OR PFML Category: Reporting and Tax Filing Explained
Understand the essentials of OR PFML reporting and tax filing, including employer and worker responsibilities and reconciliation processes.
Oregon’s Paid Family and Medical Leave (OR PFML) program represents a significant shift in how employees access paid leave benefits. This initiative provides financial support during life events such as the birth of a child or serious health conditions. As businesses and workers adapt to these requirements, understanding the nuances of reporting and tax filing is crucial.
Coverage Under the Program
The Oregon Paid Family and Medical Leave (OR PFML) program applies to most employees working in Oregon, regardless of employer size. This inclusivity ensures access to benefits for events like bonding with a new child or managing health issues. Employees must have earned at least $1,000 in wages during the base year, defined as the first four of the last five completed calendar quarters before the leave begins. Part-time and seasonal workers can also qualify. Self-employed individuals and independent contractors may opt into the program through a state coverage agreement.
Benefits are calculated as a percentage of the employee’s average weekly wage, capped at 120% of the state’s average weekly wage. This structure balances equitable benefits with program sustainability. Contributions from both employers and employees fund the program.
Funding Responsibilities for Employers and Workers
The OR PFML program is funded through shared contributions. As of 2024, the contribution rate is 1% of an employee’s gross wages, capped at $132,900, consistent with the Social Security wage base. Employers withhold 60% of the contribution from employee wages, while the remaining 40% is covered by employers. For instance, an employee earning $50,000 annually contributes $300, and the employer contributes $200. Employers remit these contributions quarterly to the Oregon Employment Department via the Oregon Payroll Reporting System (OPRS).
Businesses with fewer than 25 employees are exempt from the employer portion but can opt in voluntarily to access grants for hiring temporary replacements during employee leave.
W-2 Reporting Steps
Employers must report OR PFML contributions on employees’ W-2 forms, designating them in Box 14 as “OR PFML.” These contributions do not reduce taxable wages for federal income tax, Social Security, or Medicare, so the total wages in Box 1 should include OR PFML contributions. Employers should ensure payroll systems calculate and report contributions accurately, with regular audits to prevent errors.
Reconciliation on Tax Returns
Employers must reconcile OR PFML contributions on tax returns, comparing payroll records against quarterly reports submitted to the Oregon Employment Department. Any discrepancies should be addressed promptly to avoid penalties. Using reconciliation tools and maintaining thorough documentation of all OR PFML transactions can simplify the process and ensure accuracy.
Handling Incorrect Withholdings
To address incorrect withholdings, employers need to identify the source of the error, such as payroll miscalculations. They must adjust future payroll calculations and correct past discrepancies, which may involve issuing refunds or arranging additional withholdings. Documenting corrective actions and communicating adjustments to employees ensures transparency. For complex cases, consulting tax professionals can help maintain compliance with OR PFML requirements.