Heads up: New paid family/medical leave taxes begin Jan. 1, 2019

Taxes to fund the paid family and medical leave program passed by the Legislature last year will be collected starting Jan. 1, 2019, but the benefits won’t be available to be taken until Jan. 1, 2020.

Both employers and employees will pay the new premiums/taxes. A total premium of 0.4 percent up to the social-security cap is assessed for each employee. Generally speaking, the employer is responsible for approximately 37 percent of that premium. So if an employee makes $50,000 annually, the total annual assessment would be $200, of which $126.67 would be paid for by the employee, and $73.33 would be paid for by the employer. Employers will be responsible for remitting all premiums collected for paid family and medical leave to the state. Employers are also required to report hours and wages.

Paid family and medical leave benefits will be available for all employees who work at least 820 hours in the qualifying period. The program provides workers with 12 weeks of paid leave to care for a family member and 12 weeks of paid leave for an employee’s own serious health condition, with an overall cap of 16 weeks paid leave in a 12-month period. An additional two weeks is allowed for complications related to a pregnancy.

All employers with more than 50 employees will pay premiums and participate in the program. Employers with 50 or fewer employees can opt-in in order to be eligible for training assistance for replacement workers. Employers with equivalent paid-leave programs can receive a waiver if they offer “equal or better” benefits. Collective bargaining agreements are not exempt from the requirements. 

This will be a state-run insurance program administered by the Employment Security Department (ESD). ESD has provided this FAQ for Employers to help companies prepare.

Keep in mind that the paid family- and medical-leave program is separate from the paid sick-leave program which took effect this year. To distinguish between the two programs, see this side by side comparison developed by ESD. 

For additional background on the passage of the legislation, see this article from AGC Works in September, 2017.

ESD is currently drafting rules for the program. AGC will keep members apprised throughout 2018.

AGC members with questions can contact AGC Chief Lobbyist Jerry VanderWood, 360.352.5000.