By Amy Robinson, Attorney, SPHR, SHRM-SCPThis article originally appeared in the January 11, 2019 edition of the Vancouver Business Journal.
Last summer, Washington’s Governor 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 January 1, 2020, there are reporting and withholding requirements that kicked in for employers as of January 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
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:
- 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.
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.
- The law has a broad definition of when employees are considered to be “working in Washington” and thus potentially entitled to benefits.
Eligibility for these benefits, which again will not occur until January 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.
- 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.
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% 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% of the total premium. Employers must then pay no less than the mandated employer-paid portion (37%) 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 January 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.
We hope this information is helpful to you as you begin the new year. Be sure to stay alert for more information from ESD about how benefits will be administered and rules around notice and employee eligibility expected in the coming weeks.
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.
 Employers may adopt voluntary plans for either paid family leave, paid medical leave, or both. Voluntary plans must be approved by the ESD and require the employer to pay an initial application fee of $250 and obtain pre-approval each year for the first three years, and then when any changes are made to the plan thereafter. They also must offer every employee benefits that meet or exceed the state plan including: the same amount of leave as the state plan; equal or better wage replacement; no greater wage withholdings than the state plan would provide; cover the same events and apply to the same employees. See https://esd.wa.gov/paid-family-medical-leave/voluntary for more information about voluntary plans.
 For employers with unionized employees, so long as the applicable collective bargaining agreement (“CBA”) was in effect prior to October 19, 2017, there is a grace period providing that the new benefits need not be offered until the CBA is reopened, renegotiated, or expires.
 Note that the 50-employee threshold is based upon headcount, not a full-time equivalent (FTE) calculation. This headcount determination is expected to be made annually by ESD on September 30, and based upon the average reported over the prior four (4) calendar quarters.