by Marti Cardi, Esq. - Senior Compliance Consultant and Legal Counsel,
January 04, 2020
PLEASE NOTE we had a few holiday technical difficulties here at Matrix-Radar, and this post was distributed in a timely fashion to Matrix clients through our account managers; but actual posting on the site was delayed. We believe we have resolved the issue and apologize for the delay!
On about December 20, 2019, the Washington Employment Security Department (ESD) released its form for the mandatory notice to employees using PFML for more than 7 consecutive days. We wrote about the new notice form (and the new mandatory poster, also just released) here.
Employers have many questions about the notice to employees and some of its content. Here’s what we presently know:
Why is this info coming out just now? There is frustration all around at the timing of this information. We at Matrix, Washington employers, and other external stakeholders did not know what the state’s mandatory notice form would include until it was released a few days ago. So, no advance notice for employers to be ready to distribute its UBI number(s) and alert employees to the designation of any specific benefits as “supplemental.” A better-than-previous explanation of supplemental benefits was added recently to the ESD Paid Leave website. See below.
What employers need to do. Employers have two action items relating to this new notice form, both of which are necessary for the employee to file a claim for leave and benefits under the state plan with the ESD:
- Provide employees with the employer’s UBI number
- Determine and tell employees whether any additional company-offered pay benefits
available during PFML leave are “supplemental benefits.”
Read on for more details. As we explain below, Matrix will include the ESD notice form in our packets as a courtesy, but employers are still ultimately responsible for getting the appropriate information to their employees.
The UBI number. The new form has a place to provide employees with their employer’s Unique Business Identifier number (UBI – similar to a federal FEIN). Why? Employees of employers using the state plan to provide benefits must file their PFML claims with the ESD on line. It appears that ESD can locate an employee in their system with the employer’s UBI number, and not by use of the employee’s social security number or other individual identifier. As a result, the employee will need his employer’s UBI number before he can complete a claim.
For Matrix clients using the state plan, employees should still call Matrix early in the leave process so that we can assess the employee’s absence and apply any leaves or benefits that may be applicable in addition to WA PFML. As a courtesy, we will include the ESD’s stock notice form in the employee’s initial packet sent after the intake call but the employer’s UBI number will be blank. The employee will have to obtain the number from the employer’s HR, intranet, or other means. Be sure to make all of your Washington UBI number(s) readily available (and designated by entity, if your company has more than one entity with employees in Washington).
“Supplemental benefits.” Another surprise on the mandatory notice form is the question, “This employer offers supplemental benefits: Y _____ N _____.” The concept of supplemental benefits has raised a lot of questions and the new form is bringing them to the forefront. We touched on the issue of benefits and possible stacking in our prior blog post here.
In a nutshell, here are the three key points – these apply to both Washington paid medical leave and paid family leave:
- Forms of remuneration paid to employees during PFML leave that are not
designated as “Supplemental” will reduce the Washington PFML benefit and
will be considered “wages” for employer reporting to the ESD.
- Forms of remuneration that are designated as “Supplemental” will top off
the Washington PFML but are not considered “wages” for employer reporting
to the ESD.
- Employers will need to alert payroll to the differing treatment of additional
payments to employees treated as supplemental benefits.
Here are the details. According to the PFML statute, employers can designate certain company benefits as “supplemental benefits” to enrich the amount an employee receives during PFML usage. Supplemental benefits may include salary continuation, vacation leave, sick leave, or other paid time off. WAC 192-500-180. They do NOT include STD benefits – see explanation below.
The designation of these top-up or enriched payments as “supplemental benefits” makes a big difference to the employee and the employer. If the employer simply pays the company benefit (for example, allows the employee to use accrued PTO), that payment actually reduces the employee’s PFML benefit, as the ESD will offset that payment against the PFML benefits available. In the end, the employee still only receives the maximum statutory amount but now the employer is paying part of that total.
On the other hand, if the employer “designates” that PTO or other company benefit as supplemental, then the employee’s PFML benefits remain intact; the employer payment to the employee truly tops off the PFML benefit. In that case, however, the employer cannot include the amount of the supplemental payments in its quarterly reporting of wages per employee or to calculate employee premiums.
What is still not clear is when and how an employer “designates” benefits as supplemental. There is no explanation in the statute or the rules. Apparently, it is just a matter of applying that label and notifying the employee so that she knows not to report to ESD such supplemental benefits as “wages” when she files a claim. Employers may want to consider amending their employment policies to make the designation.
You can read the ESD’s guidance on supplemental benefits and its explanation of “wages” on pages 16 and 9, respectively, of the Employer toolkit (Dec. 19, 2019 version).
STD benefits are allowed during PFML leave. On a side note, the ESD has also clarified that an employee can receive STD benefits without those serving as an offset to PFML benefits and, apparently, without having them designated as supplemental benefits. Here is an excerpt from the ESD Employer Toolkit (page 16, Dec. 19, 2019 version):
Can my employee receive short term disability and Paid Family and Medical Leave at the same time?
A worker can receive short-term disability at the same time as Paid Family and Medical Leave. A worker can’t receive wages or paid time off at the same time as Paid Family and Medical Leave, and all other compensation is allowed if you offer it to your employees. Paid time off could be used as a supplemental benefit, see that section for details.
Quick note for Matrix clients with voluntary plans: Our clients for whom Matrix is administering a voluntary plan do not need to convey the UBI number to employees. You will still need to make the determination of whether company benefits provided during use of PFML are “supplementary” as that will affect your quarterly reporting to ESD. Matrix will make any company sponsored STD or Paid Family/Parental benefit payments to your employees as a top-off to the WA PFML payments unless you tell us that they are receiving benefits that are NOT designated as supplemental.
QUESTIONS? Contact your Matrix or Reliance Standard account manager if you have questions.