by Brittany Malidore
In our last article, we summarized Washington State’s new Family and Medical Leave Program click here and in Part 2 we will dive into some of our most commonly asked questions regarding this new statewide program.
Question #1: Are S-corporations exempt from the Paid Family and Medical Leave?
Answer: Yes and No. It depends on how your business is registered with the state. Washington state does not recognize the federal S-Corp election. In Washington, most businesses register as either a Limited Liability Company (LLC) or a Corporation. Per the state website:
If you receive compensation from your corporation in exchange for service provided to it, you are required to participate as an employee of that organization. Corporate officers are required to participate.
Limited Liability Companies (LLC's)
Members of an LLC are exempt from the program even if they are taking a wage from their LLC. Owners of a sole-proprietorship, partnership, or LLC members are not required to participate but can elect coverage.
Limited Liability Companies (LLC's) – Made S-Corp. Election
Members of an LLC who have made and S-Corp election are exempt from the program because the State does not recognize the federal election of an S-Corporation.
Question #2: Who else is exempt?
Answer: Currently federal employers, federally recognized tribes and sole-proprietors are exempt, but may elect to participate. It should also be noted that employees covered by a collective bargaining agreement may have delayed participation in the program, as well.
Question #3: Does the Paid Family and Medical Leave apply to household employees, part-time/seasonal employees, or out of state workers?
Answer: Household employees and part-time/seasonal workers are required to participate and employers will need to remit the portions of the .4% premium accordingly. This would apply even if the employees are not ever able to qualify under the 820 hours or more. Out of state workers are not required to participate, as long as they don’t enter Washington for that year of work.
Question #4: How do I calculate my benefit?
Answer: The initial premium will be 0.4% of gross wages and can be adjusted annually after 2020 by the Employment Security Department, according to rules set by the current statute.
- A worker makes $100,000 a year.
- Worker pays about $4.87 a week.
- Their employer pays about $2.82 a week.
Question #5: If my employer pays for the Paid Family and Medical Leave premiums, will it be taxable to me when I exercise these benefits?
Answer: The answer to this question is not yet known. We are still waiting for the state to advise if there are any consequences for employers to pay the premium for employees.
Question #6: As a small business owner of under 50 employees, is there any consequence to not pay the employer share of the premium?
Answer: Yes. If an employee chooses to exercise the benefits of the Paid Family and Medical Leave, the employer loses the ability to have help for temporary filing needs. According to the state, grants are available for small businesses to help cover the costs of hiring temporary employees when an employee uses the paid leave. To be eligible, your business must average 150 or fewer employees. Grants of up to $3,000 are available and can be issued up to 10 times per year to a single employer, and they must be applied for (more details are forth-coming). A grant of $1,000 is available to businesses who experience significant wage- related costs due to an employee’s leave as it applies to this new program.
Need Help? Our Client Accounting Services team is here to walk you through all of the changes related the new Paid Family and Medical Leave Program.