Sue Vickerman, CPA, CGMA, MS Tax
If you haven’t already been made aware, there are some significant changes coming at the beginning of 2019 that could potentially have some negative impacts on companies if they’re not prepared for it.
Beginning in 2020, Washington will become the 5th state in the U.S. to offer paid family and medical leave benefits to workers. The program will be funded by premiums paid by both the employees and many employers and will be administered by the Employment Security Department (ESD) in Washington. However, effective January 1st of 2019, most employers will be required to collect Paid Family & Medical Leave premiums from their employees’ paychecks through payroll. This initial premium will be 0.4% of gross wages capped at the Social Security limit of $132,900.00. However, it may be adjusted annually after 2020 by ESD, and 1/3 of the premium will be collected for Family Leave, while 2/3 of the premium will be for Medical Leave.
Employers with fewer than 50 employees are not required to pay the employer portion of the premium but are still required to collect and remit the employee portion. An employer may not deduct more than the maximum allowable employee share of the premium during any pay period. If the employer does not withhold enough to cover their quarterly bill, the employer must pay the difference between what they have collected and what they owe. An employer cannot collect premium payments from a future paycheck of an employee.