The Washington Employment Security Department announced that employers will wait to file the first quarter 2019 paid family and medical leave report until between July 1, 2019 and July 31, 2019, the same time period during which the second quarter 2019 return will be due. The first quarter return was originally due on April 30. Penalties and interest will not be assessed for the first quarter if the report is filed by July 31, 2019.

As we previously reported, Washington employers were required to begin withholding the employee's portion of premiums from employees' pay as of January 1, 2019, unless the employer chooses to pay 100% of the premium. Employers can begin withholding at any time without penalty, provided employees are given advance notice of at least a one pay period. Employers are not allowed to retroactively withhold premiums from employees; instead, employers are responsible for paying any premiums they fail to withhold from employees' wages. (EY Payroll Newsflashes 2017-1301, and 2018-1806.)

The Department advises that employers should not remit reports and premiums to the Department until quarterly reports are due. Remitting first-quarter premiums now will result in the issuance of a refund and employers will be required to remit the contributions again when filing the first-quarter 2019 report after July 1, 2019.

The reporting extension will not affect the availability of paid family and medical leave benefits to employees. Eligible employees can begin applying for benefits in January 2020.

The change in the filing due date also does not affect the separate filing of the first quarter 2019 state unemployment insurance (SUI) report, which is due by April 30, 2019.

Department recommends employers/agents test their wage reporting file format

Electronic filing of the paid family and medical leave reports is required. Employers will have three options for submitting paid family and medical leave reports online:

• Manual entry for each individual employee (up to 50 employees)
• Single employer filing using a .CSV (Excel or similar) file upload
• Bulk/multiple employer filing using an ICESA file

Because the bulk filing specifications for paid family and medical leave are different than those for SUI reporting, the Department recommends that employers and agents test their file formats ahead of time, using the links below. Note, however, that the test process is not secure. Employers should not upload real company data and identifying information when testing.

Detailed instructions on creating and uploading a test file are now available on the test site:

• Single employer file (.CSV)
• Bulk/multiple employer file (ICESA)

Legislation enacted in 2017 required establishment of a paid family and medical leave program

As we reported previously, 2017 SB 5975 creates a disability insurance program administered by the Washington Employment Security Department that will provide for paid family and medical leave, funded by employee payroll tax deductions and employer contributions.

Washington joins California, District of Columbia, Massachusetts, New Jersey, New York and Rhode Island as states that have enacted paid family and medical programs.

All Washington employers, including out-of-state employers with Washington employees, are required to participate with a few exceptions (self-employed individuals, who may choose to opt-in; federal employees; federally recognized tribes, which may opt-in; and individuals temporarily working in Washington, for example, utility workers assisting after a storm).

Employers may apply for a conditional waiver for their workers when workers meet all of the following three conditions:

• Physically based outside of the state
• Employed in the state on a limited or temporary work schedule
• Not expected to be employed in Washington for 820 or more hours in a qualifying period

An employee is included in paid family and medical leave program when all of the employee's work is performed in Washington, or most of the employee's work or services are done in Washington, but some of the work is done temporarily out-of-state. When work is not located in any state, the worker must participate: (1) when the employer's base of operations is in Washington; (2) if there is no base of operations, but the place where services are directed is in Washington; or (3) if there is no base of operations and no place where services are directed, but the worker lives in Washington.

Employees covered under a collective bargaining agreement (CBA) that was in existence on or before October 19, 2017 are not subject to the rights or responsibilities of paid family and medical leave until the agreement is reopened, renegotiated, or expires. Employers do not withhold premiums from these employees or pay the employer share of their premium until the CBA is reopened, renegotiated, or expires.

Employers may establish an employer-run voluntary plan

Rather than participate in the state plan, employers may establish voluntary plans, which are employer-run paid family and/or medical leave insurance programs. Employers can choose to use a voluntary plan for family leave, medical leave or both. Employer voluntary plans must meet or exceed state plan benefits; they must be approved by the Department before offering benefits; and they have unique reporting and employee eligibility requirements.

For the first three years of a voluntary plan's existence, re-approval is required every year. After three years, re-approval is required only if the employer makes changes to the plan. All voluntary plan applications will be subject to a $250 fee, except for mandated renewals. Applications may be filed online. If a voluntary plan is denied, employers and employees are covered under the state plan.

Note however that, under the state plan, any employer may choose to cover all or part of their employees' premiums on their behalf. It is not necessary for employers to operate a voluntary plan if they want to cover the cost of their employees' premiums.

See the Department's website for more on voluntary plans.

Employer/employee premium rates

Effective January 1, 2019 through December 31, 2020, a premium rate of 0.4% is in effect, with employers required to pay at least 36.67% of the premium, and employees up to 63.33% of the premium, on wages up to the Social Security taxable wage base ($132,900 for 2019). Employers may choose to pay up to 100% of the premium.

Wages are generally defined as gross wages without tips. Gross wages include, but are not limited to, salary or hourly wages, sick leave, vacation leave, holiday pay, bereavement leave and paid time off, bonuses, stocks as part of a compensation package and the cash value of meals and lodging when given as compensation (RCW 50A.04.010).

Employers with 50 or fewer employees are exempt from the requirement to pay the employer share of the premiums, though they may choose to do so. These employers must still remit premiums and file quarterly reports.

The rate can be adjusted annually by the Department after 2020.

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.

A premium calculator is available on the Department's website. Go here for more on how to calculate premiums.

Benefits for eligible Washington employees begin in 2020

Eligible individuals will be able to apply for benefits beginning January 1, 2020. Washington employees will be able to take up 12 weeks of paid leave, as needed, to care for themselves or a family member in times of serious illness or injury, for certain military connected events, or as parental leave to bond with a new child.

A mandatory poster to notify employees of the program will be available from the Department before January 1, 2020. Until the poster is available, employers may download the Department's optional paystub insert to distribute or post.

For more information, see the Department's website, call +1 833 717 2273 or send an email to paidleave@esd.wa.gov.

See EY Payroll Newsflash 2018-2453  for information on the various states that have, or will have, paid family leave insurance programs. See also our special report

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