The Washington Paid Family and Medical Leave (PFML) Program, which is administered by the Employment Security Department (ESD), provides partial wage replacement benefits to employees on leave for specified family and medical reasons. An eligible employee may access PFML benefits for a qualifying event if the employee worked at least 820 hours during a qualifying year. The 820 hours can be satisfied in one or more positions with one or more employers. An eligible employee can access up to 12 weeks of medical leave or family leave benefits, or up to 16 to 18 weeks of combined medical and family leave benefits in a year. An eligible employee may receive benefits amounting up to 90 percent of their wages, subject to a weekly maximum, which is $1,647 in 2026.
Premium.
The PFML Program is funded through premiums paid by employers and employees. Employers collect the premium and remit the funds to the ESD on a quarterly basis, which are then deposited into the Family and Medical Leave Insurance Account (Account). The premium is imposed upon each employee's taxable wages up to the Social Security maximum taxable earnings cap, which is $184,500 in 2026. The total premium rate has two components: a family leave share and a medical leave share. The split between the shares is based on the percentage of paid claims in each category in the previous year. For the medical leave share, employers with 50 or more employees pay 55 percent, and employees pay 45 percent. Employers with fewer than 50 employees are exempt from paying premiums. For the family leave share, employees pay 100 percent unless the employer chooses to pay a portion.
The total premium rate for combined family leave and medical leave benefits is established through a statutory lookback formula and adjusted annually by the ESD. On or around October 20 of each year, the ESD must calculate the total premium rate for the following year, as follows:
The total premium rate is capped at 1.2 percent. The total premium rate must be adjusted when the ESD determines the calculation based on the formula exceeds a rate necessary to maintain a three-month reserve. "Three-month reserve" means the average monthly expenses, including the total amount of benefits paid and the ESD's administrative costs, in the prior 12 calendar months from the date of the calculation, multiplied by three.
The total premium for 2026 is 1.13 percent of taxable wages, of which 71.43 percent is allocated to employees and 28.57 percent is allocated to employers, except employers with fewer than 50 employees are not required to pay the premium.
Office of Actuarial Services Report.
The Office of Actuarial Services within the ESD annually reports to the PFML Advisory Committee on the experience and financial condition of the Account, including the lowest future premium rates necessary to maintain solvency in the next four years while limiting fluctuation in premium rates. These reports must also be sent to the Legislature through 2028. In 2024 and 2025 the Office of Actuarial Services reported that overall claims in the program have been higher than projected, and there will be material increases to the premium rate until it reaches the 1.2 percent cap in 2027. The Office of Actuarial Services recommended exploring shifting from the statutory premium formula to an actuarial rate setting approach.
Joint Legislative Audit and Review Committee Report.
The Legislature directed the Joint Legislative Audit and Review Committee (JLARC) to evaluate certain elements in the PFML Program, including the program administration, accounting practices, and financial stability. In a final report published in January of 2025, JLARC made several findings, including that the statutory premium rate formula does not produce enough revenue to cover program expenses, and that the program will continue to have short-term deficits. The consulting actuary with JLARC recommended using a forward-looking rate setting approach and maintaining a financial reserve sufficient to cover shortfalls.
The statutory formula for setting the total PFML premium rate is removed. Instead, the ESD must annually set the total premium rate based on the annual report provided by the Office of Actuarial Services. The report must include the lowest premium rates necessary to:
"Four-month reserve" means the average monthly expenses, including the total amount of benefits paid and the ESD's administrative costs, using actuarial projection for the following calendar year, multiplied by four.
(In support) This bill requires the ESD to use a forward-looking actuarial approach for setting the premium for the PFML Program. This bill is not designed to address the solvency issues; rather, it is focused on the process for how premiums are calculated. While the bill is a shift from past agreements, members of the business and labor community are supportive, as is the PFML Advisory Committee. The PFML Program is maturing, and it makes sense to align the rate-setting process with best practices in accounting and actuarial principles.
(Opposed) None.
(Other) While shifting to this new rate-setting model is practical, it may conflict with the requirement to build a large four-month reserve. Since it is unlikely that the goal can be reached with the current rate cap, proponents of the PFML Program are going to use the reserve requirement as a justification to raise or remove the 1.2 percent cap later on. The PFML Program should be discontinued in order to allow workers to keep more of their earnings for their own needs; if that is not an option, the state should decrease benefits as opposed to raising the premium rate cap.
(In support) Senator Steve Conway, prime sponsor; Maggie Humphreys, MomsRising; Jan Himebaugh, Building Industry Association of Washington; and James Crandall, AWB.