2022 Washington Minimum Wage, Other Rates Jump, Plus Info on Long-Term Care Act
The Washington 2022 minimum wage and other payroll-related rates will increase at the beginning of the year. Inflation is behind some of the bumps, while some rate hikes are phasing in according to pre-established timelines.
2022 Washington Minimum Wage: $14.49 an hour
The Department of Labor & Industries has set the 2022 minimum wage at $14.49 an hour, up from $13.69. Washington voters approved Initiative 1433, with the intent of raising that state’s minimum wage to $13.50 an hour by 2020. The law ties raises from that point on to inflation. L&I uses the federal Consumer Price Index to calculate each increase. The jump in prices we’ve seen this year has translated into an 80-cent wage increase from this year to next.
Minimum Salary Rising, Too
Salaried workers are exempt from overtime pay, right? Not necessarily. Salaried executive, administrative, and professional workers, as well as computer professionals, must earn a minimum salary to be exempt. Starting last year, L&I requires those workers earn a multiplier of the minimum wage. For 2022, companies with fewer than 50 employees must pay their salaried workers 1.75 times the minimum wage. That translate to at least $1014.30 a week or $ 52743.60/year. This is now the same rate as companies with more than 50 employees paid this year.
The state is phasing in the multiplier approach to minimum salaries. The target is to reach 2.5 times the minimum wage in 2028. After that, increases will link to the CPI. The new policy was forged following policy meetings and several public hearings beginning in 2018.
Paid Family & Medical Leave Deduction Increasing
The Employment Security Department administers the Paid Family & Medical Leave program. Which makes sense, since PFML works similar to unemployment insurance. Workers pay money into the system, then apply to receive PFML pay when a serious illness strikes them or a loved one they must care for. A new baby also makes you eligible.
The premium is .6 percent of gross pay. Workers are responsible for 73.22 percent of that via a payroll deduction in 2022 – a greater proportion than this year. Employers are responsible for the remainder, but companies with fewer than 50 employees don’t have to pay (unless they want to). If you’re self-employed or a member of a federally recognized tribe, you don’t have to pay. But you can opt into the program.
WA Cares, the Long-Term Care Insurance Program
As of this writing, Washington state is starting a new .58-percent payroll tax on employees’ wages at the beginning of the year to finance the WA Cares Fund. The fund will pay for long-term care insurance for Washington workers (you can read more about it in our earlier blog post[https://andrewstaxaccounting.com/new-long-term-care-tax/]). Earlier this month, members of the legislature and Gov. Jay Inslee discussed delaying the start of the program due to a lack of clarity on several points. But thus far, they haven’t done anything concrete, and at this point the tax will start accruing January 1, 2022.
UPDATE, December 17, 2021: Inslee and the Washington state legislature have agreed to delay the start of collecting payroll taxes for the WA Cares program. Legislators want to fine tune the program with tweaks to benefits and other issues. They are also likely to extend a new, later deadline to opt out of the system.
As mentioned in the earlier blog post linked above, workers can opt out if they have their own long-term care policy in place. At this point, due to regulations as well as an avalanche of applications from Washington residents, it’s basically impossible to get a policy in time to avoid paying the tax at the start of the year. However, you will still be able to opt out at a later point, if you’re able to buy your own policy. But you’ll still be subject to the tax for the rest of the quarter in which you start your policy.
L&I and Unemployment: We’ll See
The Department of Labor & Industries (worker’s compensation) and the Employment Security Department (unemployment insurance) have started sending out their notices to individual companies, advising them of the tax rates for 2022. Both rates arise from the number of claims made by current or former employees. The more claims made, the higher the rate. It’s possible your rates will stay the same, or even go down! But in the case of unemployment, the state is still reeling from the number of claims that came in tied to the pandemic. So decreases are pretty unlikely, and raises are definitely a possibility.
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