As the state of Washington begins administering a Paid Family and Medical Leave (PFML) program, employers might have questions about their requirements. The following is a list of frequently asked questions (click on each highlighted phrase for more details).
- What employers are subject to Washington state PFML?
- What are employer withholding and payment requirements in Washington?
- Are there any exemptions to premium payments?
- What are the Washington employer reporting requirements?
- What reporting information is required of employers and employees?
- When do Washington PFML employee benefits take effect?
- What are reasons for qualified leave?
- What should employers know about eligibility and benefits of Washington PFML?
- What are the calculations for Washington PFML benefits, and are there caps?
- What are the Washington PFML notification requirements for employers?
- What if employers in Washington offer their own program?
- What additional clarifications are needed for Washington PFML?
- Employer takeaways
The benefits to employees of Washington’s PFML program won’t be available until 2020. However, the program requires almost all businesses with Washington employees to meet requirements, including making premium contributions based on wages, starting in 2019.
Employers also have the option of applying to administer their own voluntary plan – for family leave, medical leave, or both – with the stipulation that the plan they propose meets or exceeds the benefits of the state plan and the cost to the employees is less.
Businesses need to be aware that benefits are transferable between employers, so hours and wages are cumulative for all employment.
What employers are subject to Washington state PFML?
There is no minimum employee limit that determines which size businesses are required to follow Washington’s PFML requirements, but there are a few exemptions. In general, all employers, including out-of-state businesses, with at least one employee working in Washington are subject to the state law.
Federal employees, federally recognized Native American tribes, self-employed individuals, and any business that had a collective bargaining agreement (CBA) in existence prior to Oct. 19, 2017, are exempt from the requirements. However, everyone in that group except federal employees can opt-in to the program if they meet certain requirements.
What are employer withholding and payment requirements in Washington?
Employers must report and remit a quarterly payment, effective in 2019, that is due at the end of the month following the finish of the quarter. This is similar to how businesses file state unemployment insurance (SUI) in the state.
Washington state, however, announced it is extending the initial reporting and payment deadline, giving employers until July 31, 2019. At that time, employers must have first- and second-quarter remittance and reporting requirements fulfilled.
The employer must remit a premium, an amount that consists of a required employer portion and employee withholding. The premium is made up of two distinct coverages – Family Leave (supports an employee’s family members) and Medical Leave (supports an employee’s own serious health condition). Details for 2019 also include:
- A total for both (family and medical leave) coverages of 0.4 percent of individual wages (similar to those subject to SUI). But, PFML wages exclude certain supplemental benefits provided to employees on PFML, and tips. Employers exempt from SUI and unfamiliar with the calculations will need to evaluate how to track and calculate.
- Wages subject to premium capped at Social Security limit (currently $132,900 for 2019)
- One-third of premium designated for family leave, and employees can deduct full amount from employees (0.1333 percent)
- Two-thirds of premium designated for medical leave, and employee can only deduct 45 percent (0.12 percent) from employee while employer must pay 55 percent (0.1467 percent)
- Employer may deduct total of 0.2533 percent from employee, but employer might elect to pay any portion of the employee portion (and it might differ between employees)
Premium amounts will be adjusted in 2021 and each year thereafter, and any changes will be based on claim experience.
Are there any exemptions to premium payments?
There are some exemptions to premium payments, including for businesses with fewer than 50 employees. They are not required to pay the employer portion (0.1467 percent) but must remit the employee portion.
In addition, employers with 150 or fewer employees are eligible for grants to cover the costs associated with an employee’s leave. However, since employees can’t begin taking leave under this program until 2020, no grants are available until then either. Each eligible employer must meet conditions to qualify for the $3,000-per-employee grants, and 10 grants per year are available to each employer.
Employers with fewer than 50 employees are eligible for the grants if they pay the employer portion of the premium (0.1467 percent of wages). Smaller employers who have employees who might be considering taking leave should consider the situation: Is not paying the employer premium more financially sound than trying to secure a grant?
Another difference specific to 2019 is how employer size is determined. The Washington Employment Security Division (ESD) based the thresholds (50 employees, 150 employees) on a raw count of employees from the first quarter of 2019 without factoring in full-time, part-time, or temporary positions.
Starting in 2020 and for future years, the thresholds will be determined each Sept. 30 using the prior four quarters average employee headcount on filed reports.
What are Washington employer reporting requirements?
Employers are required to report information that supports the administration of the program, due at the same time quarterly as remittance of premiums. Any employer subject to SUI reporting will be familiar with this process because much of the information reported is identical to that, with some specific deviations.
What reporting information is required for employers and employees?
Employer level information required:
- Washington UBI number
- Business name
- Total premiums collected from employees
- Name of report preparer
Employee level information reported:
- Social Security number or ITIN
- First and last name, plus middle initial
- Wages paid in reporting quarter
- Hours associated with the reporting quarter (total hours worked by employee, including overtime, vacation pay, sick pay, and paid time off). Note: Severance and cashing out accrued leave should not be counted.
Questions currently remain as to how the self-employed who choose to opt-in would track hours and wages.
When do Washington PFML employee benefits take effect?
On Jan. 1, 2020, employees may begin to apply for PFL program benefits. Again, there are two distinct coverage types; one that covers time to care for a family member with a serious health condition (family leave) and one that covers an employee’s own serious health issue (medical leave) – the latter can be equated to what has been known as short-term disability.
What are reasons for qualified leave?
Similar to the federal Family Medical Leave Act (FMLA), reasons for a qualified leave include:
- Care of a new child – through birth, adoption, or foster placement within the first 12 months
- Care of family member with a serious health condition – physical and psychological conditions apply, and a family member is defined as a child, grandchild, grandparent, parent, sibling, or spouse of employee. Washington defines spouse as including state registered domestic partner.
- Active duty or impending active duty in Armed Forces – spouse, child, or parent qualify, and the section refers to exigencies such as but not limited to issues that arise from short-term deployment, childcare, school activities, and to attend military events, as defined by the FMLA in 2017.
- Employee’s own serious health condition – this is medical leave
What should employers know about eligibility, benefits of Washington PFML?
Most importantly for employers (and employees) is that this is a portable benefit, so hours accumulate between employers. A new employee at your business might have available leave based on time accrued from a previous job.
Employees are eligible for PFML benefits after working at least 820 hours in employment during a qualifying period, such as the first four of the past five completed calendar quarters. The maximum medical leave an employee can take in a rolling year (not a calendar year) is 12 weeks in a 12-month period, with the potential for an additional two weeks for pregnancy complications that result in incapacity. The maximum family leave available to eligible employees is 12 weeks. The maximum cumulative total for both medical leave and family leave an employee can take is 16 weeks with an additional two weeks if pregnancy complications that result in incapacity.
What are the calculations for Washington PFML benefits? Are there caps?
An employee’s weekly benefit will be 90 percent of their wages up to one-half the state average weekly wage (AWW). For employee wages above 50 percent of the state AWW, an employee would receive 50 percent on the dollar based on a multi-stepped formula:
- Take 90 percent of the employee’s average wages capped at one-half the state average, then take 50 percent of the employee’s average wage that is above one-half the state average, and add these two numbers
An employee’s weekly average wage is derived by taking the two highest-paid quarters in the qualifying period and dividing by 26.
The maximum weekly benefit for family and medical leave that occurs on or after Jan. 1, 2020, is capped at $1,000. By Sept. 30, 2020, and by each subsequent Sept. 30, the commissioner will adjust the maximum weekly benefit amount to 90 percent of the state average weekly wage. The adjusted maximum weekly benefit amount takes effect on the following Jan. 1.
What are Washington PFML employer notification requirements?
Employers must post a notice of the program to employees in places where employment notices are usually posted. The state of Washington is developing the poster and expects to have it available in late 2019.
An employer also must provide to employees a written statement of rights under this program within five business days after an employee is absent for seven consecutive days, or when the employer is informed that an employee is absent due to family or medical leave.
Employers are prohibited from discrimination or retaliation against an employee for requesting or taking paid leave. There also are robust employment protections, although there are exceptions, that ensure that an employee is restored to the same position held prior to the leave, or an equivalent position, and retains any employment benefits accrued prior to the leave if the following conditions are met.
- Employer has 50 or more employees
- Employee has been employed by the employer for at least 12 months
- Employee has worked 1,250 hours for the employer in the 12 months prior to leave
Employers must also continue an employee’s current health insurance coverage during the leave, but can require the employee to contribute their portion of the premium during leave if the employers continue paying their portion. One potential issue is how to collect from an employee since their benefit check comes from the state.
What if employers in Washington offer their own program?
Employers who elect to offer a voluntary program can opt-out of the state family and medical plan if their business maintains a plan comparable or more generous than the state’s PFML program, including the same or lower cost to employees. Employers can opt-out of either the state’s medical leave, family leave – or both plans – since they are distinctive programs.
Employers must apply to opt-out and pay a $250 application fee. However, until Washington state approves the application, employers must continue to meet the state plan requirements such as paying premiums.
If an employer offers an approved voluntary plan, it either can be self-insured or provided by a third-party insurer, and employee contributions must be held in a trust. If the plan is withdrawn by the employer, all funds must be remitted to Washington state.
Additional voluntary plan requirements include:
- Eligibility: Employee worked 820 hours in the qualifying period and 340 for this employer, or immediate if previous employer also had a voluntary plan
- Job protections: Same as under state plan applies to employees who worked nine months and 965 hours for current employer
- Quarterly reporting to ESD by employer
- Grants: Small employers are not eligible to receive any under this section
If an employer’s voluntary plan is denied by the state, there is an appeal process.
What additional clarifications are needed for Washington PFML?
Recent guidance has answered questions of how employers will need to support the new requirements, but there are still questions to be answered.
- Washington opined on the interaction of the state PFML with federal FMLA, stating the leave in both programs is taken concurrently, unless employers permit otherwise. The state did not address how it would interact with other states that might have requirements.
- It is unknown if the benefit payment is subject to federal income tax (FIT), and if it is what happens if there is a voluntary plan?
- It is yet to be determined how voluntary plan employers that have employees who work for another employer must determine benefits paid out by the plan for those employees
Employer takeaways in Washington
Employers should have begun withholding from their employees, and they should have provided information on this new withholding to their employees. Employers have the option to pay the employee portion, as well.
Employers should ensure they are gathering all the necessary information for reporting that is due in July, including all wages and hours from each Washington employee. This is important for employers exempt from SUI, as they might have never gathered and calculated this information. Employers should consider updating their handbooks with a Washington Paid Family and Medical Leave policy and be prepared to implement the provisions of the new policy.
The Washington Employment Security Division has included sample communications and handbook language in an employer toolkit to help employers get started.
Paychex will continue to monitor developments around the Washington Paid Family and Medical Leave program as the state continues to finalize regulations.