Paychecks a bit lighter in new year, generous paid leave in 2020
Workers in Washington State will see a new deduction on their next paycheck as the roll-out of the state’s new paid family medical leave law gets underway.
Washington was a leader on paid leave when it first passed it back in 2007. It never figured a way to fund the program, until 2017, when lawmakers approved a generous new program and figured out a way to pay for it.
The rollout of the new system began Jan. 1, 2019, with employees and employers covering the cost of the insurance program a year in advance. and benefits kicking in come January 2020.
Those benefits are partial wage reimbursement for at least 12 weeks when you have a qualifying family or medical event, 16 weeks if you have events qualifying for both family and medical, and up to 18 weeks under certain special circumstances, such as pregnancy complications.
The cost: 0.4 percent of paychecks split roughly 63/37 percent between employee and employer, respectively.
What that looks like
A worker earning $50,000 annually would see about $2.42 cents a week taken out of their check, and then when benefits kick in next year, they would be eligible for partial wage reimbursement of up to $1000 a week depending on your earnings.
Kate Tylee-Herz is a lawyer at Seattle’s Davis Wright Tremaine, where they’ve been working for months to help businesses get ready for the new law.
“What does that mean? It means we need to let our employees know this is going to happen, so they’re not caught off guard and have that communication to say ‘this is the deduction that’s coming out, this is the state program, this is what it’s going to look like and what you will be able to access starting in 2020, and the second piece is to start taking those deductions and that’s happening now,” Tylee-Herz explained.
Deductions started Jan. 1, and there are also quarterly reporting requirements for employers to the Employment Security Department.
“That will include specific information about your employees in Washington as far as who they are, how many hours they’ve worked, [and] how much they’re making so that ESD can track that benefit,” she said.
With some companies in the state already offering some type of paid leave, she says employers also need to take a close look at their existing policies to see how they’re going to work with the state plan.
“There is an opportunity to do what’s called a voluntary plan, where an employer can say ‘we’re going to administer this ourselves.’ We are going to have our own plan provide the same benefits but we’ll take care of it ourselves — there is some pretty unique reporting requirements on that — but it’s a good thing for employers to keep in the back of their mind, before 2020 before employees can start taking this leave, to make sure that they’re providing the benefit that they want to be providing,” Tylee-Herz said.
If employers want to opt out and do their own program, she said they can apply for a voluntary plan.
“There still reporting requirements.” she noted. “The state still needs to know who their employees are and how many hours they’re working, [and] how much they’re making, but they can apply for a voluntary plan, and once that’s approved, they are not required to remit premiums from employees or submit anything to the state as long as they’re providing as generous a benefit or more generous than what the state requires.”
Businesses with fewer than 50 employees will not have to pay into the program, but workers don’t have to make up the difference, and can still access the same benefit.
That benefit for workers is a pretty big deal, with Washington’s paid leave program among the most generous in the nation of the roughly half dozen states that even have such a program.
Tylee-Herz laid out those benefits in detail.
What it provides as far as the wage reimbursement is that it’s a maximum of up to $1000 a week with a minimum at $100 a week, so it’s a partial wage reimbursement capped at $1000 a week, and it’s based on how much an individual makes. So that gets into another complicated formula as far as how you determine what an individual will get, but it’s significant — it’s a significant benefit for individuals without having to pay much into it.
Every worker in the state will start paying into the system now, with a few notable exceptions.
Independent contractors and those who are self-employed can opt into the program.
One of the great parts of the program: They’re transferable.
So, let’s say somebody worked two part-time jobs in Washington; they work 20 hours for each employer per week. What’s great about this program is you’re going to be able to count all those hours towards your qualifying total hours to be able to access this benefit. So essentially, if you work 820 hours for any amount of employers in Washington, you get to that 820 hours you are able to access that benefit — it doesn’t matter if you have four different jobs.
She says another important piece to remember is that this benefit is not just for new parents.
“I’ve seen some misunderstandings as far as who can access this leave and it’s not limited to people taking parental leave,” she said. “It’s intended to take care of you as individuals when you have serious health conditions, as well as allowing you the opportunity to care for family members when they have serious health conditions.”
As far as what is considered a qualifying event, Tylee-Herz says a wide range of situations can qualify, from needing surgery to having a baby, and more.
“I’m going to be able to access that leave for my own serious health condition. And then, qualifying family events such as caring for a family member with a serious health condition, bonding in the first 12 months of adoption, birth or fostering a child that’s under 18,” she said.
Certain military-related events would also qualify.
For other medical events, the definition of a family member is also quite broad.
“It would cover children, parents, spouses, siblings, grandparents and grandchildren,” Tylee-Herz added.
But with the program just rolling out funding and rule making still fluid Tylee-Herz there are some unknowns and concerns.
“Is this program adequately funded? Is there going to be enough in the pot to account for individuals taking leave? What will be the usage rate of this? And that’s a real unknown right now,” she explained.
What’s more, is that premiums could actually go up.
“There is some language in the law that, there can be an increase in the premium amount. We could see an increase to 0.6 percent gross, and it’s unclear after that point, if it’s still underfunded, what’s going to happen. Are we going to see those premiums increase? And I think it’s probably likely that will we see an increase in the premium amount,” Tylee-Herz.
Employers and employees can find everything they need to know about the new law here.
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