How does Paid Leave work with small businesses?

  • Are small businesses exempt?

    Businesses of all sizes are part of this program.

    Even if you are exempt from FMLA or Unemployment Insurance (UI) requirements, you are more than likely required to participate in this program. The only significant exemptions for Paid Family and Medical Leave are federal employers and employees, federally recognized tribes and self-employed people (including independent contractors, sole-proprietors, partners and joint venturers). Federally recognized tribes and self-employed workers may opt in to the program.

    Small businesses with fewer than 50 employees are exempt from paying the employer portion of the premium.

    • Small businesses must still withhold their employee's portion or cover it on their behalf.
    • Businesses of all sizes must fulfill all reporting requirements.
    • Employees at small businesses do not pay more than 63.333 percent of the total 0.4 percent and they are still fully covered by the program. 

    Read more about calculating premiums or estimate your premiums using our premium calculator. Please note: Premiums should be withheld from each paycheck. Employers cannot collect missed premiums in later pay periods.

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  • How is business size calculated?

    ESD will calculate your business’s size on an annual basis Sept. 30 of each year. It is based on your average employee headcount over the previous four quarters as reflected in the reports you submit to ESD. It is not calculated by FTE positions.

    Business size calculation for 2019 only:

    • ESD will determine the size of your business based on your first quarter report (Jan. – March), and this is the number ESD will use for 2019.
    • On Sept. 30, 2019, ESD will average the number of employees reported over the previous quarters to determine business size for calendar year 2020.
    • You won’t receive ESD’s calculation of your business’s size until we receive your Q1 and Q2 reports in July or August 2019. However, tracking the headcount of your employees for the first quarter of 2019 will give you the best indication of whether you will need to pay the employer portion of the premium.
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  • Are independent contractors covered?

    Any self-employed person may opt-in to the state plan. This includes sole proprietors, independent contractors, partners and joint ventures. When electing to use the state plan, self-employed persons must participate for an initial period of three years, and one year thereafter.

    Self-employed people who choose to participate must cover the employee share of the premium and are required to work 820 hours in the qualifying period to be eligible for benefits.

    For more information regarding self-employed persons using the state plan, see the RCW here: Elective Coverage – Self Employed.

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  • Is there assistance for small business?

    Grants are available for small businesses to help cover the costs of hiring temporary employees when a member of your team uses Paid Family and Medical Leave. To be eligible for these grants, your business must average 150 or fewer employees. Businesses that average fewer than 50 employees must opt-in to the program and pay the employer portion of premiums to be eligible. The opt-in process will be available in 2020, so employers and employer agents should not submit the employer portion at this time.

    Grants of up to $3,000 are available and can be issued 10 times per year to a single employer. A business must apply for these grants. More information about the application process will be available in 2020.

    A grant of $1,000 is available to businesses who experience significant wage-related costs due to an employee’s leave when using Paid Family and Medical Leave.

    You can learn more about Small Business Assistance in the RCW here.

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