New laws in 2019 will impact local businesses

Laws include the new paid family and medical leave law, minimum wage increase

Family of three
VBJ File

Payments for Washington’s new paid family leave system launched with the new year – and so far things are running smoothly, said Rep. Monica Jurado Stonier, Deputy Majority Whip and a Vancouver Democrat.

The new paid leave law, passed on July 30, 2017, was put together with a lot of input from the business community, and so far businesses have been generally supportive of the legislation, Stonier said. Payments for the new system will continue through the year to build up a funding pool, and the benefits system will launch in 2020.

Businesses this year will also face a new bump in the statewide minimum wage from $11.50 to $12 an hour, but so far Stonier said she hasn’t heard that it’s causing major hardships.

“I’m getting a lot of emails about paid family leave,” Stonier said. “There was a lot of celebrating early on, but now that they have to pay for it we’re getting some questions, which is normal. It’s a huge win for keeping some of our lower paid workers out of poverty and keeping them working.”

In the paid leave program, eligible employees get 12 weeks of family or medical leave, with a cap of 16 weeks per year if an employee experiences both a family and medical crisis. Women with pregnancy complications can also get an additional two weeks leave.

Both employees and employers pay for the program through a payroll tax. Employees are eligible for the program after working 820 hours. Employees will be eligible to take leave starting in 2020.

Most employees pay less than $2 a week for the coverage. And low-wage employees making up to $17 an hour get about 90 percent of their income in the weekly benefit, with an overall cap of $1,000 a week for others. Overall, workers will pay about 63 percent of the cost of the program, while employers pay 37 percent.

“There was a lot of opposition initially, but what changed is the people wanted it,” Stonier said. “The business community said ‘if it’s going to happen, we want to do this in a way that makes sense for business,’ and they helped us build a better law.”

James Sikora, an attorney with Landerholm in Vancouver, said businesses should decide how to comply with the new law by either participating in the state program or maintaining a voluntary program.

“The new law provides businesses the option of maintaining a voluntary plan in lieu of participating in the state program, provided the voluntary plan provides at least the same benefits as the state program,” Sikora said. “This option may be worth exploring for some businesses that already provide a generous paid leave program. Voluntary programs must be reviewed and approved by the Employment Security Department.”     

Former Sen. Joe Fain, R-Auburn, who lost his re-election bid this year, was the lead Republican on the bill. He set up a calculator for businesses and employees to assess costs of the plan at family.senatorfain.com.

For a worker making $50,000 a year, the weekly employee premium is about $2.50, and the weekly employer premium for companies with more than 50 employees is about $1.50.

Companies with 150 or fewer employees are also eligible for reimbursement funds. For instance, if a company hires a temp, it can apply for state reimbursement up to $3,000 per worker. And companies that have fewer than 50 employees don’t have to pay any tax at all. However, Sikora said if these small employers wish to take advantage of the small business assistance grants, the business must elect to pay the employer share of the premium.

“All businesses should be prepared, as of January 1, 2019, to begin collecting premiums from employee paychecks and completing the required reporting of wages, hours, and more to the Employment Security Department,” Sikora said.

As 2019 continues, Sikora said businesses should be prepared to review and update leave policies in preparation for employees becoming eligible in 2020 to take paid family and medical leave. He said businesses should also consider training supervisors on how to handle employee requests for paid family and medical leave, and educate employees on requirements for requesting leave and providing notice to the business of the need for leave.  
 
“Extending coverage is always a pro worker and pro employee approach – and our business community wanted to do that anyway,” Stonier said. “Our business community, particularly in Southwest Washington, is going to be critical as we evaluate revenue options moving forward.”

The statewide minimum wage hike is pretty standard, and she hasn’t heard any rumblings about it. Seattle is facing a bigger hike, with a new minimum wage of $16 an hour for companies with more than 500 employees.

“I think the statewide increase is to be expected,” Stonier said. “I think everybody knew it was coming.”

One thing high on her agenda for the new year is to do something about Washington’s regressive tax system – and that’s something she’d also like business input on, Stonier said.

“As these proposals come forward from the business community it will be interesting to see the sorts of impacts,” she said. “I’ve seen proposals for a B&O (gross receipts) tax for small businesses, while making large corporations pay their fare share. Anything we do will be to try to right the ship on regressivity.”

The state’s regressive sales tax system the way it is now, means that people who make less than $50,000 pay a larger portion of their income in taxes than people who make more money, she said.

“Rather than overhaul the system – and obviously we can’t do an income tax – we’re trying to right the system,” Stonier said. “But I don’t know how far we’re going to get it this year.”

Another proposal she’s working on would create a benefits package for workers that follows them from job to job, rather than making them the sole responsibility of the employer. That would mean things like 401Ks, health benefits and other compensation could follow the employee to a new job.

“If you’re a gig worker, your employer might have a per-transaction or per-item rate (to pay for benefits) that just follows you around as a person,” Stonier said. “I’ve talked to companies like Uber and they say it’s a pathway to benefits. The business community is really coming to the table to see what this could look like in Washington.”

There will be a Senate companion to that bill this year, and she’s hopeful that it will get to the floor, Stonier said.

“I think the business community is helping us figure out what is do-able,” she said.

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