WASHINGTON STATE PAID FAMILY AND MEDICAL LEAVE MOVES FORWARD STEP BY STEP

Posted on: November 13, 2018 0

Employer Action Items and Resources

Washington paid family and medical leave is coming (PFML). Although leaves and benefits aren’t available until January 1, 2020, employers have decisions to make before employer and employee premium contributions start in January 2019.

You can read our prior blog posts for a summary of this up-coming law and significant developments at this link or enter “Washington” in the blog’s search box.

Employer Action Items. Time is ticking, and as a Washington employer you have things to do! At Matrix we are working with our clients and business partners to help them get ready for Washington PFML. Below is a list of key action items that all Washington employers, even those with a single employee, must address soon (and there will be more in 2019!):

  • Decide whether to use the state program or a voluntary plan. Unless and until you have an approved voluntary
    plan,
    you and your employees will be covered by the state program.
  • If you decide upon a voluntary plan:
    • Develop the plan and file for approval with state – allow 30 days for approval.
    • Make employer choices that are available with a voluntary plan, such as whether to use the accelerated
      payment option and whether to offer greater benefits (duration, amount, leave reasons, covered
      relationships) than required by state.
  • Determine whether you will deduct from employee wages or pay the employee premiums yourself (for state plan)
    or bear all costs by the company (for voluntary plan). If you choose to deduct employee premiums from paychecks:

    • Communicate with your payroll service about employee deductions.
    • Communicate to employees about deductions starting 1/1/2019 (we recommend including a brief overview
      of benefits coming 1/1/2020).
    • For a voluntary plan, set up a separate bank account to hold premiums deducted from employee wages.
    • For the state program, be ready to pay employee and employer premiums to the state quarterly, starting
      April 2019.
  • Post notices in your workplaces by the date required (to be announced by the state; we expect a state-issued
    form notice for employers’ use).
  • By 1/1/2020, review and revise existing STD policies/plans and other company leave policies to coordinate with
    the required Washington PFML benefits and ensure no duplication of benefits.

Matrix Resources. Matrix has developed a variety of resources to assist employers in preparing for Washington PFML, making the necessary choices, and developing a compliant voluntary plan:

  • Webinar on Washington PFML generally (recording available)
  • Webinar on voluntary plans specifically (recording available)
  • Washington PFML Comparison – State Program vs. Voluntary Plan
  • Washington PFML – State Program or Voluntary Plan? Employer Considerations
  • Sample voluntary plan

We can help you make the decision – state or voluntary – and file and administer your voluntary plan if that is your election. If you would like to receive any of these resources or discuss your options, the process, and more, contact your Matrix account manager or practice leader, or send your questions to us at ping@matrixcos.com. We are constantly updating and adding to our materials, so stay in touch!

Washington Resources. The Washington Employment Security Department (EDS) administers the PFML program. Its website has many resources for employers and employees. One of the latest additions is the Employer’s Toolkit, which provides an overview of the PFML program, employer responsibilities, premium calculations, and sample communications to employees about PFML, including a handbook insert, an email or blog notice to employees, and a paystub insert. Another helpful resource is the Voluntary Plan Guide which provides an overview of voluntary plan requirements.

The state is drafting and implementing rules that provide details on the PFML program, benefits, voluntary plans, the claims process, and more. The rules are divided by topic into 6 phases. All draft and final rules can be accessed on the ESD’s Rulemaking Page. Here is the status so far:

Keep watching this blog. We will provide updates as rules are drafted and finalized.

Matrix can help! Washington paid family and medical leave imposes many new employer obligations and challenges. We can help you through the morass. Call on your account manager or practice leader, or contact us at ping@matrixcos.com.

Feds Issue Guidance on Tax Credit for Paid Family and Medical Leave Benefits – and a Possible Extension?

Posted on: September 25, 2018 0

BY MARTI CARDI, VP-PRODUCT COMPLIANCE 

 

On September 24, 2018, the federal Office of Associate Chief Counsel (Tax Exempt and Government Entities) issued a Notice providing guidance on the employer tax credit for paid family and medical leave under §45S of the Internal Revenue CodeNotice 2018-71 does not have the force of regulations which are yet to come, but it does offer employers with much-needed interpretive direction on how the tax credit works and what an employer must do to claim the credit.

We previously blogged about the tax credit when it was passed, and I am happy to say that nothing in the Notice contradicts our interpretations back then.  You can read our summary of the tax credit hereI suggest you go back and read our prior blog post before proceeding here – it will all make more sense!

Possible extension of tax credit.  The tax credit is set to expire on December 31, 2019 – and so is in effect for only 2 years! However, on September 6 the US Senate introduced a bill (S. 3412) that would extend the tax credit by 3 years, through December 31, 2022.  This bill also would require a study to examine the effectiveness of the tax credit for paid family and medical leave.  We’ll be watching and will report any significant movement on that bill.

Highlights of Notice 2018-71.  The Notice has questions and answers on the following topics:

  1. Eligible Employers
  2. Family and Medical Leave
  3. Minimum Paid Leave Requirements
  4. Calculating and Claiming the Credit
  5. Effective Date

Here are some of the more helpful bits of guidance.  All of these answers and examples depend, of course, upon the employer’s policy otherwise meeting all the requirements for the paid leave tax credit.

  • Required policy provision – non-interference. Employers may voluntarily provide paid family leave to employees
    who are not eligible for FMLA leave (called “added employees” in the Act) and receive the tax credit for such
    payments as long as the employer has a policy that complies with the Act. One of the policy requirements is a
    provision against interference with the employee’s policy rights to paid leave, and a provision against termination
    of an employee for complaining about a violation of the policy.  The Notice provides some sample language for
    a policy provision that will satisfy this requirement.  Q&A 3
  • Effective date of tax credit for your policy. An employer’s written policy demonstrating compliance with the tax
    credit law must be effective before the paid leave is taken; but for 2018, this can include a policy with a retroactive
    effective date if the employer pays the leave benefit to any employees who took leave after the retroactive
    effective date. Q&A 5 and 6
  • Purposes for use of paid leave. The employer’s paid leave must be available only for FMLA leave reasons to
    qualify for the tax credit.

    • So, for example, a paid leave policy that allows an employee to use the paid leave for vacation as well as
      FMLA leave reasons would not qualify for the tax credit. Q&A 9
    • On the other hand, a policy that limits the pay benefit to FMLA-covered reasons but includes family
      relationships not covered by the FMLA (g., siblings or grandparents) will get partial coverage by the tax
      credit. Any leave time taken to care for a spouse, for example, will qualify for the tax credit, while other
      time taken to care for a sibling will not, even it the employee provides a pay benefit for both.    Q&A 10
    • The employer’s policy does not need to provide paid leave for all FMLA leave reasons. The Notice
      provides the example of an employer who offers 6 weeks of paid leave only for parental/bonding leave.
      Any paid leave provided pursuant to that policy will qualify for the tax credit even though other FMLA
      leave reasons are not covered.  Q&A 9
  • Existing short term disability plans can count! Paid leave provided under an employer’s short-term disability
    program, whether self-insured by an employer or provided through a short-term disability insurance policy,
    may be characterized as family and medical leave under § 45S if it otherwise meets the requirements for the
    tax credit. Q&A 11

The Notice provides much more information and examples regarding calculation of wages, the tax credit, and many other issues.  If your company is considering taking advantage of this tax credit, do yourself a favor and read the full Notice.

PINGS FOR EMPLOYERS

Our recommendations at this time remain the same as when we first blogged about the federal PFML tax credit.  Remember, Matrix is not a tax or financial advisor, so you need to:

  • Consult your tax advisor. As with all things tax-related, you should consult with your tax advisor to determine
    whether your existing plan is covered by the new paid leave tax credit or what changes you need to make to
    qualify.
  • Consult your financial advisor. If you don’t have a paid leave plan for your employees, consult with your financial
    (and tax) advisor to determine whether the incentive provided by the tax credits is enough to justify offering a paid
    leave benefit to your employees.
  • Consider benefits beyond monetary. In this day of strong competition for good employees, remember that a
    superior benefits package can be a lure.  But, with the tax credit scheduled to last only two years, also consider
    whether your company can continue the benefit if the tax credit expires on December 31, 2019. Even if the law
    is extended by 3 years as proposed by Senate bill 3412, taking away the benefit might not be a good employee
    relations move at a later date.

 MATRIX CAN HELP!

As state and federal programs proliferate, Matrix provides leave, disability, and accommodation management services to employers seeking a comprehensive and compliant solution to these complex employer obligations. We monitor the many leave laws being passed around the country and specialize in understanding how they work together.

If you have questions, contact your Account Manager or ping@matrixcos.com.

Washington State PFML: Open for Business on Voluntary Plans; Proposed Phase Three Rules Released

Posted on: September 17, 2018 0

BY MARTI CARDI, VP-PRODUCT COMPLIANCE 

I wish I could receive Frequent Flyer miles for all the “trips” I am making back and forth between the East and West Coasts, covering developments in state paid family and medical leave programs. The most recent news is 2 tidbits from Washington State.

Voluntary Plans Now Being Accepted.  All employers must provide paid family and medical leave benefits to their employees, but the state provides the option of using the state plan or a “voluntary plan” administered by the employer or a third party administrator or insurer.  A voluntary plan must be approved by the state before it is effective.  As of September 17, the state is accepting applications for approval of voluntary plans.   Employers can apply and file their plans for approval here.  That site also provides lots of helpful information for employers considering a voluntary plan.  An employer must complete the application, submit a copy of its voluntary plan, and pay a $250 fee before the application will be considered complete.  Because the process is brand spankin’ new, the ESD is not yet providing information regarding how long it will take to get plan approval (or rejection). 

Matrix will offer administration of voluntary plans for our clients.  We’re developing a sample voluntary plan that our clients may choose to use, with appropriate employer-specific provisions.  We anticipate this will be ready for client review by approximately October 1 – but it is a detailed process so bear with us as we work to develop a top-notch plan.

Proposed Phase Three Rules Released

The state has released the draft rules for Phase 3 of the state’s PFML rulemaking process.  Sounds dry – and it is – but these rules, once finalized, give employers and TPAs like Matrix more detailed information regarding how to comply with the Washington paid family and medical leave law.

The Employment Security Department (ESD) is charged with developing the rules and, ultimately, administering and enforcing the law.  We wrote about the rules in a prior blog post.  At that time ESD was only planning on 4 rulemaking phases.  This has now been expanded to 6 phases.  The details change periodically as circumstances necessitate.  You can keep an eye on the timeline – if you care to! – on the state’s PFML Rulemaking site, or you can watch this blog for updates.  All proposed and final rules are also available on that page.

The Phase Three Proposed Rules cover benefit applications and benefit eligibility.  Here are some highlights:

  • Definitions:
    • Under the WA PFML statute, parents who are entitled to take paid leave include “de facto” parents and
      those in loco parentis to the child. A “de facto parent” is someone who has fully committed to the parental
      role with the consent of the legal parent.  Someone in loco parentis to a child has intentionally taken over
      parental duties and is responsible for the child’s well being.
    • A “claim year” is the 52-week period starting on the date of birth or placement of a child, for bonding leave,
      and on the date a completed leave application is filed for all other types of family and medical leave.
      NOTE:  This appears to create a situation where, for foreseeable leave other than bonding, the employee only
      has 11 months in which to take the leave, since the claim year includes the 30-day advance notice period. 
  • Employee notice to employer:
    • An employee must give notice of the need for leave at least 30 days in advance for foreseeable leave, and
      as soon as practicable when the employee becomes aware of the need for leave less than 30 days in advance.
      Generally this means notice the same or next business day once the employee is aware of the need for leave,
      but the employer should take into account the particular facts of the employee’s situation.
    • The employee’s notice to the employer must be in writing (hallelujah!) and must include the anticipated timing
      and duration of the leave. Under the proposed rule, written notice includes “handwritten, typed, and all forms
      of written electronic communications, such as test messages and email.”
    • If an employee provides late notice (presumably without extenuating circumstances) the employee’s benefits
      can be denied for the period of time the notice was late. NOTE:  The proposed rule does not specify exactly
      what this denial of benefits means:  Does the time off still count toward the employee’s paid leave entitlement
      to shorten the remaining time and benefits available, or is it more of a delay of benefits, with the employee still
      able to take the full 12 weeks of leave (or 16 or 18 weeks, depending on circumstances)?  Does the employee
      have job protection but not benefits, or no protections or benefits under the law at all during the period
      of late notice?
       
  • Initial application for benefits:
    • Employees must make application through the procedures the state will make available, or as defined in
      a voluntary plan if the employer elects this route.
    • An employee must support each claim for benefits with documentation as specified in the rules: For the
      employee’s own serious health condition or to care for a family member, the employee must provide a
      certification from a health care provider documenting the serious health condition and other relevant
      information.  For bonding, acceptable documentation includes a birth certificate, court documents, or
      other written documentation.  For military exigencies, documentation includes military orders but a
      “statement” to show why the leave is necessary is also acceptable.  NOTE:  The proposed rule does not
      explain from whom the statement must come.  Must the employer accept a written statement of the need
      for leave from the employee him/herself?
    • An employer can require the employee to provide documentation of a familial relationship to support
      benefits eligibility, such as a birth or marriage certificate or court document.
    • The proposed rules provide explanations of how an employee’s average weekly wage and weekly benefits
      are calculated. We’ll wait until these are finalized before diving into a big discussion here.
    • Hourly employees’ “typical workweek hours” are determined by dividing the total hours worked in a
      qualifying period by 52. NOTE:  This does not take into account that, according to informal guidance from
      the ESD, it is possible to establish eligibility in fewer than 4 prior quarters.  So for example, dividing hour
      worked in 3 quarters by 52 would significantly understate the employee’s typical work week.
    • If an employer is using the state benefits plan, the ESD will send the employer notice when an employee
      has applied for benefits. NOTE:  There is no time specified by which ESD must send this notice to the employer.

An observation:  So far, the final Phase One rules and the proposed Phases Two and Three rules have not added much substance.  Compared to the federal FMLA regulations that really flesh out FMLA rights and procedures, the WA PFML rules so far seem more to provide tiny slivers of information, in some cases merely repeating things already in the statute itself.  It appears that much of the real details will have to be developed over time through experience.  Good luck, employers!

Matrix can help!  As always, we are tracking and analyzing developments regarding the Washington Paid Family and Medical Leave Program.  Matrix will offer development and administration of voluntary plans for those employers who choose this route rather than putting themselves in the hands of the state.  With  required employee and employer premium payments beginning in 2019 and benefits beginning in 2020, it’s time to get started!.  If you have questions, contact your Account Manager or ping@matrixcos.com.

 

Meanwhile, Back in New York  . . .  Increases in PFL Benefits, Durations, and Premiums

Posted on: September 5, 2018 0

BY MARTI CARDI, VP-PRODUCT COMPLIANCE 

Here we are, 8 months into the first year of paid family leave in the state of New York.  My attention, and that of many employers, has been diverted somewhat to the upcoming paid family and medical leave law enacted by the state of Washington, with premium collections beginning in January 2019. (For more information on Washington, you know where to go: www.matrix-radar.com, and search for anything about Washington.) 

But New York marches on, and we are closing in on changes to the NY PFL program that will go into effect January 1, 2019.  The statute itself has built-in annual increases in the employee benefits percentage and leave duration for the 3 years after implementation.  In addition, the Superintendent for the NY Department of Financial Services is to publish by September 1 of each year the rate for employee premiums for the policy period beginning on the following January 1. That information was released on August 31, 2018, and is available here.

Here’s how NY PFL premiums and benefits compare from 2018 to 2019:

Effective Duration State Annual Weekly Wage (AWW) Employee Premium* (capped at same % of state AWW) Maximum Employee Premium Employee Benefit (capped at same % of state AWW) Max Benefit per Week
Jan 1 – Dec 31, 2018 8 weeks $1,306 0.126% of employee’s weekly wage $1.65 / week

 

$85.56 / year

50% of employee’s AWW $652.96
Jan 1 – Dec 31, 2019 10 weeks $1,357.11 0.153%  of employee’s gross wages each pay period $2.08 / week

 

$107.97 / year

55% of employee’s AWW $746.41

*The state uses slightly different terminology to describe the employee’s payroll contributions in 2018 and 2019, but the result should be the same – take the premium out of the employee’s paycheck at the proper percentage of that pay period’s wages until the maximum annual employee premium has been met.

Carryover of leaves from 2018 to 2019

At this point, one pressing question on employers’ minds is how much leave and benefits are available if an employee’s leave starts in 2018 but carries over into 2019? Here are some FAQs from the NY PFL website update for 2019:

  • If I start my continuous leave in 2018, and it extends into 2019, am I eligible for the benefits at the
    2019 rate and an extra two weeks?

    You get the benefit rate and number of weeks in effect on the first day of your leave.

Managing an intermittent leave that carries over is – of course! – more complex:

  • If I start my intermittent leave in 2018, and it extends into 2019, am I eligible for the benefits at the
    2019 rate and an extra two weeks?

    You get the benefit rate and number of weeks in effect on the first day of a period of leave. When more than
    three months passes between days of Paid Family Leave, your next day or period of Paid Family Leave is
    considered a new claim under the law. This means you will need to file a new Request for Paid Family Leave
    and that you may be eligible for the increased benefits available should this day or period of Paid Family
    Leave begin in 2019.

Remember that, in all events, the amount of leave an employee can take is measured looking back 52 weeks from the date of most recent usage.  Here is an example of how to assess an employee’s leave rights in 2019 if the employee used all 8 weeks available in 2018:

  • I used all eight weeks of PFL in 2018. Can I take more PFL in 2019 if I experience another qualifying event?
    If you experience another qualifying event in 2019, you may be eligible for up to two weeks of additional leave.
    The maximum amount of leave in 2019 is 10 weeks in a 52 week period. If you took eight weeks of PFL in the last
    52 weeks, and have another qualifying event in 2019, you may be limited to two weeks at the new rate, since it is a
    rolling calendar. When it has been 52 weeks from your 2018 leave dates, you will accrue a new week of available PFL,
    up to another eight weeks.

MATRIX CAN HELP!

As state and federal programs proliferate, Matrix provides leave, disability, and accommodation management services to employers seeking a comprehensive and compliant solution to these complex employer obligations. We monitor the many leave laws being passed around the country and specialize in understanding how they work together.

If you have questions, contact your Account Manager or ping@matrixcos.com.

Bring it On – Washington Paid Family and Medical Leave!

Posted on: August 23, 2018 0

BY MARTI CARDI, VP-PRODUCT COMPLIANCE 

 

Reliance Standard and Matrix are planning a series of Webinars to keep you up to date on this topic. The first series will be August 28 and 29, 2018 @ 11:00 am PDT / 2:00 pm EDT and will be hosted by Marti Cardi, Vice President Product Compliance, Dave Lea, West Coast Regional Practice Leader and Chris Smith, Practice Leader, Leave, Disability and ADA.

Please click here  to register for the 28th and here  for the 29th.

Starting in 2020, Washington will be the fifth state in the nation to offer paid family and medical leave benefits to workers. The program will be funded by premiums paid by both employees and employers. This paid leave law will allow workers to take, in a 12 month period:

  • Up to 12 weeks of paid leave when they welcome a new child into their family, need to take care of an
    ill family member, and for certain military-related family needs.
  • Up to 12 weeks for the employee’s own serious health condition. An additional 2 weeks of paid leave may
    be available if the serious health condition is pregnancy-related,
  • If workers experience multiple events in a given year, leave entitlement is capped at 16 weeks total for all
    leave reasons, (or up to 18 weeks if the employee’s serious health condition is pregnancy-related.
When does WAPFML go into effect?

Employers must start collecting benefit premiums from employees on 1/1/2019. Employee premiums and the employer’s premium contribution must be paid to the state quarterly throughout 2019 unless the employer has a state approved voluntary plan.

Below are some Key Issues and Provisions that you need to know right now.

Issue Provision
Effective Date ·   Premium contributions: 01-01-2019

·   Benefits: 01-01-2020

Employee Eligibility ·   Must work 820 hours in the “qualifying period,” defined as the first  4 of the prior 5 calendar quarters; OR

·   If the employee is not yet eligible, the preceding 4 calendar quarters.

·   [Equates to about 15.75 hours per week over 4 quarters]

 

Covered Employer All private employers, the state and subdivisions, and units of local government; no number of employees threshold
Job Protection ·   Employees covered by state plan:

     o   Works for an employer with 50 or more employees

     o   Has worked for employer for 12 months at start of leave

     o   Has worked 1250 hours in past 12 months at start of leave

·   Employees covered by a Voluntary Plan:

     o   Has worked for employer 9 of last 12 months at start of leave

     o   Has worked 965 hours in past 12 months at start of leave

Leave Reasons ·   Employee’s own serious health condition (defined same as FMLA)

·   Family member’s serious health condition

·   Bonding with new child (birth, adoption, foster placement)

·   Military exigencies (same as FMLA)

Duration in a 12-month period ·   Medical leave (employee’s serious health condition): 12 weeks

     o    2 additional weeks if employee experiences a serious health condition with a pregnancy that results in incapacity

·   Family leave (bonding, care for family member, or military exigency): 12 weeks

·   Maximum in 12-month period:

     o    16 weeks combined total for medical and family leaves

     o    18 weeks if employee experiences a serious health condition with a pregnancy that results in incapacity

Leave Calculation Method All leaves entitlements are measured forward 12 months from date of:

·   Birth or placement, for bonding

·   Employee’s filed application for leave benefits for all other leaves

Leave Use Increments ·   Full-hour increments

·   Minimum of 8 consecutive hours of leave

Covered Family Members ·   Child (any age)

·   Parent (includes step and in-laws)

·   Spouse

·   State-registered domestic partner

·   Sibling

·   Grandparent

·   Grandchild

 

Benefit Amount
AWW = average weekly wage
·   Employees who make 50% or less than the state’s AWW will receive 90% of their AWW.

·   Employees who make greater than 50% of the state’s AWW will receive:

      o    90% of their wages up to 50% of the state’s AWW; PLUS

      o    50% of their AWW in excess of 50% of the state’s AWW (subject to the $1000 cap)

Maximum benefit ·   2020: $1,000/week

·   Adjusts annually as of September 30 each year; effective the next January 1

Waiting Period ·   No waiting period for bonding leave

·   7 day waiting period for all other leave reasons

Funding Mechanism

 

AWW = average weekly wage

·   Net result: Employee pays 67%, employer pays 33%

·   2019 and 2020: total premium for medical and family leave benefits of 0.4 percent of employee’s wages, capped at the state’s AWW; then annual adjustments

·   Premium for medical leave (employee’s own SHC) = 2/3 of tot premium

      o    Employee pays 45% of this

·   Premium for family leave = 1/3 of total premium

      o    Employee pays all of this

·   Employer may elect to pay all or a portion of the employee’s share of the premium

Administration WA Employment Security Department
Existing Employer Paid Leave Benefits Employers may:

·   Adopt or retain leave policies more generous than any policies that comply with the requirements of the WA Family and Medical Leave Program ; or

·   Make payments to supplement the benefit payments provided under the Program to an employee on family or medical leave.

Employer Voluntary Plan ·   Detailed provisions for employer voluntary plans that offer benefits at least as beneficial to employees as the state plan

·   No provisions (or prohibitions) for insured voluntary plans

 

Relationship to Existing WA Family Leave Act The existing WA Family Leave Act will be repealed as of 12-31-2019, the day before the new PFML program goes into effect.  No information yet on how leaves started in 2019 will carry over interact with the law effective for leaves 1/1/2020.

MATRIX CAN HELP!  Matrix provides leave, disability, and accommodation management services to employers seeking a comprehensive and compliant solution to these complex employer obligations. We monitor the many leave laws being passed around the country and specialize in understanding how they work together. For leave management and accommodation assistance, contact us at ping@matrixcos.com.