It’s that time of year again where the IRS and the States start updating tax laws and implementing new ones. There is one major new law that will effect all employers in the state of Washington that you need to plan for. Last fall Initiative 1433 was passed by voters which made into law:
1. Employers must provide paid sick leave to employees beginning January 1, 2018 2. Increases Minimum Wage over the next several years. 3. Ensuring Tips and Service Charges are given to the appropriate staff 4. Protects employees from retaliation when exercising their rights under the Minimum Wage and Labor Standards Act
For most of you #1 above will be the most important part of this initiative.
The Department of Labor and Industries is still in the process of developing the rules and reporting requirements for this and I will be attending their workshop at the end of the month to learn more about what will be required from you all.
This is what I know for now:
• Employees will accrue paid sick leave at a minimum rate of 1 hour for every 40 hours worked beginning on their first day of employment
• This includes part time and full time employees
• There is no exemption for small business (meaning every employer must offer this, unlike the health insurance laws where you have to have more than 50 employees to fall under the law)
• Paid sick leave must be paid to employees at their normal hourly rates
• Employees are entitled to use accrued sick leave after 90 days of employment
• Unused sick leave of 40 hours or less must be carried over to the following year
• Employees may use their accrued sick leave:
o To care for themselves OR family members
o When the employee’s workplace or child’s school/daycare has been closed by a public agency for any health related reasons
o For absences that qualify for leave under the state’s Domestic Violence Leave Act
o Employers can allow additional purposes if they choose
• LnI is in the process of developing record keeping and reporting requirements, rules for employees to request this time off, and processes to protect employees from retaliation for lawful use of paid sick leave
What does this mean for you? From what I have been able to find, there will be no way around this so everyone should budget and plan for the cost of employees using their paid sick leave. For some of you this will not be an issue as you already offer paid time off. For those of you who only offer vacation pay, you may want to consider changing your vacation policy to a paid time off policy and communicate that paid time off will cover both vacations and sick days (I’m going to clarify this with LnI to make sure its legal). For those who do not offer any paid time off, then this will definitely be a new and extra cost of doing business.
Other important things to know:
• Minimum Wage will increase to $11.50 starting January 1, 2018, $12 per hour in 2019, and $13.50 in 2020
• Beginning in 2019 the Department of Employment Security will begin administering the Family and Medical Leave bill which will be an extra payroll tax. This bill was passed and allows employees to apply to Employment Security for 12 weeks paid time off for personal illness, pregnancy, or illness of family members. (more to come in 2018 when rules and regulations are developed for this law which is separate from the Paid Sick Leave Law above).
Please feel free to contact us at Whatcom Business Consultants LLC if you have any questions regarding these changes.
Email: kyle@whatcombusinessconsultants.com