The Washington Employment Security Department (ESD) announced that for purposes of determining employer liability for its paid family and medical leave insurance (PFML) program, it will calculate employer size for calendar year 2027 on September 30, 2026, using employee headcount information from the previous four quarterly wage reports. Accordingly, the ESD encourages employers to confirm that reports for quarters 3 and 4 of 2025 and quarters 1 and 2 of 2026 have been submitted and show a "Processed" status, including quarters with no payroll.

If ESD determines that an employer's size classification has changed for 2027, it will notify the employer by mail in late October.

Current PMFL premium rate and employer coverage

Effective January 1, 2026, the PFML premium rate is 1.13% of each employee's gross wages, excluding tips, up to the 2026 Social Security wage base of $184,500. Employees pay 71.43% of the total premium. Employers with 50 or more employees pay up to 28.57% of the total premium. (See ESD's 2026 premium information and estimator.)

Washington PFML premium rate and employer coverage for 2026

All Washington businesses are required to participate in the state's PFML program and file quarterly reports. Employer size affects who pays the employer portion of the premium, not whether the employer must participate and report. ESD calculates business size annually by averaging employee headcount over the previous four quarters; the calculation is based on headcount rather than full-time-equivalent positions. (See ESD's employer-size and small-business guidance.)

September 30 employer-size determination

For the 2027 PFML coverage determination, ESD will average employee headcount from the four specified quarterly reports. Beginning with 2026 quarter 1, employers may add optional end-of-quarter employee counts to processed reports. ESD states that this information may improve accuracy for employers with seasonal staffing or high turnover. "No Payroll" and processed wage reports are used in the calculation, but missing reports are not.

2027 premium rate and contribution split

ESD will recalculate the 2027 PFML rate on September 30 and publish the 2027 rate and rate-split requirements in October 2027. ESD also stated that the 2027 rate splits will change starting in 2027 due to the enactment of HB 2345 earlier this year.

Billing statement changes

Beginning in October 2026, ESD billing statements will show outstanding WA Cares (long-term care insurance) and PFML balances. Employers should review their account contact information, reporting history, and balances to reduce the risk of penalties and interest associated with late reports or payments.

Ernst & Young LLP insights

Washington employers should promptly verify that the four quarterly PFML reports used for the September 30 sizing calculation are complete, processed, and accurately reflect employee head counts.

Employers near the 50-employee threshold should pay particular attention because the 2027 classification determines whether they must fund the employer portion of PFML premiums.

Payroll teams should also monitor ESD's October announcement and be prepared to update payroll withholding, employer contribution calculations, budgets, and employee communications before January 1, 2027.