Washington’s PFML, enacted on July 5, 2018, is one of the most expansive state paid leave programs in the nation, as we explained in our previous update, What Employers Need to Know About Washington's New Paid Family and Medical Leave Insurance Law. The law provides up to 18 weeks of paid leave insurance benefits to eligible employees under ESD’s system. But in doing so, it also made a major change in how Washington employers must administer leave for employees using Washington PFML. For legal advice for your situation, you should contact an attorney.PFML Amendments Signed Into Law: On April 3, Governor Jay Inslee signed Substitute House Bill 1399, amending Washington’s Paid Family and Medical Leave Act (PFML), administered by Washington’s Employment Security Department (ESD). The PFML Amendment was largely intended to address technical corrections and provide clarification. This article summarizes aspects of the law relevant to the Washington Paid Family Medical Leave Program it does not constitute legal advice. In the meantime, if you have any questions or comments about the PFML, please do not hesitate to contact John Way, Alee Soleimanpour, Stephanie Berntsen, or Farron Curry. We continue to follow this issue, and plan to update this summary if the IRS responds to the Employment Security Department’s inquiry. As a result, affected workers should consult their tax advisors regarding the appropriate tax reporting for the receipt of PFML payments. Accordingly, such workers should be aware that benefits received under the PFML may be deemed taxable by the IRS. Moreover, the IRS considers other benefits, including any of the special unemployment compensation authorized under the Coronavirus Aid, Relief, and Economic Security Act, to be taxable. For example, unemployment compensation is taxable income and must be reported on an individual’s income tax return. While the question on these specific facts remains open, similar types of benefit payments are subject to federal income tax. In fact, the Employment Security Department is still waiting for a response from the Internal Revenue Service (“IRS”) regarding the taxability of such payments. This does not mean, however, that workers will receive such benefits tax-free. In making payments under the PFML, the Employment Security Department will not withhold any federal taxes. The amount of paid family leave benefits the employee received during tax year 2020.The worker’s name, SSN, and address as the Payee (including the worker’s Paid Leave account number) and. The Employment Security Department as the Payer (including the Department’s contact information and tax identification number).If a worker received paid leave under the PFML during tax year 2020, the worker has received or should be receiving a Form 1099-G, Certain Government Payments (“Form 1099-G”) from the Washington Employment Security Department for tax year 2020. Since its effective date of January 1, 2020, the Washington Paid Family Medical Leave Program (“PFML”) has provided qualified employees paid time off if such employees miss work due to serious health conditions, needing to care for a family member or new child, or certain military-related events.
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