Under SB 906, Oregon employers are mandated to provide a clear paystub explanation to their employees starting from January 2026.
To avoid the costly penalties and to stay compliant, you need to be aware of this new law and also you need to follow it. The state of Oregon recently passed Senate Bill 906 (SB 906), and this new law, paystub transparency for employers, was signed on May 28, 2025. This law updates the ORS 652.610 to ensure that all workers understand their pay stubs clearly. These changes are aimed at making your employees’ payroll more understandable and transparent.
What Oregon Employers Must Do
Under SB 906, employers are required to provide new employees with a plain-language explanation of key payroll information at the time of hire and within 14 days if requested.
Specifically, Employers must provide a written explanation that covers:
- Regular Pay Period
- State the employer’s established pay schedule (weekly, biweekly, semi-monthly, monthly).
- Comprehensive List of Pay Rates
- Hourly pay.
- Salary pay.
- Shift differentials.
- Piece-rate pay.
- Commission-based pay.
- Comprehensive List of Benefit Deductions and Contributions
- Health, dental, and vision insurance.
- Retirement contributions (401(k), SIMPLE IRA, 403(b), 457(b), etc.).
- Flexible Spending Accounts (FSA).
- Health Savings Accounts (HSA).
- Other employee-elected deductions.
- Employer-paid benefits such as health insurance, retirement match, or paid time off accruals.
- Comprehensive List of Every Deduction That May Apply
- Federal income tax.
- State income tax.
- FICA taxes (Social Security and Medicare)
- Wage garnishments or court-ordered deductions.
- Union dues (if applicable).
- Loan repayments (if authorized in writing).
- Purpose of Each Deduction
- A plain-language explanation of why deductions are made (e.g., “Federal income tax is withheld because the IRS requires employers to prepay your tax obligation”).
- Allowances
- Any allowances claimed as part of minimum wage compliance.
- Payroll Codes
- A complete list of codes used on the paystub for pay types and deductions.
- A detailed description or definition of each code (e.g., “REG = Regular Hours Pay, OT = Overtime Pay, MED = Medicare Tax”).
What Format Can Employers Use?
You are not required to give explanations written in long sentences for your employees. Instead of this you can use the below formats for plain language explanation:
- Table format
- List or bullet points
- Glossary style
Employers must review and update this explanation every year by January 1 to reflect any changes in pay practices or deduction codes.
How Employers Can Deliver This Information
Employers have flexibility under SB 906 when providing the paystub explanation. It can be shared in any of the following ways:
- Printed document – Handed directly to the employee at the time of hire.
- Electronic file – Sent by email or posted in an HR portal.
- Posting – Displayed in a central, accessible workplace location.
- Website link – Providing employees with a link to a webpage that contains the full explanation.
Enforcement and Penalties
- BOLI (Bureau of Labor and Industries) has published a model written guidance document in English and Spanish.
- Employers may customize and use this model to meet compliance requirements:
- If you fail to follow this law, you will face civil penalties up to 500$ per violation of ORS 652.610(5).
What are the Steps you Should Take Now
To prepare for the new law from January 2026, you should:
- Audit Payroll systems to identify all pay codes, deduction categories, and benefits that you are providing.
- Create a clear plain language explanation of pay codes and deductions for your employees.
- Decide the Plain Language explanation delivery method. You should choose whether to provide it via printed documents, electronic files or public post.
- Keep the proof that your employees received the plain language explanations in case of audits.
- Refer to BOLI’s model guidance document, which has been published in English and Spanish, to ensure your explanations comply with SB 906 requirements.
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Why This Matters
Providing a clear paystub explanation for your employees are not only helps you to comply with the law but also:
- It helps you to build trust among your employees.
- It helps you to reduce your employee’s payroll related confusions and questions.
- It Improves your employee’s satisfaction and transparency.
As a small business owner, you should stay proactive now to avoid future penalties and ensure smooth transition.
Key Takeaways
- SB 906 takes effect January 1, 2026 – clear paystub explanations are required.
- Explanations must cover pay schedules, rates, deductions, benefits, and payroll codes.
- Formats: table, bullet list, or glossary;
- Delivery: print, electronic, posting, or website.
- Must update annually and keep proof of employee receipt.
- Penalties: up to $500 per violation under ORS 652.610(5).
- Clear explanations build trust and reduce payroll confusion.
Conclusion
The state of Oregon introduces a new law to ensure that all workers are getting clear paystub explanation. As an employer it is your responsibility to follow this law from January 2026 and provide plain language explanations to your employees and update them annually. By following this you will stay away from the future penalties, and it builds trust and transparency among your employees and also reduces payroll confusion.
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