Payroll tax, mandatory reporting starts January 1, 2019
Workers wanting to tap into Washington state’s new paid family and medical leave program cannot do so until 2020, but the payroll-tax withholding from their paychecks to finance the program – and the reporting required of you, the employer—starts January 1, 2019.
Employers may want to notify workers before the first of the year that their 2019 paychecks may be a little lighter thanks to this new payroll tax.
According to the state’s Employment Security Department, “Unlike the federal FMLA program, nearly all small businesses have requirements in Washington’s Paid Family and Medical Leave program” [emphasis added]. This completely contradicts specious assurances from the state’s chamber of commerce, hospitality association, and other trade groups given during legislative testimony, and aped in debate, that small businesses would somehow be exempt—a falsehood NFIB repeatedly disputed.
A one-page alert issued by the department can be read here, and a special webpage explaining the obligations of employers, employees, and health-care providers can be read here.
Under the new law, small businesses with fewer than 50 employees are exempt from paying the employer’s portion, but still must collect and remit the worker’s portion of the new tax. Moreover, to qualify for the program’s small business assistance grants, which provide up to $3,000 in wage replacement for workers utilizing the 12- to 18-week annual leave benefit, employers must “opt-in” to the system and pay the employer’s portion of the tax. The department points out that this tax should be slightly less than $1,500 on a payroll of $1 million, half the cost of just one wage replacement grant. Firms with fewer than 150 workers can qualify for grants covering as many as 10 workers taking paid family and medical leave each year.
NFIB vigorously opposed passage of Senate Bill 5975, which created the new law, arguing that paid time off was already offered by 73 percent of small business owners—and for any reason. NFIB fought the fight by itself, while other business groups capitulated for fear of losing another battle at the ballot box if Big Labor made good on threats to file an initiative. A chronicling of that struggle can be read in this catch-all web story.
Still, laws must be obeyed, so NFIB encourages its members and all small-business owners to become versed in its requirements.
Click the graphic below for more information against mandatory paid leave. At it, you can also read The Unintended Consequences of Paid Family Leave.
