Guest post from Nanny Parent Connection member Becki Brack who is a Partner and Certified Public Accountant with Growing Numbers Accounting and Bookkeeping. Thanks Becki for helping everyone stay up to date on the newest employment law change coming in 2019. You’re the best!
Beginning January 1, 2019, Washington’s Paid Family & Medical Leave program will launch and premiums are required to be paid to fund the program. Employee benefits will be available beginning in 2020. The program is generally funded through premiums paid by employers as well as an employee premium.
From https://paidleave.wa.gov/about: “Starting in 2020, Washington will be the fifth state in the nation to offer paid family and medical leave benefits to workers. The program will be funded by premiums paid by both employees and many employers, and will be administered by the Employment Security Department (ESD). This insurance program will allow workers to take up to 12 weeks, as needed, when they welcome a new child into their family, are struck by a serious illness or injury, need to take care of an ill or ailing relative and for certain military connected events. If workers experience multiple events in a given year, they may be eligible to receive up to 16 weeks, or up to 18 weeks if the employee experiences a serious health condition with a pregnancy that results in incapacity.”
Almost all Washington employers will be required to withhold a new tax from their employees’ paychecks, and this includes household employers.
Key Details of the Washington Paid Family Leave Program
- The total premium for 2019 is 0.4% of an employee’s gross wages.
- Employers with fewer than 50 employees are not required to pay the employer portion of the premium.
- The employee premium is 63% of the total premium (or 0.252% of gross wages) and should be withheld from employees’ paychecks beginning January 1, 2019.
- An employer can elect to pay all or some of their employees’ share of the premium on their behalf.
- The other 37% of the total premium is the employer portion, but again, businesses with fewer than 50 employees are not required to pay this employer portion.
General information can be found here. Important information for employers can be found on the “Employers” tab of that website.
How much does it cost my nanny (or myself, if I choose to pay the employee premium on behalf of my nanny)?
For every $100 in gross wages paid to your nanny, the employee premium for the program is approximately $0.25.
Example: If you pay your nanny $20 per hour for 40 hours per week of child care, all 52 weeks of the year, gross wages for the year are $41,600. The employee portion of the tax will be approximately $105 for the entire year.
Click here to check out a handy premium calculator the Washington Employment Department has created, so you can do your own estimating of the tax, including seeing how much the optional employer portion would be.
What are my responsibilities as a household employer?
Employers will be responsible for:
- Reporting employee wages, hours worked, and other information for all household employees beginning April 2019
- Collecting and remitting premiums
- Posting a mandatory poster to notify employees of the program prior to January 2020
IMPORTANT: If you fail to start collecting the premium from your employees, you cannot go back and collect it in arrears per the law. Instead, you (the employer) will become responsible for paying the premium yourself.
Regarding reporting starting in April 2019, what information do I need?
You will need the following information on hand to file the quarterly reports, the first of which is due in April 2019 and you need to start tracking wages and hours beginning January 1, 2019:
- Your UBI number (WA state business ID number)
- Business name (usually just your name)
- Total premiums collected from employees
- Name of the person that prepared the report
For each employee, you will need:
- SSN or ITIN
- Full name (first and last name plus middle initial)
- Hours worked in the reporting quarter
- Wages paid in the reporting quarter
For Growing Numbers’ nanny payroll clients, Growing Numbers does all the tracking, reporting and remittance of this tax (and others). The employer may, optionally, pay the employees’ premium themselves or a portion of the premiums, and Growing Numbers can handle those calculations, collections, and tracking. If you’d like us to take care of this for you, click here!
What is the benefit of paying the optional employer premium?
Businesses that average fewer than 50 employees must pay the employer portion of premiums to be eligible for grant assistance from the state to help cover the costs of hiring temporary employees when an employee uses Paid Family and Medical Leave.
Where do I go to manage my account related to this program?
Secure Access Washington is a central login that allows you access to the online services of multiple state agencies. It’s often referred to as SAW. You will need a SAW account (very easy to sign up), and then add a service to your SAW account called Employer Account Management Service (EAMS) which is provided by the Employment Security Department.
The official WA Paid Family Leave Program website points out that the report type for this program is not yet available until closer to April 2019, and the EAMS service is being optimized to make the process easy for employers. All that to the point that the EAMS online service may change between now and April 2019, the first reporting month for the program.
Note from Laura: The husband and I plan on beginning the tracking of wages, hours, etc. in January 2019 and then setting up our Paid Family Leave account around February/March 2019.
Should employers cover the employee premium for their nanny/nannies?
It is entirely optional for the employer to cover any portion of the employee premium (0.252% of gross wages) that is due under the WA Paid Family Leave Program. Since this is a new program that starts on January 1, 2019, there is no data available yet to determine what percentage of employers are deciding to cover a portion or all of the employee premium. The decision is up to each individual family and the nanny.
For more information, contact Becki Brack at Growing Numbers Accounting and Bookkeping by clicking here.
For those that use our Pay Calculator, we will be updating that to include this new tax next week. we have updated the calculator so that you can now calculate the correct Paid Family and Medical Leave premium to withhold!