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September 11, 2018
It has been just over one year since Washington passed legislation in July 2017 to create a paid family and medical leave (PFML) program. Washington organizations are now tasked with deciding whether to opt into the program or offer their own comparable voluntary plan. Premium payments for the state program begin Jan. 1, 2019 and benefits become payable Jan. 1, 2020. The opt-out (voluntary plan) application is supposed to be available by Sep.17, 2018. Applications must be approved by Dec. 31, 2018 to avoid paying premiums starting in January 2019. The decision to opt in or out is not one for companies, regardless of industry, to take lightly.
Many Washington companies have struggled with hiring and retaining employees for the last few years, in part due to low unemployment and a shortage of qualified workers across various industry sectors. The top strategies for improvement focus on offering rich benefits, including HRA/HSA plans, wellness programs, income insurance benefits (life, STD, LTD, etc.), and time off (or paid leave). Paid leave in particular is one of the most impactful tactics utilized in various industries and continues to evolve with each generation. The paid leave benefit has become a particularly popular benefit among the in-demand millennial generation. Therefore, there are many factors for organization’s HR personnel to consider before deciding to opt into the state program, or provide their own paid leave benefits.
The new state program for paid family and medical leave applies to all private and most public employers in Washington, with the following stipulations:
The new state program provides up to a maximum of 18 weeks of paid leave in a 52-week period and has some guidelines on who qualifies for the plan and pays the premiums:
The state program compensates the employee on leave within the following guidelines:
All of these new regulations and guidelines can become overwhelming. Consider these real-life examples of the law’s effect on a 5-figure versus a 6-figure salary employee:
The new PFML laws will impact organizations’ retention/hiring of key employees, which is an important factor for success in today’s market. Organizations with a large, low salaried workforce may find it a valuable addition to their benefits program, while those with small, highly skilled, and highly compensated populations may find that opting out is the better choice. The decision on whether to opt into the state program or offer your own plan will be different for each employer, but still highly valuable to employees.
Communicating and educating employees about these benefits is also crucial for all companies. Employee benefits represent on average 30-383 percent of an employee’s total compensation, which can often go overlooked until the employee needs the coverage. It is important to help employees understand these benefits and what they have available during stressful situations before one arises.
For more information or questions regarding the new state program or help evaluating your current offerings, reach out to an experienced employee benefits broker.
The views and opinions expressed within are those of the author(s) and do not necessarily reflect the official policy or position of Parker, Smith & Feek. While every effort has been taken in compiling this information to ensure that its contents are totally accurate, neither the publisher nor the author can accept liability for any inaccuracies or changed circumstances of any information herein or for the consequences of any reliance placed upon it.