Q&A: Assess how to report PFML wages for multistate employees

Question: Our company is located in Oregon, and we have an employee who works in person two days a week at our facility in Portland. The employee teleworks the rest of the week from their residence in Vancouver, Washington. Should we report their wages to the paid family and medical leave (PFML) program in Oregon or Washington?

Answer: On October 7, 2022, the Oregon Employment Department (OED) and Washington’s Employment Security Department (ESD) issued guidance to advise employers how to report employees’ wages for their respective state paid family and medical leave programs, Paid Leave Oregon and Washington Paid Family and Medical Leave. Oregon and Washington both consider the physical location where an employee’s work is performed before considering other aspects of employment. “Place of performance” or “localization” examines where the work is performed, the base of operations or the place of direction and control, and the residence of the employee. The guidance lays out a three-step process to evaluate where to report the wages:

1. Look at where the work is physically performed. If all work is physically performed in Oregon, you should report wages to Oregon. If all work is physically performed in Washington, you should report wages and hours to Washington.
    
2. If the employee regularly works in multiple states, including Oregon and Washington, look at which state is the base of operations for the employee. Paid Leave Oregon’s regulations define “base of operations” as “an established location from where the employee starts work and customarily returns to perform services under the terms of the contract with the employer” (OAR 471-070-3100). Washington’s regulations don’t specifically define the term, but they use it in the same way (WAC 192-510-070). If the employee doesn’t have a base of operations, look at where the direction and control of the employee comes from. If the base of operations or the place of direction and control is in Oregon, report all wages to Oregon; if it’s in Washington, report all wages and hours to Washington.
    
3. If the employee regularly works in multiple states, including Oregon and Washington, but the direction and control doesn’t come from any state where the employee works, look at where the employee resides. If the employee resides in Oregon, report all wages to Oregon; if they reside in Washington, report all wages and hours to Washington.

In the situation you described, the employee regularly works in both Oregon and Washington, so you should go to step 2 and look at which state is the base of operations for that employee. In this case, it’s Oregon, because the employee physically reports to the Oregon location. Also, the employee receives direction and control from Oregon. Therefore, you should report all of their wages to Oregon.

We’re not aware of any similar agreements with the state of California, which has its own paid family leave program. In California, employers must collect state disability insurance (SDI) contributions from employees; this covers both Disability Insurance (DI) and Paid Family Leave (PFL). California’s Employment Development Department (EDD) offers a California Employers Guide and a Multistate Employment Information Sheet.

If you have specific questions about paid family and medical leave, connect with your Vigilant Law Group employment attorney. For more information, see our Model Policy, Washington Paid Family and Medical Leave Policy, and Legal Guide, Oregon Paid Family and Medical Leave.