The Washington State Employment Security Department (ESD) has announced a premium rate increase for Paid Family & Medical Leave (PFML) starting January 1, 2025, from 0.74% to 0.92%. This change reflects a rising demand for benefits, resulting in an unprecedented $1.35 billion in payouts to over 175,000 workers so far in 2024.
Since the PFML program began collecting premiums in 2019, the rate has increased by 130%. Actuarial projections indicate that the premium rate is expected to reach its statutory cap of 1.2% by 2028
The premium, shared between employers and employees, will maintain a similar division as in 2024, with employers contributing 28.48% and employees 71.52%. Small businesses with fewer than 50 employees remain exempt from the employer portion, though they must collect or cover employee premiums.
Washington’s Paid Leave program, funded by these premiums, recalculates its rate annually based on program use. An increase in claims, combined with a legislative investment of $200 million to address a 2023 deficit, initially allowed for a lower premium rate in 2024. However, premium revenue still fell short of rapidly increasing benefit payouts, driving the need for a rate hike in 2025.
This increase will help sustain the program, as more workers become eligible for benefits amid rising post-pandemic employment.
