By Emily Hamann
Workers all across the state will return to work in the new year for a slightly smaller paycheck.
Starting Jan. 1, 2019, a new statewide paid family and medical leave insurance policy will begin, and impact nearly every worker in the state.
The program is separate from Initiative 1433, which was passed by voters and mandated the annual minimum wage increases that have gone into effect each year on Jan. 1 since 2017, and required employers to offer paid sick leave beginning at the beginning of this year.
Instead, the new paid family and medical leave program was passed through the state legislature in 2017, and is being administered through the Washington Employment Security Department.
At the beginning of the year, employers must start tracking hours and withholding money from all eligible employees. In April, employers must begin paying those withholdings, plus their own contributions, to the state, and then every quarter afterward on an ongoing basis.
While it is two separate forms, the system is similar to the way employers currently remit premiums for unemployment* insurance.
“They’ll be reporting a lot of the same information,” Clare DeLong, of the state ESD, said. She is the communications manager for the paid leave program. “The process will be familiar, but it is two different reports.”
In January 2020, employees can begin using the program to take paid leave.
There are very few exceptions to this new law. Only federal employees, tribes and self-employed people are exempt. Nonprofits, churches, small businesses and businesses based out of state are not.
“If they have even one employee working in Washington they’re in the program,” DeLong said. Employees who work 820 hours per year are included in the program — that includes most part-time and seasonal workers.
Businesses with more than 50 employees must also contribute a portion of the premium. Of an employee’s gross wages, 0.4 percent must be paid into the new program. Of that 0.4 percent, 63 percent is paid by the employee, and the other 37 percent must be paid by the employer, if it has more than 50 employees. Employers with fewer than 50 employees do not have to pay that portion, although they can choose to pay the employee’s portion.
Employees who pay into the plan are eligible to use it once benefits start on Jan. 1, 2020. These benefits are different from the sick pay that employers were mandated to offer in 2018. This new family and medical leave is intended to cover major life events, such as a serious medical condition or the birth of a baby. Employees can apply for family leave after the birth of their baby, or the adoption or placement of a new child in their home. They can also apply for family leave if they need to take time off to care for a family member in case of a major illness or medical event. Medical leave covers the employees when they need to take time off for a major illness or medical event they experience for themselves. The program covers up to 12 weeks of paid leave. Employees who want to use the leave will apply for it directly through the state.
“When the employee takes the leave, that burden is going to be completely off the employer,” DeLong said.
Also in 2020, employers can start using the benefits of the program. Employers with fewer than 150 employees are eligible for grant funding to help offset the cost an employee taking this leave. Employers can apply for two different types of grants — one if they need to hire a temporary employee to cover the person out on leave, and another to cover overtime and retraining if existing employees will cover the person while they’re gone.
“It’s a really exciting feature,” DeLong said. “Our law, while it is complicated, it has great features in there for both employees and businesses.”
Employers who already offer paid leave can apply for a voluntary plan and be exempted from paying into the state insurance plan, but those employer plans must offer benefits equal to or greater than the benefits of the state plan. Employers interested in going that route can visit paidleave.wa.gov/voluntary-plans for more information.
“I really encourage people to download that guide and read it thoroughly,” DeLong said.
Many businesses might find it easier to pay into the state plan than run their own. That’s the conclusion that Shanna Finnegan, human resources manager at Aslan Brewing Company, came to when she looked at both options.
“I think the one that the state has proposed looks pretty good to me,” she said. “And the fact that the state’s administering it is kind of a bonus.”
While employers must collect premiums and pay a portion, when it comes time for employees to use that paid leave, the state handles everything.
“Looking into it, it’s nice to be able to provide this benefit for employees, and I think it’s pretty affordable.”
Finnegan has been trying to spread the word about the new program to all Aslan’s employees.
“It is a challenge to get this information out to everybody,” she said. “So that’s kind of my big goal.”
Every employee could be impacted differently, since at the same time this new deduction goes into place, the minimum wage is also going up.
“I think a lot of employees are not really sure how much it will affect them yet,” Finnegan said. “It probably won’t be super apparent until they get their paycheck.”
* Correction: an earlier version of this story incorrectly compare the program to health insurance, while unemployment insurance is the correct comparison.