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Another new year, another new law for business owners in Washington State to have to comply with. The new paid family and medical leave policy took effect on January 1st of this year. I'm going to break down the details as clearly as I can - but of course it's best to consult with a professional to help you find the best solution for your individual business.
Administered by the Washington Employment Security Department, this is a tax on gross wages that goes into a fund that will be used for benefit payments starting in 2020. The tax is 0.4% of an employees gross wages, capped at the same amount as the Social Security/Medicare cap ($132,900 for 2019). This tax is shared between the employee and the employer, with exceptions for businesses with less than 50 employees. However almost every Washington business has collecting and reporting responsibilities under the new law.
The cost can be shared between employee and employer, with the employer allowed to deduct up to 63.33% from employee pay, or the employer can elect to pay the entire premium themselves.
So if Jill Employee makes $2500 in a pay period, the total premium (tax) is $10. No more than $6.33 can be withheld from Jill's check, and the remaining $3.67 is the cost to the business; OR the business can elect to pay the entire $10 and not withhold anything from Jill.
Reporting and premium payments are due quarterly to the Washington Employment Security Department.
To qualify for benefit payments, the employee must work 820 hours in the qualifying period. The qualifying period is either the first four of the last five completed calendar quarters, or the last four completed calendar quarters. So if Jill Employee works at least 820 hours from April 2019 through March 2020, she is eligible for benefits from April through June 2020.
The benefits can only be used for certain leave, either family or medical. Family events are related to having or adopting a baby/child, caring for an ill family member, and certain military events. Medical events relate to the employee's own illness. Benefits range from a minimum of $100 to a maximum of $1000 per week and are based on a percentage the employee's gross wages. Again the process is similar to SUI - the employee applies through the Employment Security Department, who than make a decision and either begin benefit payments or deny. Appeals can be done if denied.
I'm going to throw in my two cents :) here - I don't think this is a bad thing. When I was going through chemo during my breast cancer treatments, I kept working and so did my husband because we had no other choice. I had deadlines and we had rent to pay. The guilt he felt walking out the door to go to work, leaving me alone at home the day after my chemo infusions can't be described. MAN, this program would have been nice! Until you go through something like that you might not understand how worth it the small cost programs like this can be.
As with any state program relating to payroll tax compliance and reporting, there's a lot to know. I strongly advise having a conversation with your accountant to discuss your particular situation and to formulate a plan to stay compliant!
Happy money making, and keep living a little too!