration for corporate officers.
Oregon withholding taxes and federal taxes are due on April 30. Unemployment and transit taxes are due on the last day of the month following a calendar quarter. If you pay federal taxes electronically, you should do the same for your combined payroll taxes.
Oregon Requirements for Deductions from Wages
Oregon has strict rules governing how an employer can withhold or deduct part of an employee's wages. As the employer, you can only make deductions if:
- The state or federal law requires you to do so.
- The employee has authorized a deduction by writing for their own benefit.
- The employee voluntarily authorizes a deduction for some item, provided you aren't the ultimate recipient of the money.
- The deduction is a garnishment under Oregon Stat. 18.736.
- A collective bargaining agreement in which you are a party authorizes the deduction.
- You're making the deduction upon a worker's termination to repay a loan you gave them.
However, there are many instances where the state prohibits you from deducting or withholding any amount from an employee's wages. Examples include deductions to cover:
- Cash shortages
- Returned or dishonored checks
- Damaged or lost employer's property
- Tools, uniforms, and other items required for work
Oregon Pay Schedule Rules
Every employer in Oregon must establish and observe a regular payday when they must pay all employees the wages due to them. However, section 652.120 allows you to enter into a written agreement with your workers to pay them at a future date.
Typically, the payday should not extend beyond 35 days from the day you engaged an employee or since the last regular payday. Employers are free to establish and maintain more frequent pay intervals.
Wage Payment Methods in Oregon
You can pay your employees by cash, check, or direct deposit. A payment check should be redeemable at face value with no deductions by the employee's bank. If you want to pay via direct deposit, payroll card, ATM card, or any other electronic means, the employee must consent to it.
Electronic payment methods should allow the employees to withdraw their net pay once cost-free. A worker who wishes to revoke their consent to electronic deposits must issue you with a written notice. The revocation becomes effective 30 days after you receive it.
Oregon Employee Time Reporting Requirements
Oregon requires employers only to compensate workers for hours worked. Therefore, you don't have to pay an employee for showing up or reporting if they don't work. Additionally, you don't need to pay a worker the minimum number of hours if you dismiss them before completing their shift.
Oregon Travel Time Regulations
Determining when to compensate an employee for time spent traveling can be confusing. Oregon has several regulations that define when travel time qualifies as hours worked, including:
Traveling between home and work is not compensable work in Oregon. Therefore, employers don't need to compensate their workers for commuting time.
When Traveling Is Part of the Job
If traveling is a principal activity in an employee's workday, the travel time should be compensable. This includes traveling to various job sites. The same applies to employees who work at a fixed location but have to travel occasionally to other worksites 30 miles away.
Travel for Emergency Jobs
You might need an employee to perform an emergency job away from your premises after their shift. If the job site is a considerable distance away, say outside a 30-mile radius, you must count the employee's travel time as hours worked. You can reduce the travel time by the number of hours your employees typically take to reach the site and back to your premises.
Businesses should count time for employees traveling overnight from their home area on a workday. You should pay a worker even if the travel occurs on a workday when they don't usually work.
Oregon Waiting Time Rules
If you engage employees to wait for work, you should consider the time as hours worked. An employee engaged to wait is typically under their employer's control and direction, preventing them from utilizing the time for their own tasks. Oregon labor law considers such a worker to be on duty.
Employers don't have to compensate employees who wait voluntarily without your engagement. An example is when you inform a worker that they are free and may leave the job until a specified time, but they choose to stay. However, you should relieve an employee long enough to allow them to go about their own business to consider them off-duty.
Oregon On-Call Time Guidance
On-call time means that an employee is not working, but he or she is ready for work immediately the employer contacts them. Therefore, the individual must stay within or near the workplace such that they can't use the time for other purposes.
If you keep a worker on call, you should count their time as hours worked when processing their payment. However, a worker who only needs to say where they are without necessarily staying at or near the employer's premises is not an on-call employee.
Meeting and Training Time in Oregon
Time spent attending meetings, training, lectures, and similar activities can qualify as hours worked depending on some conditions. As the employer, you don't have to count these hours in Oregon if:
- Attendance is not mandatory for the employee
- Sessions take place outside your regular work hours
- The activity is unrelated to the employee's job
- No productive work takes place during the meeting
Oregon Final Paycheck Requirements
Payment for Terminated Employees
For companies that are discharging an employee or for a worker leaving according to a mutual agreement, companies are required to pay the employee their wages due not later than the end of the next business day after the separation date. The same applies to layoffs with no hope of return.
Payment for Employees Who Quit
How you pay an employee who resigns or quits employment in Oregon depends on the underlying circumstances.
Employee Provides 48 Hour Notice
If an employee gives you a notice of at least 48 hours (excluding weekends and holidays), you must pay them on the last day of their employment.
Employee Provides NO Notice
If an employee resigns or quits employment without prior notice, you must pay them within five business days or on the next payday, whichever comes first. For workers who submit time records to enable their employers to determine their wages, the employer must pay the estimated wages within five business days.
A person employed under an unexpired contract with a definite engagement period might resign with or without notice. In that case, should pay all wages due not later than the next regular payday.
Oregon Statement of Wages
Employers in Oregon must provide employees with an itemized pay stub when paying wages. The statement should show and describe any deductions made from wages. You can attach the report to the paycheck or whatever payment document the worker receives.
Oregon Payroll Services in Portland
PeoplePro Payroll is an intuitive payroll reporting system that processes payroll in real-time for companies throughout Portland, Oregon, and throughout the great northwest. It brings more visibility into workforce productivity and labor costs across locations, departments, and / or jobs.
Companies use PeoplePro to streamline all your payroll processes, reduce errors, minimize compliance risk, control labor costs, and leverage the professional services team at GNSA to handle your payroll tax filing in Oregon or any other locations throughout the United States.