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APA Asks Questions of Eugene, Oregon, on Its New Payroll Tax

BY: Alice P. Jacobsohn, Esq. | 02/19/20

As the city of Eugene, Ore., begins to prepare proposed administrative rules regarding its new payroll tax under Council Ordinance No. 20616, APA provided comments for consideration. The issues include addressing:

  1. Payroll taxes for employees with variable rates of pay and other pay‑related issues;
  2. Employees who work for employers that are physically located within the city of Eugene and work outside of the city limits and employees that occasionally travel to Eugene for work; and
  3. Administrative tracking, remitting, and reporting requirements.

“Payroll managers and their employers need to understand how the city ordinance will apply to the many methods by which employees are paid,” APA said.

Ordinance 20616 §3.722 defines employee pay subject to the payroll tax as a “fixed rate” for “time spent in the performance of the services, on the number of operations accomplished or on the quantity produced or handled.” Employees are paid in a variety of ways. This pay is not always defined in the manner to which the ordinance envisions. For example, tipped employees must be paid a minimum wage, but tip amounts vary and are not always known to the employer. Commissioned employees may be paid based on the value or number of products or services they sell, team-based pay structures, an employer’s overall profits at year end, or some combination of criteria.

In addition, physical location must be clearly defined for employers to understand which employees are covered. For example, an employee may telecommute from a location outside the city but report to a physical employer location in the city. Some employees may occasionally work at an employer’s physical location within the city.

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Alice P. Jacobsohn, Esq., is Senior Manager of Government Relations for the APA.