Washington Paid Leave

FYI: Washington Paid Family and Medical Leave

The WPFML is a new mandatory insurance program administered by the Employment Security Department.  The program gives eligible employees access to up to 12 weeks of paid leave to recover from a serious illness or injury, bond with a new child, or care for an aging parent or ill or injured family member.   They may receive up to 16 weeks if they have events covered under both family and medical leave in the same qualifying period.

What do the benefits cover?

Paid Family and Medical Leave benefits can only be disbursed to those who have a qualifying family or medical event, such as:

Family Leave

  • Care for and bond after a baby’s birth or the placement of a child younger than 18
  • Care for a family member experiencing an illness or medical event
  • Certain military-connected events

Medical Leave

  • Care for yourself in relation to an illness or medical event

Benefits

The weekly benefit for Paid Family and Medical Leave is equivalent to the dollar amount a covered employee will receive from ESD while claiming these benefits. The dollar amount is a calculated percentage of the employee’s gross wages and is capped at $1,000 with a minimum of $100.

Premium collection begins January 1, 2019 and benefits become available January 1, 2020.  

Employer Responsibilities:

Effective January 1, 2019, all Washington State employers of all sizes (with very few exceptions) will have the responsibility to:

    1. Report employee wages, hours worked, and other information for all employees.
    2. Collect and remit employee premiums via payroll deductions and employer contributions.
    3. A mandatory poster to notify employees of the program will be available before Jan. 2020. If you would like something to share with your employees prior to that, here is a flyer  to distribute or post 

Premium Calculation:

https://paidleave.wa.gov/premium-calculator

The total premium is 0.4% of gross wages paid. To calculate the employee and employer shares under the law; the agency allows for three options:

  1. Employee portion: .6333%, Employer portion: .3667%
  2. Employee portion: .6333%, Employer portion: 0% (if <50 employees)
  3. Employer may opt to pay 100% of the premium

This new deduction will calculate on all 2019 checks in your payroll account created after December 17, 2018. Your payroll account will default to option 1 listed above.

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.

If you have an employee who you believe is exempt from this new payroll deduction please go to Taxes and Exemptions under that specific employee’s profile in your payroll account on or after January 1, 2019.  Then, select the box for WA Paid Family and Medical Leave.

Please visit the Washington Paid Family & Medical Leave Help for Employers web site for important additional information.

Who’s eligible for WPFML benefits?

To qualify for Paid Family and Medical Leave, you must work 820 hours or more in the qualifying period. The qualifying period is either:

    • The first four of the last five completed calendar quarters; or
    • The last four completed calendar quarters

All Washington employers, including out-of-state employers with Washington employees, are required to participate with few exceptions.

Exceptions:

    • Self employed individuals (may opt-in)
    • Federal Employees
    • Federally Recognized Tribes (may opt-in)
    • People who work temporarily in Washington (Example: Utility worker helping after a storm)

Temporary waivers for out-of-state employees:

Employers may apply for a conditional waiver for their workers when they meet these three conditions:

    • Physically based outside of the state;
    • Employed in the state on a limited or temporary work schedule; and
    • Not expected to be employed in the state for eight hundred twenty hours or more in a qualifying period.

In-state vs. out-of-state employees:

An employee is included in Paid Family and Medical Leave when:

    • All of the employee’s work is performed in Washington; or
    • Most of the employee’s work or services are done in Washington, but some of the work is done temporarily out-of-state.

When work is not located in any state, the worker must participate when:

    • The base of operations is in Washington; or
    • If there is no base of operations, but the place where services are directed is in Washington; or
    • There is no base of operations, no place where services are directed, but the worker lives in Washington.
TL;DR: Gusto’s default is opting your employees in, including the employer portion. Let us know if you want to opt out on the employer portion.
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What retirement accounts can I have?

What Retirement Accounts are Available for Someone Who is Self-employed or a Small Business Owner?

Well…it depends (you knew that was coming right?).

Before giving an answer, I always ask:

  • How many employees do you have?
  • Are you an S-Corporation?
  • How much do you want to contribute to your retirement accounts?
  • Do you want as simple a solution as possible?

Three types of accounts work best for small business owners or freelancers:

  • Simplified employee plan (SEP) IRA
  • Solo 401(k)
  • Simple IRA

 

 

 

 

 

 

 

 

 

 

*less half of your self-employment tax

 

What does this chart mean?

A SEP IRA is very similar to a regular IRA. The contributions come from the business only; there are no employee contributions. If you are self-employed, your contribution is 20% of your business net income, and if you are an S-Corporation, your contribution is 25% of your compensation. A SEP IRA tends to be a great plan for a small business owner with no employees.

A Solo 401(k) is similar to a 401(k) offered from an employer. You can make contributions from your paycheck and the business can make contributions as well. A Solo 401(k) does have filing requirements once the plan gets big enough. The “solo” part of a Solo 401(k) is because the plan only works if you don’t have employees.

If you do have employees, a Simple IRA is a very straightforward plan that offers two options: a flat 2% of compensation or a 3% match of compensation.

 

So, what retirement account is right for me?

Most of our small business clients who have no employees tend to use SEP IRAs. Our small business owner clients who do have employees usually use Simple IRAs.

We always recommend you talk to an advisor to determine which option is best for you and your circumstances.

TL;DR: Retirement planning might be a pain, but you should still be saving for it.
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When Am I Required to Provide Health Insurance to Employees?

As you likely know, the Affordable Care Act (ACA) added requirements for employers to provide health insurance to employees if employing a certain number of full-time employees. According to various provisions of the ACA, a full-time employee is defined as anyone working around 30 hours per week. You do need to look at part-time employees as well since they can add up to full-time employees.

If you have over 50 employees, you are considered a Large Employer and are required to provide health insurance benefits. In this case, we recommend speaking to an agent to discuss the specific requirements that must be adhered to under the ACA.

Employers with less than 50 full-time employees are considered Small Employers. Small Employers are not required but are encouraged to offer health insurance benefits to their employees. Small Employers have access to the Small Business Health Options Program (SHOP) and can check their eligibility online.

If your business has under 25 full-time employees, you may qualify for the Small Business Health Care Credit to lower premium costs.

If you provide health insurance benefits to your employees, this information needs to be reported on your employees’ W-2 forms along with any other benefits.

TL;DR: Health insurance is a complicated area if you employ close to 50 full-time employees. If you are under 50 full-time employees than you aren’t required to provide coverage, but there are programs available to help you do so.