Paid Leave Legislative Activity

Paid Medical and Family Leave (bill HF 2) was signed into law by Governor Tim Walz on May 25th, 2023.

• Contributions begin January 1, 2026.
• Benefits go into effect January 1, 2026.

Because it will take some time to set up the program and for premiums to collect enough to cover benefits, Governor Walz and the DFL legislative leaders agreed to draw $668 million from MN’s surplus budget to front-load the program. Premiums will start being collected, and benefits will start being paid, on January 1, 2026.

• Private plans (fully insured or self-funded) that exceed the benefits of the state plan permitted.
• 12 weeks paid leave for employee’s own serious health condition, including pregnancy, care for a family member, including bonding with a new child, related to a family member’s military deployment and instances of domestic abuse of sexual assault. 20 week cap for medical and family leave combined.
• Replacement wages would range from 55% to 90%.
• Funded by 0.7% payroll tax. Employers could charge 50% of the expense to employees. The rate could go up but not until January 2027 and not above a maximum of 1.2 percent.
• Job protected leave and retaliation prohibited.

Washington Senate Bill 5286, signed by the Governor Jay Inslee on April 20, 2023, takes effect July 23, 2023. It is meant to address fund stabilization issues. Currently, premiums are 0.8% of gross wages, and although the law becomes effective on July 23, 2023, the rate will not change until Jan. 1, 2024.

Shortly after September 30th of each year, the agency will calculate the new premium rate for the following calendar year. The employer/employee split will also be calculated at that time and will be included in the announcement from the state agency. The total premium rate will be calculated as follows:(i) calculate an amount that equals 140% of the prior fiscal year's expenses, including the total amount of benefits paid and the state administrative costs;(ii) subtract the balance of the family and medical leave insurance fund (account created in RCW 50A.05.070 for state plan administration) as of September 30th from the amount calculated that equals 140% of the prior fiscal year's expenses; and(iii) divide the difference by the prior fiscal year's taxable wages.

As a result of this new calculation, the solvency surcharge previously enacted and which could be added to the total premium rate in order to provide sufficient revenue for state fund administration has been removed. Instead, the Commissioner must set the total premium rate which must be: (i) adjusted If the Commissioner determines the total premium rate calculated under the new process exceeds a rate necessary to maintain a three-month reserve at the end of the following rate collection year, such that the total premium rate is at the minimum rate necessary to close the rate collection year with a three-month reserve; and(ii) the total premium rate must not exceed 1.20 percent.

Companion Bills H. 4574 and S. 332 were introduced this week, establishing a PFML program (with private plan option).