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, 2016. 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.