Payroll Deductions Begin January 1st for Washington’s Paid Family and Medical Leave Law
Thursday, December 27, 2018
Posted by: Becca Wiegand
Starting January 1, 2019, Washington employers and out-of-state employers with employees working in Washington will need to start deducting premiums from the paychecks of their employees who work in Washington, as required under the Washington Paid Family and Medical Leave Law (WA PFML).
Last year, Washington became the fifth state in the nation to enact a law providing paid family and medical leave benefits to employees who work in Washington. These benefits are funded through a program administered by the Washington Employment Security Department (ESD), similar to unemployment insurance benefits.
Employees who work in Washington become eligible for these benefits on January 1, 2020, but there are a number of reporting and withholding requirements of the law that begin in 2019.
WA PFML applies to employers with one or more employees working in Washington and has a very broad definition of which employees are covered under the law. An employee’s work is subject to premiums when the work is “localized” in Washington. Work is considered “localized” if it is performed entirely in Washington or mostly performed in Washington with some temporary or transitory work, or isolated transactions, occurring outside of Washington. Work that is not localized in Washington may also be subject to premiums, if certain conditions are met.
An employer can request a conditional premium waiver for an out-of-state employee who is temporarily working in Washington. Employers must file quarterly reports to verify the employee still qualifies for the waiver. If the employee exceeds 820 hours in the qualifying period, the conditional waiver expires and both the employer and employee will be responsible for paying premiums during the qualifying period.
WA PFML premiums need to be withheld from employees who work in Washington, as defined by the statute, as of the first payroll in January 2019.
For 2019, the total premium contribution is 0.4% of each employee’s gross wages. ESD has provided guidance on how to calculate the premiums owed (https://esd.wa.gov/paid-family-medical-leave/premiums). The employee’s share that must be deducted from their pay is 63% of the total premium. Employers must pay no less than the remaining 37% of the premiums, unless they have fewer than 50 employees, in which case they are not obligated to contribute toward the employer share of the premiums, but must still withhold the employee’s share.
The premiums have to be withheld each pay period and remitted to ESD on a quarterly basis starting in April. Employers cannot deduct missed employee premiums in future paychecks. If a premium payment is not deducted from an employee’s paycheck, the employer is responsible to pay for the missed premium.
Employers with employees in Washington need to be prepared to report hours worked, wages earned, and additional information to ESD in April of 2019, and every quarter thereafter. The law allows employers to report 40 hours per week for exempt employees.
ESD is developing a secure account management system where employers can file reports, pay premiums, apply for voluntary plans, etc., but it is still being developed.
ESD will make grants available for smaller employers (i.e., fewer than 150 employees). Employers with fewer than 50 employees must voluntarily opt to pay the employer portion of the premiums to be eligible for a grant. Smaller employers can apply for grants to help defray the cost of hiring temporary employees to cover an employee’s WA PFML absence or other cost associated with covering the employee’s absence. ESD will be providing more guidance regarding these grants in 2019.
Employers are also able to adopt a voluntary plan, which may include a current paid leave policy, provided the plan meets the requirements of WA PFML and is approved by ESD. Information regarding adopting a voluntary plan is available on ESD’s website (https://paidleave.wa.gov/voluntary-plans).
A mandatory poster to notify employees of the program will be available from ESD before January 1, 2020. ESD has developed an optional paystub insert to distribute or post to inform employees who work in Washington of the premiums that will be withheld from their paycheck starting January 1, 2019 (https://paidleave.wa.gov/paystub).
Enforcement: ESD will have broad authority to audit, investigate complaints, and impose penalties. The agency can file a civil suit, which must be given priority hearing, to force payments. If an employer fails to remit required payments, for example, the employer must pay the entire balance owed, plus 1% monthly interest (compounded), and double those amounts as penalties.
Benefits Begin in 2020: Starting January 1, 2020, eligible employees who work in Washington can take up to 16 weeks leave, and in some cases 18 weeks, of combined paid leave to care for a family members or their own serious health condition, childbirth or the placement of a child under 18 with the employee, or prepare for a family member’s pre- and post-military deployment activities. Specifics regarding eligibility, leave entitlements, notice requirement, and other benefits provided under WA PFML will be addressed in future law alerts.
ESD has published an “Employer’s Toolkit” to help employers comply with the requirements of the law. (https://paidleave.wa.gov/files/Documents/2018.Employer.Toolkit.V1.1.pdf)
Please reach out to UEA’s attorneys on the Employer Helpline if you have questions regarding the WA PFML law or any of its requirements.
UEA will continue to provide additional information on the WA PFML law in 2019.