PFML Amendments Signed Into Law: On April 3, Governor Jay Inslee signed Substitute House Bill 1399, amending Washington’s Paid Family and Medical Leave Act (PFML), administered by Washington’s Employment Security Department (ESD). The PFML Amendment was largely intended to address technical corrections and provide clarification. But in doing so, it also made a major change in how Washington employers must administer leave for employees using Washington PFML.
Washington’s PFML, enacted on July 5, 2018, is one of the most expansive state paid leave programs in the nation, as we explained in our previous update, What Employers Need to Know About Washington's New Paid Family and Medical Leave Insurance Law. The law provides up to 18 weeks of paid leave insurance benefits to eligible employees under ESD’s system.
Supplemental Benefit Payments. Under the PFML Amendment, employers may allow employees using PFML to receive “supplemental benefit payments.” This term is defined to mean employer-provided paid vacation, sick time, paid parental leave, or any other paid time off. Accordingly, the PFML Amendment allows employers to permit employees to top off ESD’s benefits with employer-provided supplemental benefit payments. This allows employees to receive up to 100% of their wages during PFML leave. This is helpful to employees because PFML benefits are capped at $1,000 per week.
Employee’s Choice. Here’s the rub. Under the PFML Amendment, employers are now prohibited from requiring that employees use employer-provided supplemental benefit payments during PFML. The PFML Amendment is explicit: “The choice to receive supplemental benefit payments lies with the employee.” This will dramatically affect how employers administer leaves under the federal Family and Medical Leave Act (FMLA), and employer paid time off policies, as we explain below.
Employees Can Now Stack Paid Leaves: The recent PFML Amendment extends the total amount of time that an employee may be absent from work with pay if an employee chooses not to use available supplemental benefit payments, and instead saves those benefits to use after PFML is exhausted.
Impacts to FMLA Leave: While PFML runs concurrently with FMLA leave in many cases, the PFML Amendment will impact employers’ FMLA policies. Under FMLA regulations, employers may require employees on FMLA leave to use accrued paid leave benefits during FMLA leave. Many employers take advantage of this because it helps reduce the total amount of time off that an employee may take for FMLA-qualifying reasons. Because the Washington PFML Amendment no longer allows employers to require employees to use accrued paid leave during PFML, employers ostensibly may no longer require use of paid leave during FMLA if the FMLA leave is also PFML.
Impacts to Paid Parental Leave Policies: The Amendment also creates challenges for employer-provided paid parental leave benefits. Employers can supplement PFML benefits to ensure employees on PFML leave related to the birth or placement of a child receive their full weekly compensation (recall PFML is only a partial wage replacement benefit). However, now that employees can choose whether to use accrued paid leave benefits to supplement their PFML benefits, employers may be unwittingly offering more paid time off than they intend. An employee could choose not to use paid parental leave benefits during PFML and save parental leave to use after she exhausts PFML. This could result in an employee receiving several additional weeks or even months of paid leave.
What Employers Should Do Now: Washington’s PFML program goes live on January 1, 2020, when ESD will begin granting benefits to employees. Employers should act now so that they are prepared. Employers with Washington operations should:
- Review their leave policies to ensure that they comply with PFML, including policies designed to implement the federal FMLA.
- Consider whether to top off PFML with employer-provided supplemental benefit payments.
- Evaluate paid parental leave policies to determine whether benefits are more generous than intended when they supplement benefits provided by ESD under the PFML.
- To avoid unintended consequences, consider having your policies reviewed by experienced legal counsel, especially if your employee handbook has not been recently reviewed.