Under a law passed last year, Washington State will begin offering paid family and medical leave benefits to workers in 2020. These benefits will be funded by payroll taxes that take effect January 1, 2019. Employers should start preparing now to ensure they are ready for these significant legal changes.
This article outlines key facts for employers about the new law, as well as ways for employers to learn more and have input in the rule-making process.
Quick facts about the new law:
- Who administers the law? The law will be administered by the Washington Employment Security Department (ESD), the same agency that handles unemployment insurance.
- What does the law do? The law creates a statewide insurance system for paid family and medical leave funded by payroll taxes, similar to our current unemployment insurance system. Employers must either participate in the state plan or have a “voluntary” (self-funded) plan that is pre-approved by ESD and is at least as generous as the state plan.
- Which employers are covered? Virtually all employers with employees within Washington State except the federal government are covered by the law. However, the law applies differently to different types and sizes of employers. For example, employers with fewer than 50 employees are not required to pay the employer portion of the payroll taxes.
- When do I have to start collecting premiums? Employers must begin collecting payroll taxes (premiums) on January 1, 2019.
- What premiums do I have to collect and pay? For 2019 and 2020, the total premium due is 0.4% of an employee’s wages up to the social security cap. The employee is responsible for approximately 63% of the total premium, and the employer is responsible for the remaining approximately 37%. Employers with fewer than 50 employees are not required to pay the employer’s portion, but if they do, they will qualify for certain grants and assistance.
- How do I pay premiums? Employers are responsible for collecting the employee’s portion of the premium via payroll deductions. Alternately, the employer may choose to pay the employee’s portion on the employee’s behalf. ESD is still deciding how often employers must remit premiums to the State. ESD is also currently creating an online system for employers to submit these payments.
- Which employees are eligible for benefits? Employees who have worked a total of 820 hours for any employer in Washington State for either the last four full calendar quarters or the first four of the last five full calendar quarters are eligible for benefits.
- What benefits do employees get? The law provides partial wage replacement during two types of leave—medical leave (for the employee’s own serious illness or injury) and family leave (leave related to the birth or placement of a child, to care for an injured or ill family member, and certain military-related leave). The amount of wage replacement is based on a percentage of the employee’s wages up to a maximum of $1000/week. Each year, eligible employees may receive up to 12 weeks of paid family or medical leave, up to 16 weeks for a combination of paid family and medical leave, and up to 18 weeks for pregnant employees with serious health conditions that result in incapacity.
- Do I have to hold an employee’s job open? An employer is required to restore an employee to his or her job or an equivalent position after any paid family or medical leave only if: (1) the employer employs 50 or more employees, (2) the employee has been employed by the current employer for at least 12 months, and (3) the employee has worked for the current employer for at least 1,250 hours during the 12 months immediately preceding the leave. These requirements are very similar to the eligibility requirements for the Family Medical Leave Act (FMLA).
- What if I want to offer a voluntary plan? Rather than participating in the state plan, employers can offer voluntary (self-funded) plans that are approved by ESD for paid family leave, paid medical leave, or both. Voluntary plans must be at least as generous as the state’s plan and meet certain additional requirements, such as expanded employee eligibility. ESD currently predicts that voluntary plan applications will be available in late summer 2018. ESD’s fact sheet on voluntary plans is available here. See below regarding how to sign up for ESD’s notifications, which will include when a notification when voluntary plan applications become available.
What employers should do now
Although payroll deductions do not start until 2019, employers can take certain steps now to ensure they are prepared for the new law:
- Begin analyzing whether you want to implement a voluntary (self-funded) plan for paid family leave, paid medical leave, or both. This will require consideration of your current leave of absence policies, short-term disability insurance offerings, and your company’s financial situation.
- Coordinate with your payroll department or vendor to learn what logistical steps are needed to begin withholding the new payroll taxes beginning January 1, 2019.
- When setting your 2019 budget, include as an expense the employer’s portion of paid family and medical leave premiums or the cost of your voluntary plan if applicable.
Learn more and get involved
ESD is doing four separate phases of rule-making to create the rules that will clarify and implement the new law. The first phase of rule-making is complete, the second phase is underway, and the third and fourth phases will take place in 2019. Simultaneously, ESD is also developing an online system for employers to calculate and remit premiums and for employees to calculate and apply for benefits. Until the rule-making and technology development is complete, many questions about the law will remain unanswered.
ESD is actively seeking employer input in the rule-making and technology development process. The following resources provide information about how you give feedback and get updates as ESD rolls out the new law.
- Register for email updates from ESD about paid family and medical leave.
- ESD’s Paid Family and Medical Leave website: This is the portion of ESD’s official website devoted to paid family and medical leave. It contains fact sheets and FAQs about the law, basic information on the rule-making timeline, and notices about upcoming meetings.
- ESD’s “Public Comment Portal”: This site is created specifically for the rule-making process. It contains more detailed information about past and future rule-making meetings than is available on ESD’s official website, including agendas, powerpoints, and transcripts, as well as an online forum where anyone can leave a comment and get a public answer from ESD.
- Email address for questions and comments: firstname.lastname@example.org
- ESD survey to gather information about public knowledge of the law.
- Statutes: Chapter 50A.04 RCW
For questions, please contact any member of Ryan, Swanson & Cleveland’s Employment Rights, Benefits & Labor department.
This message has been created by the Employment Rights, Benefits & Labor Group at Ryan, Swanson & Cleveland, PLLC to advise of recent developments in the law. Because each situation is different, this information is intended for general information purposes only and is not intended to provide legal advice on any specific facts and circumstances. Ryan, Swanson & Cleveland, PLLC is a full-service law firm located in Seattle, Washington.