SEATAC, Wash.–Credit unions in this state are being offered some guidance in how to deal with Washington’s new Paid Family Leave Act.
“This new law will revolutionize how Washington businesses, including credit unions, provide paid leave benefits to employees who take family medical leave,” said the Northwest Credit Union Association in its analysis. “This program is similar to the state’s unemployment insurance benefit for employers with 50 or more employees in that both the employee and the employer will pay a premium to participate (or the employer can have its own equivalent plan).”
In an analysis for the NWCUA, Kelly R. Tilden, an attorney at Farleigh Wada Witt and chair of the firm’s Employment Practice Group, said that “credit unions already offer generous paid leave benefits and will need to reassess and likely revise these benefits in light of this law and related costs, and also in light of the previous Paid Sick Leave law, which offers different benefits and protections that will become effective in January 2018. The benefits provided by these two statutes overlap and will have to be considered together before 2018. While the payment of premiums will start in 2019, the benefit will not be offered until January 2020.”
Under the new law, nearly all those who work at a credit union with more than 50 employees in Washington will be eligible to receive up to 12 weeks of paid time off for the birth/placement of a child, for the employee’s own serious health condition, or to care for a family member with a serious health condition, said Tilden.
The benefit amount to the employee varies due to a calculation based on the employee’s rate of pay and the state’s average weekly rate (currently $1,082 or $56,264 annually). Employees who earn less than the state’s average weekly rate will receive the equivalent of 90% of the employee’s weekly wage, explained Tilden in a posting that appeared first on the NWCUA’s website. Employees who earn more than the state’s average weekly rate will receive a benefit calculated as 90% of the employee’s weekly wage, up to 50% of the state’s average weekly rate, plus 50% of the employee’s average weekly wage that is greater than the 50% of the state’s average weekly rate, up to a maximum $1,000 per week for 2020.
To be eligible, an employee must have worked 820 hours (approximately 4.5 months) during the qualifying period (first four of the last five calendar quarters).
What does all that mean to credit unions? According to Tilden, employees will pay a weekly premium toward the paid leave benefit, as will employers. Under the law, the total premium charged for each employee will be equal to 0.4% of the employee’s wages up to the maximum limit that is equal to the maximum wages subject to taxation for Social Security as set by the SSA.
Tilden said that under the current WA Family Medical Leave Act and FMLA, most employees who meet certain requirements, take family medical leave, and obtain benefits under this Act will be entitled to return to the employee’s position held prior to leave or to an equivalent position. There are some exceptions for shorter term employees and key employees.
One issue still up in the air, wrote Tilden, is whether the Internal Revenue Service will determine that these paid family leave benefits will be subject to federal income tax. Most likely, the benefit will be subject to taxation, and the employees will be able to elect that the tax be deducted and withheld from the payment of benefits. The amounts withheld will remain in the family medical insurance account created by the state treasurer and then will be transferred to the IRS.