Last summer, Gov. Jay Inslee signed a new law providing paid medical and family leave benefits to employees who work in Washington. Unless employers adopt a voluntary plan that provides equivalent benefits, these benefits will be funded through an insurance program administered by the Employment Security Department (ESD), similar to how unemployment insurance benefits are administered. While these benefits will not be made available to employees until Jan. 1, 2020, there are reporting and withholding requirements that kicked in for employers as of Jan. 1, 2019.
Under the new law, Washington employees will become eligible for 12 weeks of two new kinds of paid leave, paid family leave and paid medical leave for the following events:
- A new child in their family (through birth, adoption, or foster placement)
- A serious illness or injury to the employee
- A seriously ill or injured relative requiring care by employee
- Preparations for a family member’s pre- and post-military deployment activities, as well as time for childcare issues related to a family member’s military deployment
If an employee has multiple covered events in a year, the 12-week cap can be increased up to 16 weeks of total combined leave and up to 18 weeks in the event of a serious health condition during pregnancy that results in incapacity. These leave entitlements are in addition to the unpaid leaves mandated by the federal Family and Medical Leave Act and Washington’s Family Leave Act, but they may be taken concurrently when both are triggered unless the employer permits otherwise.
The ESD recently published an “Employer’s Toolkit” (available here https://paidleave.wa.gov/files/Documents/2018.Employer.Toolkit.V1.1.pdf) to help employers comply, but we thought we would provide a quick overview of three key details we think all employers with any employees in Washington should know now to be ready in time:
1.Employers with even a single employee in Washington will be required to comply with the new law, either by participating in the state’s plan or under an approved voluntary plan that provides the equivalent amount of paid family and medical leave.
Washington employers need to be prepared to report hours worked, wages earned, and additional information to ESD in April 2019, and every quarter thereafter. Unlike some other leave statutes, this law does not limit coverage to only employers with a certain number of employees. If a business has even one employee in Washington, it is expected to comply. The only employers that are exempt are the self-employed (although they may opt-in), federal employees, federally recognized tribal employers (who also may elect to opt-in) and employers who only have employees temporarily in Washington (more on that below).
While smaller employers are not totally exempt, the law does excuse employers with fewer than 50 employees from paying any employer portion of the premiums, though they must still withhold and remit the employee portion. There also will be grants available to certain smaller employers (i.e., those with fewer than 150 employees or those with fewer than 50 employees who have voluntarily opted to pay the employer portion for the premiums) to help defray the cost of hiring temporary employees to cover an absence due to an employee’s use of these paid leave benefits. We are still awaiting more information about how to apply for grants and a number of other details.
2.The law has a broad definition of when employees are considered to be “working in Washington” and thus potentially entitled to benefits.
Employees who regularly work in Washington are covered, but so are employees who may be only temporarily in Washington if they work more than 820 hours in Washington. The statute is also one of the first to address “virtual workers” (i.e., those who may not report to work at an office location but commute from a home office or community workspace) and makes them eligible for benefits if (a) the employer’s base of operations is in Washington, or (b) the “place where the services are directed” is Washington, or (c) the employer is not based in Washington, and the services are not directed to Washington, but the worker lives in Washington.
Eligibility for these benefits, which again will not occur until Jan. 1, 2020, requires that the employee has worked 820 hours during the “qualifying period,” for which there are two options: (a) the first four of the last five completed calendar quarters, or (b) the last four completed calendar quarters. Employees who meet these eligibility criteria will receive benefits that are based upon a certain percentage of the individual’s average weekly wage during the two highest quarters in the qualifying period, up to a maximum amount of $1,000/week. These amounts are expected to be adjusted annually, just like minimum wage.
3.Employers need to know the basics of how premiums will work before the first payroll in January so they can ensure the required deductions are made in time.
For 2019, the total premium contribution for both types of leave is 0.4 percent of each employee’s gross wages. For purposes of this law, “gross wages” does not include tips for tipped employees. Here is how you calculate the premium: https://esd.wa.gov/paid-family-medical-leave/premiums/.
Also, the total premium is allocated between the two types of paid leave benefit as follows: One-third to paid family leave funded entirely by employee contributions and the other two-thirds to medical leave for which the employee is required to contribute 45 percent of the premium. That means the employee’s overall share, which must be deducted from their pay unless the employer voluntarily opts to pay all or some of it on their behalf, is 63 percent of the total premium. Employers must then pay no less than the mandated employer-paid portion (37 percent) at a minimum unless they have fewer than 50 employees, in which case they are permitted but not obligated to contribute toward the employer share.
The premiums have to be withheld each pay period (they can’t be made up later, according to the rules as currently proposed) and remitted to ESD on a quarterly basis starting in April.
Detailed information on calculating premiums, including a calculator you can use to estimate your premiums, is available on the website at www.paidleave.wa.gov/employers.
Recommended Next Steps
Again, the first phase of this law will took effect on Jan. 1, 2019, so we recommend employers with any employees in Washington take these steps now:
- Consider whether you want to adopt a voluntary plan that meets the requirements and get your application submitted as soon as possible. See the ESD’s website (https://paidleave.wa.gov/voluntary-plans) for more information.
- Continue to accurately track the hours worked by all employees in Washington (the rules currently allow you to report 40 hours for exempt employees) and wages earned as of January 1, 2019, so you are ready to report this data to ESD at the end of the first quarter in April 2019. Be sure to include the time any non-Washington-based employees may work in Washington temporarily so that you can document whether they have or have not surpassed the 820-hour threshold.
- Watch for the mandatory notice that ESD has promised will be ready and posted to the website (again, https://www.paidleave.wa.gov/). It had previously been promised before January, 2019 but now looks like they are saying before January 2020. In any event, watch the website for updates, as it will need to be posted with your other employment-related notices. In the meantime, consider enclosing the insert ESD has prepared to explain the new withholdings, available online at https://www.paidleave.wa.gov/paystub.
- Plan to update your handbooks and policies to address this leave. ESD has provided sample language to use in the employer toolkit referenced above and available online at https://paidleave.wa.gov/files/Documents/2018.Employer.Toolkit.V1.1.pdf. The new year is also a great time to have your handbook and policies reviewed to identify whether there are any additional updates that may be required or recommended.
- Educate those involved in attendance management so that they are familiar with the requirements of the law and prepared to facilitate compliance when this leave becomes available to employees in 2020. Depending on your organizational structure, this may include first-level supervisors as well as personnel/HR representatives and upper management.
Amy Robinson is a shareholder at Jordan Ramis PC, practicing in the Employment Practice Group. She works with clients throughout Oregon and Washington and can be reached at (360) 567-3900 in Washington or (503) 598-7070 in Oregon.