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By: Stephanie Salmon CPA

WA State Paid Family Medical Leave (PFML) is a new statewide insurance program that started 1/1/2019 and obligates employers to manage funding via employee withholding. Timely filing and paying of premiums are still required during this time of crisis so the department can verify eligibility of employee claims and pay benefits in a timely fashion. The state is also offering more leniency to employers who are unable to file timely due to COVID-19, which includes the waiver of penalties for late responses.

Which employers are required to participate?
In Washington State virtually all employers (private and public) are required to participate. There are a few exceptions: federal and tribal employers, some employees subject to collective bargaining agreements and self-employed individuals.

What defines a small business employer?
Small employers have fewer than 50 employees and do not have to pay the employer portion of the PFML premiums.

What employers qualify as self-employed?
You are self-employed if you are:
A sole proprietor
A joint venture or a member of a partnership
A member of a limited liability company (even if you file your federal return as an S-Corporation)
An independent contractor 
Otherwise in business for yourself.
Corporate officers however are not considered self-employed.

Are S-Corporation shareholders required to participate in Paid Family and Medical Leave?
Yes, unless – the business was originally established as an LLC and simply reports taxable income for federal purposes as an S-Corporation.

Corporations and S-Corporations (originally established as an S-Corporation for state purposes) - If the shareholder receives compensation from the corporation in exchange for services, the shareholder is required to participate as an employee.
Limited Liability Companies (LLC’s) - Members of an LLC are exempt from participation in the program even if they take a wage from their LLC. Owners of a sole-proprietorship or partnership and LLC members are not required to participate but can elect coverage.

Employers regardless of size have a responsibility to report employee wages, hours worked, and other information for all employees and collect and remit premiums on a quarterly basis.