Oregon Employer Guide

Oregon Household Employer Guide 2026

Your household employee — a nanny, caregiver, housekeeper, or anyone who works in your Oregon home — is a W-2 employee. Oregon is a high-compliance state for household payroll, with Paid Leave Oregon, statewide sick time, the Domestic Workers' Bill of Rights, workers' comp, regional transit taxes, and progressive state income tax withholding.

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✓ Updated May 2026 · Verified against Oregon Bureau of Labor & Industries (BOLI), Oregon Employment Department, OR Department of Revenue, Paid Leave Oregon, OR Workers' Compensation Division, and IRS
Paid Leave0.6%
Sick Time40 hrs
Minimum Wage$13.70–$15.95
Workers' CompRequired
Transit TaxMay apply
Oregon is a high-compliance household-payroll state. The big items are Paid Leave Oregon, statewide paid sick time, the Oregon Domestic Workers' Bill of Rights, workers' compensation coverage for most regular household employees, regional transit taxes in Portland metro and Lane County, and Oregon state income tax withholding. The good news: most state payroll taxes are handled through Oregon's quarterly Combined Payroll Tax Report.
Your household worker is a W-2 employee. Whether they're a nanny, caregiver, housekeeper, gardener, or personal assistant — if you control when, where, and how the work is done, they are your employee under IRS rules. That means W-2 reporting, payroll tax compliance, and federal labor law obligations. Most household workers are employees under IRS rules, not contractors — issuing a 1099 in this situation can lead to back tax penalties, interest, and wage-law liability.

When the rules apply

Oregon household employers mainly need to watch the federal payroll thresholds, Oregon day-one withholding/Paid Leave obligations, and workers' compensation requirements for regular household employment:

2026 Thresholds
$3,000
Federal · 2026
Triggers Social Security and Medicare taxes (FICA) and W-2/W-3 reporting.
$1,000
Federal/quarter
Triggers federal unemployment tax (FUTA) and Oregon Employment Department UI registration.
From $0
State · day 1
Triggers Oregon state income tax withholding, Paid Leave Oregon employee contributions, and Oregon payroll reporting. Workers' comp is required for most regular household employment.

How Nest Payroll handles this

Each pay period, you pay your employee the net amount directly — through Venmo, Cash App, Zelle, your banking app, or by check. Nest generates the pay stub, calculates payroll taxes and Oregon deductions, and supports Oregon payroll reporting once your state accounts are active.

Federal taxes — quarterly EFTPS payments

At the end of each federal quarter (March, May, August, December), Nest debits your bank account for the federal taxes owed — FUTA, employer + employee FICA, and any federal income tax withheld — and remits them to the IRS via EFTPS. You'll get a confirmation email a week beforehand. Your money stays in your account until taxes are actually due. We don't hold withholdings on your behalf. At year-end, Schedule H on your Form 1040 reconciles everything Nest already paid through the year; Nest produces a signature-ready version.

Oregon state taxes — quarterly Combined Payroll Tax Report

Each quarter, Nest files Oregon's Combined Payroll Tax Report through Frances Online. This single quarterly filing covers UI tax, state withholding, Paid Leave Oregon, transit taxes, and the Workers' Benefit Fund assessment.

Oregon UI tax: New household employers generally pay 2.4% on the first $59,000 of each employee's wages. This is employer-paid and not withheld from your employee. Nest calculates and remits this with the quarterly Combined Payroll Tax Report. Source: Oregon Employment Department — Businesses
Paid Leave Oregon: For 2026, the total premium is 1.0% on wages up to the Social Security wage base. Household employers with fewer than 25 employees are exempt from the employer share, so the practical household-employer requirement is withholding and remitting the 0.6% employee contribution. Source: Paid Leave Oregon
Oregon state income tax: Oregon uses progressive state income tax rates and Form OR-W-4 for withholding. Nest withholds Oregon PIT from each paycheck based on the employee's OR-W-4. Source: OR Department of Revenue — Forms
Oregon transit taxes: Oregon has a statewide employee transit tax of 0.10%. Employers in the TriMet district or Lane Transit District may also owe employer-paid regional transit taxes. Nest determines the applicable tax based on your household address and includes it in Oregon payroll reporting.
Portland-area personal income taxes: Multnomah County and Metro taxes may apply to higher-income residents personally, but they generally do not change household payroll setup unless your employee is above the applicable income thresholds. Source: Portland Revenue Division — Personal Income Tax
End-of-year reconciliation: If you didn't cross the federal FICA threshold ($3,000/year per employee — most common when families start payroll late in the year or hire short-term help), we'll let you know exactly what was withheld but doesn't need to be remitted. You return those amounts to your employee, and we file accordingly.

Set up payroll in 5 minutes.

Nest handles OR Combined Payroll Tax registration, paystubs, quarterly Frances Online filings, Paid Leave Oregon, transit tax compliance, and year-end Schedule H — all for $42/mo.

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Setup checklist (before they start)

Oregon Workers' Compensation Insurance — required for most households

Oregon requires workers' compensation coverage for most regular household employees. A narrow casual-labor exception may apply to incidental or occasional work, but regular nanny, caregiver, and housekeeper arrangements usually need coverage.

Additionally, all Oregon employers (including those with workers' comp coverage) pay the Workers' Benefit Fund (WBF) assessment — a small per-hour assessment (currently 2.0¢/hour, split between employer and employee at 1.0¢ each). The WBF assessment is reported on the quarterly Combined Payroll Tax Report and applies regardless of whether you've purchased a workers' comp policy.

How to enroll: Purchase a household-employer workers' comp policy through any insurer doing business in Oregon, or through SAIF Corporation — Oregon's not-for-profit workers' comp carrier and the largest insurer in the state. You'll need to provide a class code (typically Class Code 0913 for domestic service) and an estimate of total payroll.

Form I-9 (Employment Eligibility)

Have your employee complete the Form I-9 at hire to verify they're authorized to work in the United States. You don't submit this anywhere — keep it filed in case of audit.

Federal W-4 and Oregon Form OR-W-4

The federal W-4 determines how much federal income tax to withhold from each paycheck.

Your employee also fills out the Oregon OR-W-4 at hire to set their state withholding allowances. The OR-W-4 is required for OR state income tax withholding from day 1.

Withholding note: Federal income tax withholding is voluntary for household employers and requires agreement with your employee. Oregon state withholding follows standard payroll rules and uses Form OR-W-4.

Oregon New Hire Reporting

Report new hires to the Oregon Child Support Program — New Hire Reporting within 20 days of the start date. You can file online at the link above. Federal law requires this; OR penalty for failure is up to $25 per missed report.

Required Employment Posters

With a household employee, OR requires the following workplace posters (or equivalent notification, since your home isn't a typical workplace):

  • Federal posters: FLSA, FMLA, EEO, USERRA, Polygraph Protection
  • Oregon Minimum Wage poster (BOLI — required posters)
  • OR Sick Time poster (statewide, required for all employers)
  • Paid Leave Oregon poster
  • OR Domestic Workers' Bill of Rights notice — required at hire for all household employees (BOLI — Domestic Workers)

For a household setting, a single binder kept in a common area satisfies the posting obligation in most cases.

Written Work Agreement — required by Oregon DWBR

Under the Oregon Domestic Workers' Bill of Rights (ORS 653.547), employers of domestic workers must provide a written employment agreement at hire. The agreement must include: pay rate, work schedule, duties, paid time off, meal/rest periods, and grounds for termination.

Use our free nanny contract template as a starting point — it covers compensation, hours, duties, vacation, sick time, confidentiality, and at-will employment language. Customize for OR DWBR requirements.

Oregon Domestic Workers' Bill of Rights — key protections (ORS 653.547):
  • Paid meal periods of at least 30 minutes for shifts over 6 hours
  • Paid rest periods of at least 10 minutes for every 4 hours worked
  • For live-in workers: at least 8 consecutive hours of uninterrupted sleep, with separate sleeping accommodations
  • At least one 24-hour rest period each work week
  • 3 paid personal days per year after one year of employment
  • Written notice of termination

Pay & compensation

Minimum Wage — three-tier regional, $14.05–$15.95 in 2026

Oregon has a unique three-tier regional minimum wage, set under ORS 653.025:

Oregon Minimum Wage by Region (effective July 1, 2025 → June 30, 2026)
Region2026 RateCoverage
Portland Metro$15.95/hrMultnomah, Washington, Clackamas (urban growth boundary)
Standard counties$14.70/hrMost of OR including Salem, Eugene, Bend, Medford
Non-Urban counties$13.70/hr18 frontier counties (Baker, Grant, Harney, etc.)

Rates adjust annually on July 1 based on CPI. In practice, household-employer market rates are above all three floors; nanny pay in Portland metro typically ranges from $20–$28/hr.

Overtime — 1.5× regular pay over 40hr/week

Federal Fair Labor Standards Act (FLSA) overtime rules apply: live-out household employees get 1.5× their regular hourly rate for any hours over 40 in a workweek. Live-in household employees are exempt from federal OT (FLSA exemption for live-in domestic workers), and Oregon has no state OT requirement that overrides this.

Oregon Overtime Rules
Worker typeOT triggerRate
Live-out (most nannies, housekeepers, caregivers)Over 40 hr/week1.5× regular
Live-inFLSA-exempt — no OT required1.0× regular

"No Tax on Overtime" Deduction (2025–2028)

The federal overtime deduction may let household employees deduct the premium portion of qualifying overtime pay on their personal tax return. This is a federal income-tax rule; it does not change how you calculate overtime, FICA, Oregon withholding, Paid Leave Oregon, or payroll records.

With Nest Payroll: Nest tracks qualified overtime reporting for W-2 purposes when required.

Pay Frequency

Household employees are usually treated as non-exempt hourly workers under FLSA rules — even when you've agreed to pay a "salary," federal FLSA treats it as a wage covering a fixed number of hours per week, with overtime owed on hours past 40.

Under ORS 652.120, Oregon employers must establish a regular payday. Wages must be paid at least once every 35 days; most household payroll arrangements pay weekly or biweekly.

Mileage Reimbursement

Oregon does not have a state-mandated mileage reimbursement rate for private employers. If your employee uses their own car for work-related driving (errands, school pickup, doctor's appointments for the children), reimburse at the federal IRS standard mileage rate — $0.70/mile for 2026. Reimbursements at or below the federal rate are not taxable wages.

Paystub Requirements

Oregon requires itemized paystubs under ORS 652.610. Each paystub must show: gross wages, hours worked (regular + OT separately), rate of pay, deductions (federal income tax, FICA, OR state income tax, Paid Leave Oregon, transit tax, statewide transit tax), net pay, and pay period dates.

With Nest Payroll: Nest generates a compliant earnings statement (pay stub) for every pay period — automatically. Each stub shows gross, FICA, federal income tax, OR state income tax, OR Paid Leave 0.6% employee deduction, statewide transit tax 0.10%, Tri-Met or Lane Transit (employer-paid, shown for transparency), net pay, hours worked. You can email each stub to your employee from the app, or download a PDF.

Time off & leave

Oregon Sick Time — 40 hours/year, statewide

Oregon requires paid sick time for household employees. Employees accrue 1 hour for every 30 hours worked, up to 40 hours per year, and sick time can be used for illness, medical care, mental health, family care, or safe time.

For households, frontloading 40 hours at the start of the year is usually the simplest approach because it avoids per-pay-period accrual tracking and keeps balances easier to manage.

Vacation & PTO

Oregon does not require employers to provide paid vacation (separate from the 40-hour sick time requirement). If you offer vacation, document the policy in writing — under Oregon law (ORS 652.140), accrued vacation is generally treated as wages owed at separation unless your written policy clearly states otherwise. A written policy with explicit caps and conditions is the protection.

Frontloading at the start of each year is the simplest approach. If you offer paid vacation, set the annual amount upfront and let your employee draw against it as time is used — no per-pay-period accrual tracking, no carryover headaches at year-end. See our frontload PTO & payout guide for the calculation method when payout does apply (earned-but-unused, pro-rated through the last day worked, at the final rate of pay).

Upon departure

When the working relationship ends, Oregon's final pay rules under ORS 652.140 are strict:

  • Termination by employer: Final wages due by the end of the next business day after termination
  • Resignation with 48+ hours notice: Final wages due on the last day of work
  • Resignation without notice: Final wages due within 5 business days OR on the next regular payday, whichever is sooner

Final wages must include any earned-but-unused vacation pay and unused frontloaded sick time (if your written policy provides for sick payout — sick time payout is not legally required, but many employers offer it). At separation, give your employee a final paystub and a copy of any timekeeping records.

Final pay matters in Oregon. Oregon can impose penalty wages for late final pay, so separation pay should be handled carefully and on time.

Year-end forms

Your responsibilities

  • Hand the W-2 to your household employee by January 31 — Nest produces this; you deliver it
  • Attach Schedule H to your Form 1040 by April 15 — Nest produces a signature-ready version

What Nest handles for you

  • Quarterly federal tax payments to the IRS via EFTPS
  • W-3 + Copy A of W-2 filed with the Social Security Administration
  • Quarterly Oregon Combined Payroll Tax Reports through Frances Online
  • OR-WR annual withholding reconciliation with the Oregon Department of Revenue
With Nest Payroll: Your tax forms are generated automatically and appear in your Tax Summary by the end of January.
Bonuses and vacation payouts: Bonuses and vacation payouts are included on your employee's W-2 and taxed through regular payroll withholding calculations.

Tax breaks for household employers

Two federal tax breaks may help offset your nanny payroll costs:

1. Dependent Care FSA (DCFSA). Through your employer's benefits, you can set aside up to $7,500/year (2026 OBBBA increase from $5,000) in pre-tax dollars to pay for childcare for kids under 13. This typically saves 25–35% on the contributed amount, depending on your federal + state tax bracket.
2. Child & Dependent Care Tax Credit. On your federal Form 1040, claim 20–35% of qualifying childcare expenses (up to $3,000 for one child / $6,000 for two or more). The percentage scales based on your AGI.

For nannies caring for school-aged kids, families often use the DCFSA first (better tax savings for most), then claim the credit on any expenses above the FSA limit. Note: you cannot claim the same expenses under both — but you can split them.

Resources & free tools

🧮 Nanny Payroll Calculator ⏪ Catch-Up Calculator ↗ Gross-Up Calculator 📄 Free Contract Template 🏖️ Frontload PTO & Payout Guide 📚 Nanny Payroll 101

The information on this page is general in nature and not tax, legal, or financial advice. Oregon rules change. Verify current rates and rules at OR Department of Revenue, OR Employment Department, BOLI, and Paid Leave Oregon, or consult a tax advisor.