The coming year will usher in a new era in how Washington state companies handle employee leave.
Washington’s Paid Family and Medical Leave Act established a statewide insurance program, which will issue payments to workers who need to take time off to care for a family member or their own serious medical condition. While benefit payments won’t begin until 2020, contributions into the program begin Jan. 1, 2019.
Employers—with 50 or more employees in Washington—and employees share the cost. So, the first step for businesses is to set up the new payroll deductions—and alert employees to expect them.
Beyond this first step, employers must embark on a much longer journey. Understanding the near-term compliance requirements, building effective employee communications, and navigating through the complex landscape of leave laws will require careful planning.
Paid leave is a major component of most compensation packages. It also plays a vital role in supporting employees’ physical, emotional, and financial wellbeing. A company’s approach to leave management is directly linked to productivity.
Given the scope and importance of the task, the passage of the new law should prompt Washington employers to use this opportunity to build better workplaces and advance their overall organizational well-being. Now is a great time to begin reviewing your leave policies and establishing clear strategies that align with your company’s philosophy. This will lessen the administrative burden and improve your employee experience.
Employers have some options. Rather than contributing to the state insurance fund, employers may apply to instead provide their own comparable voluntary paid leave plan. Employers can manage these plans themselves or outsource them.
Companies with fewer than 50 employees are exempt from having to contribute the employer portion. However, they may choose to do so in order to qualify for state assistance grants to aid in hiring temporary replacement employees or for wage-connected costs. Companies with fewer than 150 employees may qualify for small business assistance as well.
There is more nuance to consider once the program goes into effect. An important compliance aspect is calculating the premiums owed by an employer and its employees starting Jan. 1. Overall, an employer with 50 or more employees pays at least 37 percent of the total premium. Employers may choose to pay more—even 100 percent of both the employer and employee portions. Of course, employee wages weigh into the calculation. Also, there are eligibility questions. For example, how many hours does one have to work to qualify for the benefit? What about workers who are in Washington only temporarily?
Some aspects of the law are awaiting clarification, such as how its provisions integrate with the federal Family Medical Leave Act law and employer-provided paid time off. Retaining an adviser before and during initial program implementation may be a wise move for some organizations. Taking advantage of the best available options and staying on top of the additional guidance might help to avoid a bumpy road ahead.
Washington’s PFML Act has long been a subject of media attention and public debate. Workers are looking forward to taking advantage of paid leave in 2020, especially considering that a portion of their wages will help fund the program. However, many employees still do not have a firm grasp of the law’s provisions.
Employers should proactively communicate the details clearly and concisely, and provide resources to answer the many questions that are bound to arise. For example, it may be important to communicate that the law is designed primarily to help low-wage earners. Thus, the benefit will be less for those who earn substantially more than the state average weekly wage. Also, employees may question their share of the contribution and why they have to pay into the program for an entire year without any benefit.
Companies that choose to subsidize the employee portion of the cost should advertise this valuable benefit. One option is to supply each employee with a total compensation statement detailing cash pay along with benefits and perks. This is an important tactic that helps employees appreciate the full value of their compensation package. It helps such an employer position the workplace as one that supports the total well-being of its employees. In addition, it can help attract, retain, and engage top talent in today’s tight labor market.
As of July 1, there were more than 230 state leave laws in existence in the U.S. Among these, there are seven states with paid family and medical leave—California, New York, New Jersey, Rhode Island, Hawaii, Massachusetts, and, now, Washington.
Another 12 states, for a total of 19, mandate some form of family and medical leave, although it’s unpaid. All but three states have some requirements for leaves associated with specific events or statuses, such as victim, witness, school activities, and emergency. Local and municipal requirements are being added to all of the above with some regularity.
Additionally, employers should consider that state leave interacts with a variety of other statutory and nonstatutory programs. These include FMLA, Workers’ Compensation, Americans with Disabilities Act, paid time off, short- and long-term disability, and paid maternity and paternity leaves.
All of these benefits, although much needed and valued by employees, present an administrative and legal quagmire for employers. It’s time to take inventory, understand the requirements, and weigh the importance of the various offerings against the company’s human capital needs.
An employer’s ultimate goal should be to develop a comprehensive leave-management strategy that includes a centralized intake process, unified tracking, and a suite of employee communications. These things will help provide the emotional and financial support employees need during difficult moments in their lives.
When employees feel supported, they can more effectively engage in their work and drive better business outcomes. This helps strengthen your company culture and build a better workplace as you travel the road ahead.
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