Washington companies legally must start collecting premiums on January 1, 2019 or be approved for the Voluntary Plan by the deadline December 31, 2018. So why would a company want to apply for a voluntary plan?
To put it simply: competition.
According to the United Nation’s International Labor Organization, the only two countries in the world that don’t guarantee paid parental leave are Papua New Guinea and the United States of America. And, we are rapidly moving to be stricken from that list as multiple states have implemented their own leave laws such as California, New York, New Jersey, and Rhode Island. Next up is the state of Washington where businesses will begin collecting premiums starting January 1, 2019.
Part of the reason for the state level legislation is long overdue support for the data that parental leave benefits children and businesses. Walmart announced they are expanding their leave benefits because they recognize that when workers have stability at work, they can thrive at home. As Jackie Telfair, Walmart’s SVP of Global Compensation, told Harvard Business Review, when workers thrive at home they’ll have better work engagement, performance, and productivity. In other words, Walmart sees parental leave as an investment in the company. Here are some more additional known benefits to a business:
- Women are 93% more likely to be working 9 to 12 months after giving birth than those who didn’t take leave
- Contrary to the myth, 70-90% of the businesses in the states with mandatory parental leave are reporting that they see either a positive or no impact on productivity
- Paid leave policies have an influence on 77% of prospective employees for their choice of where to work
That last point is why companies like Adobe have implemented 26 weeks of parental leave. And they weren’t first, they are upping their benefits to compete with companies like Netflix and Microsoft that had already implemented competitive leave benefits. A big reason for the increased competitiveness is the changing demographics of the American workforce. Women are now breadwinners for 40% of US families with children under the age of 18. Millennials now make up the largest demographic in the workforce and they are starting their families now. Millennials are also a key demographic for Silicon Valley companies and thanks to California state leave laws, those companies had to step up their leave benefits to stand out. New York based companies are also competing for talent in a state with mandatory leave laws, which is why Esteé Lauder is now offering 20 weeks and $20K in fertility treatments.
Now, it’s Washington’s turn. Companies that once competed on leave benefits may now find themselves holding a basic benefits package. In a talent rich and competitive state like Washington, voluntary plans are a way to separate from the pack to attract and retain top talent.
Ok got it. So, what are the key things to know about a voluntary plan?
- August, 2018
- Guide Published
- Customer Care Team taking calls.
- September 17, 2018
- Voluntary plan applications available
- September 18, 2018
- Phase 3 Stakeholder Meeting
- September 31, 2018
- Guide revised with new information
- October 24, 2018
- Phase Two Rulemaking Public Hearing
- October 29, 2018
- Phase Two Rulemaking Public Hearing
- November 2, 2018
- Phase Three Rulemaking Public Hearing
- November 30, 2018
- Guide revised with new information
- December 31, 2018
- Final day for application determination before premiums begin
- January 1,2019
- Premium collection begins
First and foremost, to avoid remitting premiums to Washington as of 1/1/19, employers should have their plan approved by: December 31, 2018. The whole point of a voluntary plan is to offer more than the minimum, so the Employment Security Department (ESD) must approve all voluntary plans and as one would expect, they have to meet or exceed the state requirements in key areas like eligibility, leave duration, job protection, and more. Please be aware that some of the details may change because there are additional rounds of rule making and the final voluntary plan guide is expected November 30, 2018 from the ESD.
Perhaps the next critical thing to know is that having a voluntary plan is NOT the only way to increase benefits from the basic package. Employers could also offer to pay for the employee portion of the state’s leave plan. Some employers may choose this option because it makes their benefits more competitive, and it doesn’t require additional administrative effort.
It’s also worth noting that there are two portions to the voluntary plan: family and medical. Employers can apply for a voluntary plan that covers only one of those two. For example, one company’s workforce might value expanded medical benefits over family and might be able to leverage their existing short term disability benefit as the voluntary plan for medical leave.
For employers that have to compete harder for talent and want a full voluntary plan that covers medical and family leave, there are some key things to note:
- Only employers with a voluntary family leave plan can offer accelerated payments as an incentive to return to work early. For example, if an employee was entitled to 10 weeks of maternity leave, the employer could offer the employee 8 weeks of paid leave and an additional 2 weeks of pay upon returning to work. This option doesn’t reduce the amount due to the employee, but it can shorten the timeline, however, the employee must accept the offer. It also doesn’t shorten the amount of time the employee has job protection. Accelerated options can be complex and employers should refer to the ESD voluntary plan guide and related resources.
- Approved voluntary plans don’t have to start collecting premiums on January 1, 2019. At the time of writing this resource, no collection start dates for voluntary plans have been determined. It’s possible they won’t have start dates, but that is still to be determined.
- For companies whose voluntary plans are not approved, there will be an appeal process. Those companies must implement the state plan until an appeal is approved.
- Approved voluntary plans have extra administrative reporting requirements. One of the reasons for requiring this is that an employee’s benefits are calculated based on past work history, which needs to be recorded so it’s available if they switch jobs to an employer with a state plan. While the reporting tools aren’t expected until April of 2019, the ESD has said that voluntary plan employers should generally record weekly benefit and leave duration information for any employee who takes leave under that plan for reasons that would have qualified for leave under the state plan, and total premiums deducted during a quarter, as well as prepare to report quarterly the following information for each employee:
- Full name
- Social Security number (ITIN if no SSN)
- ZIP code of primary work location
- Job title
- Start date
- Wages paid during that quarter
- Total hours worked during that quarter
- If voluntary plan companies use a third party administrator, the employer still carries the legal burden of satisfying the requirements of the program.
- Employees must work 340 hours for the employer before they become eligible for the voluntary plan. The state has said this is a statutory requirement and the employer cannot be more generous. Until the 340 hours are met, the employee can still collect benefits from the state.
- Employees are job protected under voluntary plans once they work 9 months and 965 hours (more generous provisions than the state plan).
- Here’s the latest Voluntary Plan Guide v1.1 from ESD.
What will make a voluntary plan stand out?
At its simplest, a strong voluntary plan will exceed the state requirements, which are:
- Employee Eligibility: Covers all eligible employees
- Employee Premium Amount: 0.4% Gross Wages * (.3333 for family leave + .3000 for medical leave)
- Leave Duration: Up to 12 weeks of family or medical leave (16 weeks if combined), plus 2 weeks from pregnancy complications.
- Weekly Benefit: Workers whose average weekly pay is $595 (half the 2017 state average income, which will be recalculated every June) or less will be paid 90% of their average weekly pay. For workers whose average weekly pay is greater than than $595, in addition to the first tier, they will also receive 50% of their weekly average pay that is greater than $595.
- Job Protection: For companies using the state’s plan and that are larger than 50 employees, when an employee with 12 months tenure and 1,250 hours worked returns from leave, they are entitled to their previous job or an equivalent role in terms of pay, benefits, and other terms and conditions of employment. For companies with a voluntary plan any size employer has to protect leave if the employee has worked for them 9 months and 965 hours.
- Health Benefits While on Leave: Must maintain health benefits while on leave in accordance to FMLA
First movers have been competing heavily on leave duration and the amount of pay they cover. Large companies have been ensuring they nail the details that support a diversity of family situations for broad appeal. Smart companies have also recognized that simply having the benefits isn’t enough. It can be challenging to explain *and show* how a shorter leave duration with a higher percentage of income covered could mean more total compensation for the employee. Rumors and myths can nullify the intended value and hard work for strong leave policies if they are clunky to navigate and use. LeaveLogic has been helping leading edge companies like Slack, Pandora, and Hotel Tonight put their leave benefits in a self-serve software showcase, rather than burying them in legalese. Before an employee discloses their life event, she or he could discretely login to LeaveLogic, answer a few questions and an algorithm will combine and personalize all of the choices available to them. Once a leave plan has been created, the employee can stay on task for things like submitting third party forms using a dashboard that is automatically generated for them based on their plan.
Contact us for more information about how LeaveLogic customers streamline the leave planning process by providing employees with self-serve tools.
“LeaveLogic has helped our team access and understand our parental leave policies better. It has also helped our employees better visualize leave time and pay so they can plan more accurately. LeaveLogic has allowed our People Ops team to spend more time supporting employees and helping them transition as they expand their families!”