Paid Family and Medical Leave benefits begin in Washington on 1/1/20. Nearly all employers must participate, offering employees benefits through the state plan or a private plan. Host Laura Marzi, CMO of Group Benefits at The Hartford speaks with Paul Lagrotteria, Regional Sales Director at The Hartford in Washington, and Keri Brightbill, Assistant Director of Product and Strategy at The Hartford, about what employers and brokers should know to prepare for PFML in WA.
- 1:30: WA PFML program overview and status
- 3:23: Employee eligibility now and benefits
- 5:47: How can employees use Paid Family and Medical Leave benefits?
- 7:02: How does the funding equation work for WA PFML?
- 8:28: How WA employers should prepare
- 10:07: Factors to consider if you want to get a private plan
- 11:44: Grants available to small employers in WA for temporary workers
- 12:18: Applying for a private plan in Washington state
Laura: Hi, I’m Laura Marzi, the host of The Hartford’s “Line on Leave” podcast, where we discuss updates and trends in Paid Family and Medical Leave. As the leader in Leave Management,1 The Hartford understands the importance of this issue to many of our employer-customers and valued broker partners.
Today, I’m delighted to be joined by Paul Lagrotteria, who is the Regional Sales Director in Washington, and Keri Brightbill, who’s our Assistant Director of Product and Strategy, as we discuss Paid Family and Medical Leave in Washington.
I want to thank you both for joining us. As more and more states adopt PFML laws, I guess you could say Washington is “on deck” as the next state to roll out benefits. Keri, I was wondering if you can you give us a brief overview of who and what of the program in Washington?
Keri: Sure, will do. Yes, Washington definitely is “on deck” for benefits starting January 1, 2020. But at the same time, the state is still finalizing all their regulations.
The final phase of that is going on now but it’s not expected to be complete until the end of November. So we’re totally keeping an eye on it.
And we know employers are very closely watching this and have been since July of 2018 and now we’re just months from benefits starting to be payable.
About Washington … It’s the fifth state to create a PFML program. As I said, benefits are payable January 1, 2020. There’s a private plan option available and we’re going to talk about that in greater detail later. This was created from scratch, so unlike New York, there is no existing statutory disability program to attach itself to. Employers are required to notify their employees of PFML no later than December 31, right before they go live. Employment Security Department, that’s the agency that’s overseeing this and that’s also the same agency that oversees the unemployment law. So the program is seemingly different than what you’d expect for leave and disability as it’s really modeled after unemployment and how they assess those benefits. So just as an example they’re requiring weekly claims be filed even if they’ve been out continuously and the waiting period is actually beginning the Sunday before their leave starts.
Laura: Got it. Okay, so can you explain a little bit more who are the covered employers as well as the employees?
Keri: Sure. Nearly all employers must participate in this. The few exceptions are federal employers and then those that are self-employed and tribal employers may opt in to the program.
And then just as an aside, there’s no exemption for companies with collective bargaining agreements through a union. So that said, those that are under contract as of October 19, 2017 and prior they don’t need to re-open their negotiations but when their contract expires it going to be expected that they include PFML as part of their program.
Laura: So let’s talk about the employee eligibility now and their benefits.
Keri: So with regards to employee eligibility it’s slightly different for employees under a state plan versus a private plan … And then there’s job protection and payment differences.
So for the state plan, with regards to payment they must have at least worked 820 hours for employers in Washington. For private it’s in addition to that, there’s a 340 hour requirement for that current employer unless they have transitioned from another private plan where they were eligible, and then they could be immediately eligible for your plan.
From a job protection perspective, the state requires 12 months of service and 1,250 hours worked … whereas for the private plan it’s nine months of service and 965 hours. So just slightly different there.
Laura: Got it. Okay. And what kind of benefits are we talking about?
Keri: Up to 12 work weeks of the Family and then there’s 12 weeks Medical or a combined benefit of up to 16 weeks of Family and or Medical … And there’s a two-week extension for those that are having pregnancy complications requiring incapacitation. So an additional two weeks from the Medical or combined perspective.
There’s also a calculation of average work weeks just because this can be used intermittently. You have to try and figure out how many hours are going to be entitled throughout the whole benefit. So salaried are different than hourly in that calculation of averaging their work week … And then with regard to intermittent use, an employee who is taking intermittent time must have at least eight consecutive hours in a week missed to be entitled to any benefits throughout that week.
And then lastly with regard to payment, the calculation is … the employee can earn up to 90 percent of their gross wage with the weekly max of $1,000 a week.
Laura: So I know a lot of people listening in would want to know who can, what can you use PFML for, how can employees take advantage of the benefit? Could you break that down for us a little bit?
Keri: Yes. So an employee can use this to bond with a new child through the birth, adoption or foster placement. They can care for a seriously ill family member, recover from their own illness, or injury, pregnancy and then lastly respond to military events: family, pre- or post-deployment, ceremonies, that sort of thing. And just a note, too … Washington has the nation’s sixth highest population of active duty military personnel.
Washington hasn’t adopted as broad a definition as other more recent states have for family member. But a family member includes: child, spouse/domestic partner – they consider that one in the same – parent, sibling, grandparent and grandchild.
Laura: Okay, got it. And one other question that I have that I think many of our listeners would have is who’s paying for this? How does the funding equation work here?
Keri: The premium is 0.4 percent of employee wages up to Social Security maximum which for 2019 is $132,900. There is cost-sharing in the premium so the employee is covering 63 percent and then the employer has 37 percent of that cost-share. And the employer portion is specific to the Paid Medical. There is no employer share of the Paid Family. It’s up to the employer if they want to cover some or all of the employee share. That’s totally on the employer to decide there.
And then small businesses with fewer than 50 employees working in Washington, they’re not required at all to pay the employer portion. So they obviously still must collect from those employees and pay that on to the state but they don’t need to contribute themselves.
There’s also business assistance grants for employers that are with 150 or fewer employees and then for small employers who have chosen to contribute themselves and cover that. They can receive up to $3,000 ten times a year.
Laura: Okay so Paul, for employers, 2020 will be here before they know it. Can you update us on what employers are doing now – or what should they be doing now to prepare?
Paul: Yes. Hi Laura. Thank you. By this point, employers should already be taking the necessary steps to review the law to be able to comply with its requirements. More specifically, since January 2019, employers have been collecting payroll contributions for the employees’ share of the premium. They’ve also been making quarterly reports to the state on wages earned and hours worked. First-quarter collections had to be turned over to the state by July 31.
Laura: Okay, got it. So the bookkeeping has begun?
Paul: Correct. The bookkeeping has begun. I should also mention that it’s the employers’ responsibility to keep their employees notified about this new law. The state has provided posters and pay stub inserts and communications to help employers with this requirement. And employees have to be notified at least one pay period in advance that there will be a small amount withheld from their pay to fund the program. And by small amount, what I’m really trying to say is the Washington State pay stub insert explains it this way: For an employee earning $50,000 year, the maximum premium is just $2.44 a week.
Also, I should mention that employers cannot go back and collect contributions they may have missed. Another way to say that is there’s no retroactive collection. So those “missed collections” are the employer’s responsibility.
Laura: Okay, so what are some of the important factors an employer should consider if they’re going to offer a private plan?
Paul: Great question. So private plans, which the state calls voluntary plans, can provide the same benefits the state is offering – or even more generous ones. But to offer a voluntary plan, employers must first meet state approval for some basic requirements.
The voluntary plan has to match up on a number of fronts including eligibility, leave duration, weekly benefit, job protection and maintenance of health benefits. And I think it’s important to mention that employees CANNOT be charged more than what they would contribute to the state plan in this context.
Employers have choices with a voluntary plan offering. They can choose to offer either a Paid Family Leave plan, a Paid Medical Leave plan or both. If they choose to offer one side of the program, employees will use the state plan for the other.
They also don’t have to do it all themselves. Washington gives employers the freedom to partner with a third-party administrator. So if an employer has an approved private plan, there are no state premium requirements for the employer. And employers must hold employee contributions in a trust fund. Employees will file claims for benefits directly with the employer or a third-party administrator.
There are also some state grants available for small employers who face replacement costs in having to find staff to cover the work of the employee on leave. Employers with workforces of up to 150 people are eligible for grants of $3,000 to hire a temp worker for a stint of at least seven days. There is a limit, though. Employers can get up to 10 grants a year and only one for each employee on leave.
Laura: Okay, I get it. So say an employer makes a decision to offer a private plan. Are we talking about a lot of red tape to get there?
Paul: It’s actually an online process and employers can apply directly on the Washington PFML website. There’s $250 nonrefundable application fee. And once the application is filed, the approval process takes at least 30 days before the employer will know whether the plan is good to go with the state.
So if it is approved, it goes into effect on the first day of the next calendar quarter. Employers need to have their private plans approved each year for the first three years.
Laura: Okay, and that what happens after three years?
Paul: Right, well that begs the question. After three years, they only need to submit it for approval if they make changes to the plan.
Laura: Well, thank you Paul. Really good information for employers. So, the question I’ve got, what if an employer goes through all the steps to apply for a private plan and then finds out it’s denied. Keri, can you help us explain what would happen next for an employer?
Keri: Fortunately for employers, there are opportunities to appeal or re-apply. They can appeal the denial. There is no penalty for having being denied, but the employer must participate in state plan until approved they’re approved and that plan is in place.
Laura: So what I’m feeling though is these Paid Family and Medical Leave laws are coming so fast that some employers are struggling to keep up and many of them are doing this for the very first time. In your option how do you think The Hartford can help them at this point?
Keri: There’s definitely a checklist of sorts to get approved for a Washington private plan and The Hartford can certainly help employers with the process. It’s important for employers to be fully aware of their responsibilities to stay compliant and there are some general things they may want to consider between the state and private plans.
With regards to, for example reporting requirements, in addition to what’s required under the state plan, employers need to still report back to the state with information on their private plans, such as payments made, duration. They also must immediately notify the state once a new hire has worked 340 hours. And both of these requirements are really expected to help the state in reducing their potential for any overpayments.
Laura: Well that’s a lot of employer considerations. Can you break down for us, who’s actually eligible, Keri?
Keri: Yes, sure. As we touched on a bit earlier, something for employers to consider as they are looking at establishing a private plan – benefits are determined from the employee’s two highest paid quarters in the five full quarters before they went on leave. So it really doesn’t necessarily matter how much they’ve been earning with you as an employee but how much they’ve earned in that last year.
In addition, new hires can immediately be eligible for benefits if they’ve transitioned from another private plan. So that’s something for them to consider.
And then lastly, there’s a lower threshold for job protection with a private plan … so nine months of service, 965 hours versus the 12 months and 1,250 hours.
Laura: Awesome. Thank you so much for all that detail, Keri. And thank you, Paul, as well. I think you’ve both taken a topic that has a lot of details and a lot of considerations for our employer and broker community and really broken that down, especially for the impacts in the state of Washington. And we really appreciate your insights there.
I also want to thank our listeners for your time, as well. As we’ve said a couple times, you can find this episode along with other Line on Leave podcasts and the additional resources that you need at your fingertips on this topic on The Hartford’s Paid Family and Medical Leave Resource Center. And again to direct you to that it’s at www.thehartford.com/pfml.
Thank you for listening.
1 LIMRA 2018 Absence Management / Family Medical Leave Sales and In Force.
7649a NS 07/20