Washington State will soon join California, New Jersey, New York, Rhode Island, and the District of Columbia in providing paid family and medical leave to its residents. Effective January 1, 2019, Washington employers must begin funding the state program through an employer and employee payroll tax of 0.4% of employee gross wages.
Leave under the new program will be available starting January 1, 2020. Eligible employees may receive up to 12 weeks of paid leave for the following events:
- to care for and bond with a new baby or adopted child;
- to care for oneself or a family member experiencing an illness or medical event;
- for certain military-related events.
Employees can use up to 16 weeks when family and medical leave are used in combination, plus an additional 2 weeks for pregnancy complications that result in incapacity. The paid benefit will be a percentage of pay, at a minimum of $100 per week and a maximum of $1,000 per week. Employees are eligible if they worked at least 820 hours during the first four of the previous five completed quarters.
The program is mandatory for all employers with at least one employee working in Washington State, with the exception of federal employees, federally recognized tribes, the self-employed, and certain collectively bargained employees. Employers must remit 0.4% of gross wages to the state’s Employment Security Department (ESD) on a quarterly basis. That 0.4% premium can be split between the employer and employee, with up to 63.33% withheld from the employee’s pay and at least 36.67% paid for by the employer. Employers with fewer than 50 employees who work in Washington state will only be assessed the employee portion of the premium. Premium withholdings are capped at the Social Security tax wage base, which is $132,900 for 2019.
Covered employers must begin reporting employee information and remitting the premiums to ESD on a quarterly basis, with the first report due April 30, 2019. Those reports will include the organization’s state Unified Business Identifier (UBI) number, the business name, total premiums collected from employees, the name of the report’s preparer, employees’ Social Security Numbers or Tax ID Numbers, employees’ full names, and wages and hours for that quarter. The reporting process, which is still in development, will be similar to but separate from Unemployment Insurance reporting.
Alternatively, Washington employers may offer a voluntary paid leave program. Businesses that choose to do so must submit an application to ESD, which shows that the private program offers benefits at least as generous as what is required by the state program. Employers will still have to submit quarterly reporting; they will be required to post notice of their program; and employee contributions must be kept in trust separate from general assets. They have the option to work with a third-party administrator.
The ESD website offers an Employer Toolkit explaining the state program. This document contains sample text that employers may use for their employee handbook, as well as sample newsletter language, and an employee paystub insert. There is also a Voluntary Plan Guide for employers interested in offering private paid leave benefits.
Please contact your Keller account team with any questions.