New paid family and medical leave insurance program coming to Washington
Washington Governor Jay Inslee has signed a sweeping Paid Family and Medical Leave Bill (SSB 5975) that will have far-reaching implications for employers. The law creates a paid family and medical leave insurance program, where employees will apply to the state to receive a paid leave benefit for a variety of family and medical leaves.
The insurance program is funded by premiums paid by workers and employers and will be administered by the Employment Security Department (ESD), similar to unemployment insurance. Although there are still many issues to be decided, employers should begin familiarizing themselves with the law.
For now, here’s what employers need to know:
- Preemption: The law prohibits local jurisdictions from imposing their own versions of paid family leave insurance on private employers.
- Effective date: Employers must begin collecting and paying premiums for the paid leave benefit on January 1, 2019. Workers may begin applying for and receiving the paid leave benefit on January 1, 2020.
- Covered employers: All employers with at least one employee in Washington.
- Eligible employees: All employees employed by any employer in Washington for at least 820 hours during the first 4 of the last 5 calendar quarters immediately preceding the application for leave or, if eligibility is not established in that timeframe, the last 4 completed calendar quarters immediately preceding the application for leave. Similar to unemployment insurance, workers must file claims to receive paid leave benefits and employers may appeal.
- Reasons for taking paid leave benefit: There are two types of paid leave benefits: family and medical.
- The paid family leave benefit will be provided when an employee:
- (1) is bonding during the first 12 months after the birth or placement of a child under age 18;
- (2) needs to care for a family member* with a serious health condition; or
- (3) needs time off for a military family member’s* qualifying exigency. *Note: “Family member” includes expansive definitions of the employee’s child, grandchild, grandparent, parent, sibling, or spouse. Also, “serious health condition” and “qualifying exigency” are defined the same as in the federal Family and Medical Leave Act (FMLA).
- The paid medical leave benefit is provided for an employee’s own serious health condition.
- The paid family leave benefit will be provided when an employee:
- Duration of paid leave benefit: The duration of benefits is generally 12 weeks for either family leave or medical leave, but if both types of leave are used, the combined total is capped at 16 weeks. This cap is extended to 18 weeks if the employee experiences a serious health condition associated with a pregnancy that results in incapacity. Employees applying for a paid family and medical leave benefit must wait 7 calendar days to receive the benefit, unless the benefit is for the birth or placement of a child.
- Paid leave benefit amount: The leave benefit amount is a weekly sum based on a percentage of the eligible employee’s average weekly wage, capped at $1,000 per week. The benefit amount will be adjusted annually based on a formula.
- Payment for leave benefit: Paid leave benefits will be funded through employer and worker premium contributions. The total premium rate will be 0.4 percent of wages from January 1, 2019, through December 31, 2020. After this, the premium rate will be based on a formula created in the law. The medical leave premium rate is 2/3 of the total premium rate and the family leave premium is the remaining 1/3. For the medical leave benefit premium, employers pay 55 percent and workers pay 45 percent. For the family leave benefit premium, workers pay 100 percent. This results in a total premium responsibility of 37 percent for employers and 63 percent for workers. Employers may deduct all of the premiums due for the family leave benefit from employee wages and up to 45 percent of the premiums for the medical leave benefit.
- Small employer exception: Employers with fewer than 50 employees employed in the state of Washington aren’t required to pay any portion of the employer premiums.
Job protection: Employees are entitled to reinstatement to the same or equivalent job if:
- (1) the employer employs at least 50 employees;
- (2) the employee has been employed with the employer for at least 12 months; and
- (3) the employee has worked for the employer for at least 1,250 hours during the 12 months before leave begins (see the tips section below for commentary on how this differs from FMLA). There is a limited exception to the reinstatement rights for certain highly paid salaried employees.
- Employer notice requirements: Employers must provide qualified employees written notice of their rights in a form to be provided by ESD within 5 business days after the employee’s 7th consecutive day of absence or within 5 business days after the employer has received notice the leave is due to family or medical leave, whichever is later.
- Employee notice of need for leave: For both family and medical leave, employees must provide notice at least 30 days in advance or as soon as practicable.
- Delay for collective bargaining agreements (CBAs): Employers with CBAs don’t need to comply with the new law until the CBA is reopened, is renegotiated, or expires.
- Small business grants: The law provides grants to small businesses to offset the cost of hiring temporary workers to replace an employee on leave. Employers with 150 or fewer employees or employers with 50 or fewer employees who opt to pay all premiums for three years are eligible for grants of $3,000 if the employer hires a temporary worker to replace an employee on leave for seven or more days or up to $1,000 for reimbursement for significant additional wage-related costs related to an employee's leave. An employer who receives a grant for the wage-related costs may receive an additional grant of up to $2,000 in certain circumstances. An employer is limited to one grant for each employee on leave, capped at ten grants per year.
Tips for Employers:
Employers will be responsible for keeping appropriate records, remitting proper premiums, providing notices, and managing the time off, but the granting or denying of paid leave benefits is up to ESD.
Regarding job protection rights (which only apply to employers with 50 or more employees), the Washington law appears to accidentally provide new protections for workers at small locations. Unlike the FMLA, the Washington law doesn’t require an eligible employee to be employed at a worksite with at least 50 workers within 75 miles. It’s possible these differences could be harmonized through regulations; Vigilant will keep members apprised as developments occur. In the meantime, ensure these changes are communicated to those with responsibilities for payroll, accounting, and HR.
Questions? Reach out to your Vigilant employment attorney for counsel. If you’re not a member, contact Vigilant to learn about unlimited counsel with a Washington employment attorney for a flat monthly fee.