Paid Family Medical Leave Legislative Review

The Joint Legislative Audit and Review Committee (JLARC) recently conducted a review of the state's Paid Family and Medical Leave (PFML) program, which is managed by the Employment Security Department (ESD). The program provides paid leave for both public and private sector employees, financed by premiums from employers and employees. JLARC’s preliminary report emphasized persistent financial difficulties, with program expenses exceeding revenues.

Here is a quick summary of the preliminary report:

The Paid Family and Medical Leave (PFML) program in Washington, established in 2017, provides paid leave to employees for various situations like serious health conditions or bonding with new children. Managed by the Employment Security Department (ESD), the program allows eligible employees those who have worked at least 820 hours in the past yearto claim up to 12 weeks of leave, increasing to a maximum of 18 weeks for multiple qualifying events within a year. Benefits and premiums are determined by a statutory formula, with employees and employers contributing based on gross wages, but the current premium rate is not sufficient to cover expenses.
 
As of December 2023, ESD had collected $4. 5 billion in premiums while paying out $4. 2 billion in benefits over more than 700,000 claims. However, financial forecasts indicate that the program may face deficits in upcoming years, with expenses likely surpassing revenues in three out of the next five years. A consulting actuary recommended a more proactive rate-setting approach and maintaining a financial reserve to enhance the program's sustainability.
 
The program has seen a significant increase in application rates, from 168,000 in 2020 to 259,000 in 2023, with a growing approval rate for claims. Payments are calculated based on employee wages relative to the state's average weekly wage. The maximum weekly benefit reached $1,456 in 2024, with an average payment of $878.
 
Despite the successful establishment of core functions, ESD has yet to implement all program requirements, particularly in project prioritization and employer compliance audits. Issues remain with timely customer service; during high call volumes, many calls go unanswered, and ESD struggles to approve benefit payments in a timely manner.
 
The legislative auditor recommends adopting a forward-looking rate-setting strategy, implementing stricter compliance audit procedures, creating performance measures for customer service, and increasing transparency in project prioritization. Overall, while the PFML program has made noteworthy progress, it faces financial sustainability challenges and operational improvements need to be addressed to better serve employees and employers alike.
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The Paid Family and Medical Leave program in Washington state plays a vital role in supporting employees during critical life events. However, it faces significant challenges related to financial sustainability, program administration, and customer service. Legislative recommendations include adopting a proactive rate-setting approach, maintaining sufficient reserves, enhancing auditing procedures for employer compliance, and implementing performance measures to improve service quality. Addressing these recommendations will help ensure that the PFML program remains effective and sustainable for the future.
 
You can review the complete review the preliminary report here. The final report is expected to be released in early 2025. JLARC is a Washington state legislative committee that works to improve state government. JLARC’s nonpartisan staff research and complete audits as directed by the Legislature. You can learn more about JLARC here. 
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