How the Paid Family and Medical Leave Act Affects Washington Businesses

Posted on Jan 21, 2019

By Shareen Corlett, CPA

Are you aware of the new Washington State Paid Family and Medical Leave Act?  In 2018, Washington created a statewide insurance program hoping to strengthen companies by ensuring every employee has access to paid time off to care for themselves and their family.  Washington will be the fifth state in the nation to offer this benefit.

The plan allows employees to take up to 12 to 18 weeks of leave for certain circumstances.  The Employment Security Department (ESD) has worked in phases to develop the program, which is still in process.

Premium withholding for this program began on January 1, 2019.  If you did not start collecting on January 1, not to worry.  There is no penalty and you can begin withholding at any time.  However, the employer is responsible to pay all prior missed premiums on the employee’s behalf.

Beginning January 1, 2020, employees who have worked 820 hours in the qualifying period are able to take paid medical leave or paid family leave.  The qualifying period is the first four of the last five completed calendar quarters starting from when the employee makes a claim for benefits.

While on leave, employees will receive up to 90% of their average weekly pay.  This is paid by the state rather than the employer.

The premium is calculated at 0.4% of gross wages, split between the employee and employer.  The employee is responsible for 63.33% of the premium, while employers are responsible for 36.67%. Employers may choose to pay for all or part of the employee portion of the premium on the employee’s behalf.

Exceptions and modifications exist for certain employers:

  • Are you a small employer with 50 or less employees? If yes, you are assessed only the employee portion of the premium.
  • Do you have a voluntary plan for family and medical leave? If yes, your calculations may be different.
  • Do you have a Collective Bargaining Agreement (CBA) in existence on or before October 19, 2017? If yes, you may not be subject to the Paid Family and Medical Leave Act until the CBA reopens, is renegotiated, or expires.

Quarterly reporting to the ESD begins April 2019, with the first report due April 30, 2019.  The reporting requirements and forms are in development and will be available in the employer’s SAW account when it comes time for filing.  This is a separate report from the Unemployment Insurance report and all employers, regardless of size, are responsible for remitting the premiums to ESD on a quarterly basis, as well as reporting all hours for employees.

The Washington State Employment Security Department offers a thorough walk-through for businesses regarding the Paid Family and Medical Leave Act. To avoid future missed premiums, it is best for companies to reach compliance as soon as possible.

If you would like assistance in preparing your forms and assurance that you are meeting the guidelines, please contact us.

Shareen Corlett is a manager in Clark Nuber’s Accounting and Consulting Group.

© Clark Nuber PS and Developing News, 2019. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Clark Nuber PS and Developing News with appropriate and specific direction to the original content.

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