Calculating benefits under Washington’s paid family leave law
Washington provides a paid family leave program for employees who take time away from work to bond with a newborn or newly adopted child. Calculating how much pay an employee will receive from the Washington program takes a few mathematical steps.
These are the steps:
Determine whether the employee is eligible for leave
Ensure the employee has not been disqualified for leave
Determine the applicable state average weekly wage
Determine the employee’s average weekly wage
Perform the weekly benefit amount calculation
Pay the employee the lesser of Washington’s maximum average weekly wage or the amount derived from the employee’s leave pay benefit calculation
Determine the employer’s supplemental payment
Determine whether the employee is eligible for leave
First, it is important to know that Washington will only pay leave insurance benefits to an employee who has worked at least 820 hours in the state during the “qualifying period.” The qualifying period can be one of two periods of time. Generally, the qualifying period will be the first four of the last five completed calendar quarters. But if the employee is not eligible based on that calculation due to not working enough hours in those months, then the qualifying period is the last four completed calendar quarters immediately preceding the application for leave.
Example: Joan plans to start her bonding leave on September 12. Her default qualifying period is the first four of the last five completed calendar quarters, i.e., April - June of the prior year (first quarter); July - September of the prior year (second); October - December of the prior year (third); and January - March of the current year (fourth). However, if the employee has not worked 820 hours in that period, then the qualifying period will begin in July of the prior year and end in June of the current year. If the employee has not worked 820 hours in either qualifying period, then the employee will not be eligible for paid family leave insurance.
The hours counted towards the 820 threshold include hours worked for any employer — not just the current one from whom the employee is taking a leave of absence. If an employee just started working at your company and is applying for paid family leave, the employee still might be eligible if they worked 820 hours during the qualifying period at prior employers.
Ensure the employee has not been disqualified for leave
There are a few instances where an employee can be disqualified from receiving paid family leave from the state of Washington. An employee may not be eligible in the following circumstances:
The absence was occasioned by the employee’s willful intention to bring about injury to or sickness of thee employee or another, or resulting from any injury or sickness sustained in the perpetration by the employee of an illegal act;
The leave commences before the employee becomes qualified for benefits under the law;
For any period of time during which the employee works for remuneration or profit
In any week when the employee knowingly and willfully made a false statement or representation involving a material fact or knowingly and willfully failed to report a material fact and, as a result, has obtained or attempted to obtain any benefits under the provisions of the law. After that disqualifying week, the employee will be disqualified for an additional amount of time depending on how many covered misrepresentations the employee has made:
An individual disqualified for the first time will also be qualified for an additional 26 weeks beginning with the Sunday of the week in which the determination is mailed or delivered;
An individual disqualified for a second time is also disqualified for an additional 52 weeks beginning with the Sunday of the week in which the termination is mailed or delivered; and,
An individual disqualified for a third time is also disqualified for an additional 104 weeks beginning with the Sunday of the week in which the determination is mailed or delivered.
Any week in which the employee receives unemployment compensation under RCW 50, permanent total disability compensation under RCW 51.32.060, temporary total disability under RCW 51.32.090,or any other applicable federal unemployment compensation, industrial insurance, or disability insurance.
If any of those conditions are met, then Washington’s insurance program may not compensate the employee’s time off in that week. Your company will be left to decide whether the employee qualifies for pay under your program and whether the company will pay 100% of the leave pay without assistance from Washington’s program.
Determine the state average weekly wage
Next, to calculate an employee’s leave pay, you need to know Washington’s state average weekly wage.
In 2021, the average weekly wage was $1,586. This is the amount that Washington will use to determine paid family leave benefits through the end of 2023.
In 2023, the average weekly wage rose to $1,618. This is the amount that will be used to calculate paid family leave benefits filed on or after January 1, 2024.
Determine the employee’s average weekly wage
The next step is to determine the employee’s average weekly wage. Washington does not pay benefits based on the employee’s base salary or hourly rate. Rather, the state will look back at all the wages the employee earned during the qualifying period (including commissions, bonuses, and other incentives) and base its leave pay benefit calculation on the total enumeration paid to the employee. This includes pay the employee received from other employers (i.e., second jobs) and prior employers — not just the employer from whom the employee is taking leave.
To determine the employee’s average weekly wage, an employer must first determine the wages the employee earned from all sources in the four quarters of the qualifying period. Then, the employer must identify the two quarters when the employee made the most money, add them together, and divide by 26 weeks. This is the employee’s average weekly wage.
Example: An employee earned the following amounts during the four quarters in the qualifying period:
Q1: $27,450
Q2: $32,780
Q3: $39,622
Q4: $31,244
The employee earned the most money in Q2 and Q3. The sum of those quarters is $63,402. Dividing that number by 26 weeks gives us the employee’s average weekly wage during the qualifying period, $2,438.54.
Perform the weekly benefit amount calculation
Once you calculate the average during the qualifying period, you must perform some additional calculations set forth in Washington’s leave statute, RCW 50A.15.020(5), to determine the employee’s weekly benefit amount.
How the weekly benefit amount is calculated depends on the amount of the employee’s average weekly wage and how it compares to the applicable state average weekly wage.
If the employee’s average weekly wage is equal to or less than one-half of the state average weekly wage, then the benefit amount is 90% of the employee’s average weekly wage.
If the employee’s average weekly wage is greater than the state average weekly wage, then the benefit amount is the sum of (1) 90% of one-half of the state average weekly wage, plus (2) 50% of the difference of the employee’s average weekly wage and one-half of the state average weekly wage.
Example: Let’s continue with the example above, where the employee’s average weekly wage during the qualifying period was $2,438.54.
Assume the employee’s leave will begin in 2023. The average weekly wage of $2,438.54 is greater than the state average weekly wage for 2023 ($1,618).
To calculate the weekly benefit amount, we take 90% of one-half of the state average weekly wage (.9 * .5 * 1618 = $728.10) plus 50% of the difference of the employee’s average weekly wage and one-half of the state average weekly wage (.5 * ($2,438.54 - .5 * $1,618 = $814.73)). The sum ($1,542.83) is the weekly benefit amount.
Account for Washington’s minimum and maximum benefit amounts
Washington has set minimum and maximum weekly benefit amounts that an employee might receive. If the calculation of the weekly benefit yields a number that is less than or greater than the minimum or maximum, then the benefit will be adjusted to the minimum or maximum amount.
Through the end of 2023, the minimum benefit paid by Washington is at least $100 and the maximum benefit amount is $1,427. So, if the employee’s benefit calculation is less than $100, then Washington will pay $100 each week. If the benefit calculation yields a number greater than $1,427, then Washington will pay $1,427. If the benefit calculation falls between $100 and $1,427, then that is the average weekly wage for the employee.
Example: In the example above, the employee’s weekly benefit amount calculation totaled $1,542.83. Because this exceeds Washington’s maximum for 2023, the weekly benefit amount will be reduced to $1,427.
For leaves that begin in 2024, the weekly benefit amount will increase to $1,456.
Q1: $16,546
Note: If the employee owes child support obligations, the department must deduct and withhold an amount from the benefits for child support.
Determine the employer’s supplemental payment
After determining the weekly benefit amount that Washington will pay, the employer can decide on the supplement amount that it wishes to pay. This supplemental payment is not required by law. An employer may want to make a supplemental payment to ensure employees in Washington have earnings that are equitable in comparison to other states.
The amount the employer will pay, in addition to what the employee receives from Washington’s program, will depend on the employer’s leave pay policy. The employer may want to ensure that employees receive 100% of their regular hourly wages based on regular hours worked or their regular salary. In that instance, the employer will want to take the employee’s regular pay and subtract the weekly benefit the employee will receive from Washington to determine the supplemental benefit payment.
Example: Continuing with the example above, imagine the employee receiving the $1,427 maximum weekly benefit from Washington uses paid leave for an entire week. If the employee’s regular salary is $150,000, then the weekly portion of that salary is $150,000 / 52 weeks = $2,884.62. To ensure the employee receives 100% of his or her regular pay from both Washington and the employer, the employer will take the employee’s regular salary ($2,884.62) substract what Washington will pay ($1,427) and pay the difference ($1,457.62).
If the employer simply paid the employee’s full salary ($2,884.62) during the course of the employee’s leave, that would be problematic. Due to the payments the employee receives from the state, the employee would be paid more while on leave then while working.
Another example: Consider another example. Imagine an employee earns the following amounts during the four quarters of the qualifying period:
Q1: $9,229
Q2: $9,436
Q3: $11,261
Q4: $9,201
The employee’s two highest quarters were Q2 and Q3. The sum of those quarters is $20,697. Dividing that number by 26 gives us the average weekly wage, $796.04.
The employee’s average weekly wage ($796.04) is less than one-half of the 2023 state average weekly wage ($1,618 / 2 = $809; $796.04 is less than $809). Therefore, we calculate the weekly benefit by calculating 90% of the employee’s average weekly wage (.9 * $796.04). The weekly benefit is $716.44.
Because the employee’s weekly benefit calculation amount falls between Washington’s minimum and maximum payments ($100, $1,427), the weekly benefit that Washington will pay is $716.44.
What if the employer wants to supplement Washington’s leave insurance payment during the course of this employee’s leave so that the employee receives his or her regular wage when all the payments from all sources are totaled?
The employer would first need to determine the employee’s regular wage. Imagine the employee is paid $21 per hour and works 40 hours per week, so the typical weekly earnings are $840. To supplement the employee’s pay, the employer would take the regular weekly wage ($840) subtract the weekly benefit paid by Washington ($716.44). The difference ($123.56) is the amount the employer will pay to supplement Washington’s leave payments.
Supplementing Washington’s payments can ensure the employee is paid equitably in comparison to employees in other states. If the employer pays employees in other states without leave insurance programs 100% of their regular wages during the course of a family leave, employees in Washington would be underpaid without supplemental payments. Conversely, if the employer simply contained to pay employees in Washington their regular wages while on a leave of absence, the employees would be overpaid in comparison to their peers in other states who do not receive leave insurance payments.
What if the employee in Washington uses paid family leave for a portion of a week? For example, the employee might start or end a paid family leave halfway through a workweek, or might take paid leave intermittently. How to calculate the supplemental leave payments in those circumstances is a topic for another post.
Takeaways
Washington provides paid family leave to eligible new parents. The amount those parents receive is based on the employee’s average weekly wage. The calculation of their weekly benefit will depend on whether the average weekly wage is less than or equal to one half of the state’s average weekly wage.
Washington’s statute allows employers to supplement the leave payments an employee receives from Washington. Employers can calculate the amount paid by Washington and make supplemental payments.
EquiLeave helps employers calculate supplemental leave payments so employees can enjoy fair and equitable family leave. Click the link below for more information.
