diff --git a/app-admin/sysklogd/files/sysklogd.rc8 b/app-admin/sysklogd/files/sysklogd.rc8
index a6590d725a69e..920ab96332646 100644
--- a/app-admin/sysklogd/files/sysklogd.rc8
+++ b/app-admin/sysklogd/files/sysklogd.rc8
@@ -34,7 +34,7 @@ start_daemon() {
 	ebegin "sysklogd -> start: ${daemon}"
 	start-stop-daemon --start --exec /usr/sbin/"${daemon}" \
 		-b -m --pidfile /var/run/"${daemon}".pid \
-		-- ${fg_opt} ${options}
+		-- ${options} ${fg_opt}
 	retval=$?
 	eend ${retval} "Failed to start ${daemon}"
 
diff --git a/app-admin/sysklogd/sysklogd-2.0.ebuild b/app-admin/sysklogd/sysklogd-2.0-r1.ebuild
similarity index 87%
rename from app-admin/sysklogd/sysklogd-2.0.ebuild
rename to app-admin/sysklogd/sysklogd-2.0-r1.ebuild
index c69300ca428a7..d7a0750798823 100644
--- a/app-admin/sysklogd/sysklogd-2.0.ebuild
+++ b/app-admin/sysklogd/sysklogd-2.0-r1.ebuild
@@ -41,6 +41,11 @@ src_prepare() {
 
 src_configure() {
 	local myeconfargs=(
+		# Required for correct pid file location. (bug #701048)
+		# syslogd appends "/run/syslogd.pid" to the localstatedir
+		# path, and tries to write to that file even when being
+		# started in foreground. So we need to pin this to /
+		--localstatedir="${EPREFIX}"/
 		$(use_with klogd)
 		$(use_with logger)
 		$(use_with systemd systemd $(systemd_get_systemunitdir))