Washington PFML Developments Keep Us Hopping

Posted on: April 8, 2019 0

By Marti Cardi, Vice President Product Compliance Gail Cohen, Director Employment Law & Compliance

April 8, 2019

Despite my recent advice to Washington employers to “sit back and relax,” I now have to say: Don’t get too comfortable with all things Washington PFML.  Although employers have been required to withhold premium contributions from employee paychecks (or waive such withholding) since January 1, lots of pieces are still in motion.  We recently blogged about the delay in premium payments and reporting to the state here.  Now:

  • The governor has signed into law some amendments to the PFML statute relating to employee benefits, the
    waiting period, voluntary plans, and more.
  • The Washington Employment Security Department (ESD) has finalized its Phase Three Rules, which relate
    in part to claims handling procedures.

Amendments to Washington PFML

The full bill as passed can be reviewed here. These are some of the more significant changes:

Waiting period

Employees must satisfy a 7-day waiting period before they can start receiving benefits. Prior to the PFML amendments, it was unclear how that waiting period would work. The law now states more clearly that the waiting period consists of “the first 7 consecutive calendar days” (rather than the previous version, “first 7 calendar days of leave”).  The amendments further clarify that the waiting period starts when an eligible employee takes leave for the minimum claim duration of 8 hours.  So, once an employee’s leave for a qualifying reason begins, he can start receiving benefits 7 calendar days later (if the leave continues beyond that) rather than having to take 7 days of leave before getting benefits.

And a reminder:  No waiting period is required for leave for the birth or placement of a child.

Topping off PFML benefits

The original PFML law had a strange provision that prohibited employers from allowing employees to use other pay benefits during a PFML leave. This has been corrected to align more closely with PFML laws in other states. Now, once benefits start in 2020, an employer may offer “supplemental benefit payments” to an employee on family or medical leave in addition to any paid family or medical leave benefits the employee is receiving.  Supplemental benefit payments include, but are not limited to, vacation, sick, or other paid time off.  Employers are not required to offer supplemental pay benefits.  If offered, the choice whether to use them lies with the employee – the employer cannot force the employee to use such benefits.

Voluntary plans

The PFML amendments affect voluntary plans as follows:

    • Payment of benefits from only one plan. An employee may only receive payment of benefits for
      family leave, medical leave, or both from one approved plan at a time. If an employee is simultaneously
      covered by more than one approved plan, the employee will receive benefits only under the plan for
      which the employee has worked the most hours during the employee’s qualifying period.  From the
      context of this amendment, it appears that this applies whether the simultaneously applicable plans
      are 2 voluntary plans or a voluntary plan and the state plan.

What is NOT clear (and we’ll be asking questions of the ESD) is whether the employee receives benefits limited to the amount attributed to that one plan only, or receives benefits equivalent to his entitlement under all applicable plans, but only paid by the plan of the employer for whom the employee has worked the most hours in the qualifying period.  If that is the case (we hope not), how would the paying plan know how much is owed to the employee under other applicable plans?

    • Waiver of voluntary plan eligibility. To be eligible for benefits under a voluntary plan, an employee
      must have worked both 820 hours within the state during the qualifying period, and 340 hours for
      the employee with the voluntary plan (the 340 hours can count toward/be a subset of the 820 hours).
      An employee who commences work with a new employer with a voluntary plan is eligible for benefits
      immediately if she was eligible under a voluntary plan with her previous employer.  Otherwise, that
      340-hours-of-work for the new employer requirement applies before she can receive benefits.
      Pursuant to the new amendments, however, an employer with an approved voluntary plan may waive
      the 820 and/or 340 hours worked requirements, in whole or in part, to allow an employee to be
      immediately eligible for coverage under the employer’s voluntary plan
      .

Phase Three Final Rules.

A bit of background:  States pass the laws that require employers to provide paid family and medical.    The laws establish the basic structure of employee and employer rights and obligations.  Then the state agency that will be responsible for implementation, administration, and enforcement of the law passes rules or regulations (same thing, basically) that fill in the details needed to administer the law and advise employers and employees how to comply.

The Washington Employment Security Department (ESD) designed a process to draft, revise, and finalize its PFML rules in six phases.  The final version of the Phase Three rules have been released.  These are important because they address the claims handling procedures, including:

  • Defining a claim year
  • Employee notice requirements (timing and content)
  • Process and timing for application of benefits
  • Requirements for documentation of the leave request (certification contents, timing, etc.)

The Phase Three rules are available here.

What Matrix is doing:

  • Employers can still file for approval of a voluntary plan at any time. Matrix has a template for
    voluntary plans and a complete process for submitting plans for approval on behalf of clients.
  • Now that the Phase Three rules are finalized, Matrix is developing claims handling procedures,
    employee 
    communications, training for our employees, and other necessary processes. We will
    be ready for claims 
    management for our clients with voluntary plans when benefits are available,
    starting January 1, 2020.
  • Matrix continues to pose questions to the Washington ESD for provisions of the law and rules that are
    still not clear.

MATRIX WILL BE READY ON JANUARY 1, 2020.  WILL YOU?

If you want to learn more contact us at ping@matrix.com or through your Account Manager.

 

Sit back and relax! Washington PFML reporting and payments to the state delayed by 3 months.

Posted on: March 14, 2019 0

BY MARTI CARDI, VP-PRODUCT COMPLIANCE & GAIL COHEN, DIRECTOR-EMPLOYMENT LAW/COMPLIANCE

 

We know employers have been on the edge of their seats wondering when and how they can begin their required Washington paid family and medical leave reporting for Q1 slated for April 1-30.

Well, calm yourself. 

The state just announced that first quarter employer reporting is being delayed until July 1-31, 2019.  Likewise, Q1 payments to the state for employer and employee premium contributions for those employers using the state PFML plan have been delayed.  At that time, employers will make 2 separate reports, and payments if applicable, for 2019 Q1 and Q2.

More information can be found on the state’s website, particularly the rollout FAQs and the email notice to employers.  One point of note: The delay in the reporting and payment deadlines for Q1 does NOT affect the start of PFML benefits on January 1, 2020.

We at Matrix have been watching the WA PFML website and announcements regularly for information about procedures for employers to fulfill their requirements for reporting and premium payments for Q1.  I’m guessing the state needs more time to get the technology in order.  Not a big surprise, considering they can’t even accept electronic payments yet for voluntary plan application fees.

The employees of the Washington Employment Security Department (ESD) who answer our calls and emails have been very kind to deal with and offer as much assistance as the statute allows.  But I hope other states in the process of implementing or considering paid family and medical leave are watching.  The PFML law passed by the state legislature did not allow ESD enough time to develop the program procedures, regulations, and technologies.  The ESD staff is left with tough questions and, sometimes, no good answers.  Hang in there ESD folks, and thanks for what you do!

Matrix can help!  At Matrix we offer administration of Washington voluntary plans for paid family and medical leave.  These include providing a plan template, filing the plan with the state, fielding ESD questions, and seeing the plan through to approval.  Then Matrix will administer the PFML leave and benefits for your Washington employees, along with other Washington statutory leaves, the FMLA, and your company policies.  For assistance and more information, contact us at ping@matrix.com or through your Account Manager.

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.