Paid Family Medical Leave Amendments and Draft Rules Highlight Supplemental Benefit Options for Employers

In April 2019, Governor Jay Inslee signed SHB 1399, which amended the Washington Paid Family Medical Leave Program (PFML). The bill can be found here.

The bill seeks to provide clarity for employers and employees relating to: (1) an employee’s ability to top off the PFML benefits with employer-provided PTO, vacation, and sick leave; (2) the waiting period; and (3) voluntary plan eligibility and notice.

Subsequently, on July 10, 2019, the Employment Security Department (ESD) released the second draft of Phase Six Rules relating to the 2019 amendments. The comment period for the rules begins August 29, 2019 and continues through November 12, 2019. A summary of the amended PFML law and the draft Phase Six Rules and key considerations is below. Links to our prior advisories, including regarding rulemaking, are here.

PFML Challenges for Employers

Despite new information assisting employers in decision making regarding existing paid time off benefits, many issues have not yet been addressed, making it difficult to determine exactly how PFML will interplay with both existing employer benefits and other leave laws. Those considerations include the interplay of PFML with other leave and accommodation laws, as well as more detailed information about the use of “supplemental benefits” during PFML leave.

Specifically, uncertainty remains whether employees eligible for both Family Medical Leave Act (FMLA) and PFML leave could be required to use available paid time off benefits (supplemental benefits) while on leave. Although the FMLA allows employers to require the use of available paid time off while employees are on FMLA leave, PFML does not.

PFML Basic Requirements

Under PFML, eligible employees will be entitled to the following starting on January 1, 2020:

• Paid leave up to 12 weeks for their own serious health condition (medical leave) or for family care (family leave);
• Up to 16 weeks combined family and medical leave; and
• Up to 2 additional weeks for certain pregnancy complications. Payments are funded by premiums from employees and employers, and the ESD administers the PFML program.

2019 Amendments to PFML

Topping off PFML Benefits

As initially drafted, PFML prohibited an employer from allowing an employee to top off PFML with existing employer-provided paid time off leave benefits. When benefits start in 2020, an employer may allow an employee to take “supplemental benefit payments” in addition to any PFML.

Although there is no requirement that an employer offer “supplemental benefit payments,” if an employer chooses to provide supplemental benefits, they cannot require that an employee use the supplemental benefits, that choice lies with the employee. The draft Phase Six rules further address these issues (please see below).

Waiting Period

Under the original law, employees were required to satisfy a 7-day waiting period before they could receive PFML, but it was not clear how the waiting period was to be calculated. The amended law clarifies that the waiting period is seven consecutive calendar days, not seven calendar days of leave. The amended law also clarifies that the waiting period starts after an employee takes at least eight hours of PFML.

Voluntary Plans

Under the amended law, employers with approved voluntary plans can now allow new hires to immediately go onto their voluntary plans, without meeting any eligibility requirements. Previously, an employee had to work for 820 hours within the state and 340 hours for the employer with the voluntary plan to be eligible for the voluntary plan unless the employee came from an employer who had a voluntary plan in place.

Phase Six Draft Rules

The Phase Six draft rules provide additional insight into the amendments, including how existing paid time off benefits may be used by employees during PFML leave. However, many questions related to the interplay of FMLA leave and PFML leave remain unanswered despite the fact that the leaves may run concurrent in many situations.

Key provisions of the draft Phase Six rules include:

Supplemental Benefit Payments ¹

Supplemental benefit payments are defined as “payment offered by an employer to an employee who is taking leaving under Title 50A RCW.” This includes but is not limited to “salary continuation, vacation leave, sick leave or other paid time off.”

The draft rules specify employers can offer paid time off to employees taking PFML, but there is no requirement that employers provide paid time off benefits to employees on paid PFML leave. As is noted above, it is the employee’s choice to use any offered supplemental benefits (“[t]he choice to receive supplemental benefit payments lies with the employee.” RCW 50A.04.045(2)). Significantly, under the FMLA employers can require that employees use paid time off benefits while taking FMLA leave. Employees who are eligible for PFML could also be eligible for FMLA and could be using the leave concurrently. The draft rules provide no guidance on the supplemental benefit use where there is concurrent use of FMLA and PFML leave. Further guidance on how the supplemental benefits issues will interplay with the FMLA is necessary.

The draft rules specify employers offering paid time off to employees during PFML must “provide information” about the supplemental benefits to the state. However, the draft rules also state there is no reporting requirement (see below). Additional clarification is needed about what information needs to be provided by employers to the ESD.

Effect of Supplemental Benefits on PFML Benefit Payments and Employer Requirements ²

Pursuant to the draft rules, supplemental benefit payments are excluded from the definition of wages and need not be reported to the ESD. The draft rules provide that supplemental benefit payments “will not reduce an employee’s weekly benefit payment,” meaning employees can receive amounts in excess of their normal compensation from a combination of PFML and supplemental benefits from their employer while on PFML leave. As is noted above, further clarification on the reporting issue is needed.

Waiting Period ³

The draft rules define the benefits waiting period as “the first seven consecutive calendar days beginning with the Sunday of the first week an eligible employee starts taking paid family or medical leave.” An employee satisfies the waiting period by taking at least 8 consecutive hours of leave during the week of the PFML claim.

An employee will not receive a benefit payment for hours claimed during the waiting period. In addition, other than leave for birth/placement of child, “an employee must only meet the requirement of one waiting period in a claim year.”

Employee Eligibility for Voluntary Plans ⁴

Employers may now waive eligibility requirements (820 hours worked during a qualifying period/340 hours worked with employer) in whole or in part in order to allow employees to be eligible for benefits through a voluntary plan. This means new employees could be eligible to participate in an employer’s voluntary plan without first working for the employer for 340 hours, even without meeting the state’s overall eligibility requirement of working 820 hours within the qualifying period. Additional rules exist regarding employees with multiple employers as well as updates related to the withdrawal and termination of voluntary plans.

Calculation of Weekly Benefits ⁵

The Phase Six draft rules provide additional information regarding calculations of weekly benefits based on the employee’s average weekly wage and the state’s average weekly wage.

Appeals and Procedures

Information regarding the appeals process for aggrieved persons receiving adverse decisions from the ESD, an approved voluntary plan, etc., are also included. The model rules of procedure were adopted.

Next Steps on Rulemaking

The draft Phase Six Rules are scheduled to go into effect on approximately December 20, 2019. ESD will be holding two public hearings regarding the rules on November 7 and November 12, 2019.

Additional rulemaking on Phase Five rules is also ongoing. More information about PFML rulemaking can be found here.

Employer Considerations

• Review existing PTO, vacation, sick time and other paid time off policies and consider whether or not to offer these paid time off benefits to employees who are on PFML leave.
• Consider whether any existing benefits, such as paid parental leave or PTO, should be modified to take PFML leave into account.
• Examine existing FMLA policies to consider implications PFML may have, including whether the use of existing paid time off benefits is required during leave.
• Determine whether voluntary plans warrant modification to waive eligibility requirements for employees

DWT Webinar

Davis Wright Tremaine attorneys continue to monitor the PFML rulemaking process. In addition, complimentary webinars regarding updates to the PFML are hosted periodically. Please visit the Virtual Events page for more information about upcoming seminars, roundtables and events.

FOOTNOTES

1 WAC 192-500-180

2 WAC 192-620-030

3 WAC 192-500-190

4 WAC 192-530-030

5 WAC 192-610-051