Hunton Employment & Labor Perspectives

Washington state has enacted a paid family leave program that will go into effect in 2020. Through this enactment, Washington has joined just four other states and the District of Columbia in requiring paid leave benefits for eligible employees. Under this new law, the state insurance program will provide private-sector employees up to 12 weeks of income for leave related to childbirth, a child’s adoption, a relative’s illness, or an employee’s own health condition. An employee’s maximum combined family and medical leave will be 16 weeks a year, with an additional two weeks in cases involving pregnancy complications. The new law also requires employers to hold the employee’s job open, regardless the size of the business, until he or she returns from leave. The employer may, however, hire a temporary worker to substitute for the employee on family or medical leave.

The state Senate approved the legislation on June 30^th by a vote of 37-12 after the bill passed the House 65-29. Governor Jay Inslee signed the program into law on July 5^th. The legislation addresses an unfinished bill by the 2007 Legislature that created a paid family leave program but never established who would pay for the benefit.

According to the legislation, employers and employees will fund the program with weekly contributions. Beginning January 1, 2019, the premium for the paid leave program will be 0.4 percent of an employee’s wages. Employers will be required to pay 37 percent of this premium while employees will be responsible for the other 63 percent. An employer may also choose to pay the employee’s share of the premium or establish its own paid leave program that meets or exceeds the law’s minimum requirements.

Employers with fewer than 50 employees will be exempt from paying the employer share of the premium, but their employees will still be required to pay. Because the requirements of the new law are expected to disproportionately affect small businesses, the legislature will provide grants to small businesses to help with the cost of employees’ family or medical leave.

The benefits an employee receives under the law will depend on the employee’s salary as of January 1, 2020. Employees will be able to receive up to 90 percent of their salaries, but not more than $1,000 a week. The wage replacement percentage is the highest of any similar paid leave program.

Given the limited experience states have had to date with paid family and medical leave programs like this, it is unclear what effect the legislation will have on employers. It is important, however, for employers to be aware of the new law and make adjustments as necessary.