Washington’s PFML program, enacted in 2017 and implemented in 2020, is facing a potential deficit for the second time in four years. The program allows people to take paid time off from work if they have a serious health condition, are caring for family members, or have a new child. Employers and employees share the tax burden to cover program costs and benefits. Maintaining this shared tax responsibility, as originally negotiated, has been a key priority for the association.
The PFML program launched during the pandemic and incurred significantly higher costs than anticipated. Initially, the tax rate was 0.6%. In 2022, the Legislature increased the tax rate to 0.8% starting in 2023 and appropriated $200 million of federal COVID relief funds to the program.
The tax rate is determined by a formula that considers recent program usage and the amount in the PFML fund. Benefits are also adjusted annually to reflect overall wage growth in Washington State. Under the tax rate formula, the $200 million appropriation led to a tax rate adjustment from 0.8% to 0.74%. However, benefit costs continued to increase beyond expectations.
The number of people approved for benefits increased from 112,737 in 2020 to 210,268 in 2023. In 2023, the PFML program paid out $1.5 billion in benefits, a 24% increase over the previous year. Approved applications increased by 14% from 2022 to 2023, and the average weekly payment to eligible workers rose by 7%.
Rose Gundersen, Vice President of Operations and Retail Services, was recently appointed to the Paid Family and Medical Leave Advisory Committee. This committee, which includes representatives from business, labor, the Legislature, and state agencies, is tasked with reviewing operational data from the PFML program and making recommendations for legislative and/or administrative actions to address fiscal and policy issues.
WR will closely monitor and provide input to the committee as it scrutinizes PFML data and develops recommendations for the 2024 Legislature.
