Recently enacted SB 5975 creates a disability insurance program administered by the Washington Employment Security Department (ESD) that will provide for paid family and medical leave, funded by employee payroll tax deductions and employer contributions, similar to the disability insurance programs in six other jurisdictions (California, Hawaii, New Jersey, New York, Puerto Rico and Rhode Island). Washington joins New York and New Jersey as states that require employer and employee contributions to a state family leave insurance plan.

Program funded by employer and employee contributions

Effective January 1, 2019 through December 31, 2020, a premium rate of 0.4% will be in effect, with employers required to pay 37%, and employees 63%, of the premium. Employers may choose to pay 100% of the premium. A taxable wage limit will be established each year by the EDS commissioner, capped at the Social Security wage base in effect.

For example, a full-time worker earning $15 dollars an hour would contribute $1.51 a week toward the benefit while the employer would pay $0.89. (News release, governor's office.)

After 2019, the premium rate will be reviewed for annual adjustments under a specified formula and a solvency surcharge will be assessed if the account balance ratio is at or below a specified level.

Employers with 50 or less employees are exempt from the requirement to pay the employer share of the premiums, though they may choose to do so.

Tribes and self-employed individuals, including independent contractors, may opt-in to the program. Self-employed individuals who elect coverage pay only the employee share of the premiums.

Employee benefits start in 2020

Beginning January 1, 2020, paid family leave benefits are provided when an employee is bonding after the birth or placement of a child (under the age of eighteen), because of a family member's serious health condition, or for a military exigency (i.e., for short notice deployments, military events, urgent childcare and related activities, and post-deployment activities). Paid medical leave benefits are provided for an employee's own serious health condition. A serious health condition is defined the same as in the federal Family and Medical Leave Act (FMLA) and its regulations.

Employees are eligible for family and medical leave benefits after working for at least 820 hours in employment during the qualifying period. Self-employed individuals are eligible for benefits once they have worked 820 hours, after electing coverage, and must pay premiums for a minimum of three years. To be eligible to receive benefits, an employee must file a claim for benefits with the ESD, consent to the disclosure of certain information, notify the employer, and meet certain documentation requirements regarding leave for a serious health condition or military exigency.

Individuals are eligible for 12 weeks of benefits for each of family leave and medical leave. The combined total of family and medical leave is 16 weeks per year. An additional two weeks of leave may be used if the employee has a serious health condition with a pregnancy that results in incapacity, for a combined total of 18 weeks. There is a one-week waiting period for benefits.

The benefit amount is a percentage of the individual's average weekly wage (AWW) during the two highest quarters in the qualifying period, up to $1,000 per week, adjusted annually to 90% of the state AWW.

Other details

An employer may opt-out of either the state program for family leave or medical leave, or both, by having a voluntary plan that meets specified standards. The ESD will charge a $250 fee for reviewing an employer's voluntary plan.

An employee returning from leave is entitled to be restored to a same or equivalent job under the same standards regarding employer size and hours of employment as specified in the FMLA. This applies to an employee of an employer with 50 or more employees, who has worked for the current employer for at least 12 months and for at least 1250 hours during the preceding 12 months, with an exception for certain highest paid employees of the employer.

Employers must post a workplace notice regarding the benefits provided under the paid family and sick leave program.

Paid sick leave is also required effective January 2018

As previously reported, on November 8, 2016, voters approved Initiative Measure No. 1433 which effective January 1, 2018, require employers to provide paid sick leave. At minimum, employees must be allowed to accrue paid sick pay at the rate of one hour of paid sick leave for every 40 hours worked. Employers will be required to allow use of paid sick leave after 90 days of employment. Paid sick leave may be used for an employee's own medical needs, to care for a family member's medical needs or for domestic violence leave.?

For more information on paid sick leave requirements, see the Washington Department of Labor & Industries Initiative 1433 website.

Ernst & Young LLP insights

The legislation implements the framework for a state family leave insurance program that was enacted in 2007, but was never funded. Under 2013 legislation, benefits were to begin when the state passed legislation that funded the program and established an implementation date.

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