Paid Family and Medical Leave (PFML) – Benefits
by Sandy Wood, CEBS, GHB Benefits & Compliance Consultant
Employees will be asking questions when the new PFML premium payroll deductions begin in January. Here is what they need to know.
You know by now that the Paid Family & Medical Leave (PFML) premium deductions must begin as of January 1, 2019. As the media has started covering the new law, we are hearing from confused employees. Most are upset that they’ll need to pay into a program for an entire year before being eligible for benefits, which don’t begin until January 1, 2020. It’s important to let employees know what they are paying for with this new line item deduction. Here’s a quick overview of what employees need to know about this new paid leave law.
The Washington State Paid Family & Medical Leave (PFML) law specifically requires that the program be funded before benefits are available. This is why premiums into the program are starting on January 1, 2019, while benefits are not available until January 1, 2020.
The PFML program covers employees working within the state of Washington (exceptions include employees working for the Federal government or a federally-recognized tribes, self-employed individuals, and those covered under some collective bargaining agreements). Even if an employer is based outside Washington, their workers in Washington will be eligible for the program and will need to pay premiums into the fund.
Two-thirds of the PFML premiums will be paid by employees through payroll deduction. The other one-third will be paid by large employers. For 2019, the premium will be 0.40% of salary. An employee with $2500 in monthly wages would pay $6.67 into the fund for that month. If the employer has 50+ employees, they’ll also pay $3.33 into the program. In this example, the annual charge would be about $80 for the employee and $40 to the employer. If you’d like to determine premiums, here’s is a quick calculator: https://paidleave.wa.gov/premium-calculator provided by the State.
Qualifying for Benefits
Qualified employees will be able to take leave starting January 1, 2020. To be eligible, an employee must work 820 hours in Washington State over 4 consecutive calendar quarters. The state will track every employee’s hours and wages at each of their employers. If an employee works for more than one employer, their hours will be combined for the purposes of qualifying for leave benefits. In addition, moving from one employer to another will not “restart” the qualifying period, since the state will have hours/wages on file from all of an employee’s employers on an ongoing basis.
Based on the date leave is requested to begin, the State will look back over 5 full quarters of work history for that employee. If the first 4 of those quarters shows the employee worked 820 hours or more, he or she will qualify. If not, then the last 4 full calendar quarters will taken be into consideration.
While PFML looks like Short Term Disability coverage, it is much more expansive. This program includes “paycheck” insurance not only during an employee’s disability, but also for taking time off to care for a sick family member or bond with a new child. Employees utilizing the program’s benefits will set up a customer account with the Washington State Employment Security Department (ESD) to apply for and manage their claim.
The maximum amount of time off allowed during a 12-month period will be 12 weeks (can increase to 18 weeks in certain circumstances). PFML benefits will be a percentage of average weekly wages, with a minimum of $100 and maximum of $1000 per week. An employee’s average weekly wages will be the total of their two highest quarters during their qualifying period (the 5 full quarters prior to the start of the requested leave), divided by 26, rounded down to the nearest dollar.
The way benefits are calculated are a bit complicated, based on a “state average weekly wage.” Benefits will differ for wages above and below 50% of this average.
- If the employee’s average weekly wage is less than 50% of the state average weekly wage, his weekly PFML benefit will be 90% of his average weekly wage.
- If an employee’s average weekly wage is greater than 50% of the state average weekly wage, her weekly benefit will 90% of her average wage up to the 50% mark plus 50% of her wages over the 50% mark.
I would show you an example of what this might look like, but the state hasn’t said how they will calculate the “state average weekly wage” yet.
Since benefits will not be available until January 1, 2020, the State has not finalized the process for submitting a claim, receiving approval or denial, submitting an appeal, etc. Some processes that are known at this point:
- An employee will file for leave with the ESD. ESD will notify the employer of the employee’s claim for leave.
- If the reason for leave is foreseeable, the employee will need to give their employer at least 30 days’ notice prior to taking leave.
- If the claim is approved, the employee will receive their benefits within 14 days of their application. Thereafter, payments will be made bi-weekly to the employee.
The Bottom Line
Most of the moving parts surrounding the benefits side of PFML still need to be nailed down prior 2020. Since the premiums are being levied as of January 1, 2019, the State has been directing their energy into those processes. Employees have already started asking questions about the program, and once they have deductions coming out of their paychecks, they’ll have even more. The State has provided a payroll stuffer in English and 13 other languages. Personally, I like their employee infographic better.