Washington State does not have state income taxes, but it does have a lot of specific laws concerning payroll. For example, hiring minors requires a special addition to your business permit. The minimum wage is higher than most states, and Seattle and SeaTac have their own minimum wage laws. Thus, the harder part of payroll is onboarding. Once you have your employee set up according to the laws and rules, it’s relatively easy to complete.
While not nearly as complex as taxes for other states like California, Washington State payroll rules can get tricky. Payroll software like Gusto keeps track of all the state regulations, calculates your rates, and files your federal, state, and local taxes. Gusto can also pay your employees by direct deposit, check, and even Gusto Wallet, a mobile-accessible online account allowed by Washington State. Sign up for a free 30-day trial today.
Step-by-Step Guide to Running Payroll in Washington
When you have everything set up, Washington State payroll is not difficult to process. Below are the steps for handling it per federal and state regulations. If you’d like greater detail on general payroll procedures, consult our article on how to do payroll.
Step 1: Set up your business as an employer. At the federal level, you need your Employer ID Number (EIN) and an account in the Electronic Federal Tax Payment System (EFTPS).
Step 2: Register with Washington State. When you apply for your business license (or reapply upon hiring your first employee), the state will send you the information you need to start an account. First, you must create a SecureAccess Washington (SAW) account. Then add EAMS (Employer Account Management System) to your list of SAW services. Find full instructions on the Employment Security Department’s website.
You also need to get a Workers’ Compensation Account (WCA). When you apply for your business license, a state account manager will contact you to set up your policy.
Step 3. Set up your payroll. You need to set up pay runs at least monthly, with additional pay runs for overtime if needed, and determine how you’ll pay your employees. See “Minimum Pay Frequency” and “Different Ways to Pay Employees” later in the article. Another part of your payroll process is determining how you’ll collect/complete payroll forms and other documents you need to maintain compliance.
Step 5: Collect, review, and approve time sheets. Washington State is one of the few states that allow up to 10 days from the end of a pay period to pay employees. This can help when calculating hours but also imparts different deadlines. See “Minimum Pay Frequency” below for details. If you have hourly or nonexempt employees, you’ll need a way to track their work time. It’s common for small business owners to create their own time sheets (consider one of our free templates) or use time and attendance software, some of which have free plans.
Step 6: Calculate payroll and pay employees. Aside from compliance, a big part of processing payroll is performing payroll calculations. You’ll need to total hours worked (use our free timecard calculator to help), gross pay, paycheck deductions, tax withholdings, benefit premiums, etc. As you calculate deductions, especially garnishments, be sure you are not taking more than 50% of an employee’s net pay. An Excel payroll template or payroll software can help automate this step.
Step 7. File payroll taxes with the federal and state governments. Follow the IRS instructions for federal taxes (6.2% of employee paychecks for Social Security and 1.45% for Medicare plus a matching amount from your bank account). Unemployment taxes are also required—both state and federal (6% of the first $7,000 of each employee’s paycheck). Washington does not have state income tax.
For Washington unemployment taxes (SUTA): You must send tax and wage reports each quarter whether or not you owe taxes that quarter. You can use the Employment Account Management System (EAMS) through SAW to file the reports and pay the taxes. Alternatively, you can file the report via EAMS and pay via ePay. Use the most current versions of the Quarterly Unemployment Insurance—Tax Summary (5208A) and Quarterly Unemployment Insurance—Wage Detail (5208B) forms to avoid penalties. To request the latest forms, you’ll need to call the Account Management Center at 855-829-9243. Select Option 4.
Unemployment tax reports are due by the following dates:
For Wages Paid During
Postmarked No Later Than
Jan, Feb, Mar
Apr, May, Jun
Jul, Aug, Sep
Oct, Nov, Dec
Workers’ compensation reports and premiums are filed quarterly.
Step 8. Document and store your payroll records. Washington State requires you to keep employee payroll records for at least three years, similar to federal regulations, except for the federal four-year requirement you have to follow for payroll tax forms. Records must include the following:
- Full name
- Home address
- Date of birth (for employees under 18)
- Employment start date
- Time of day and day of the week the employee’s workweek begins
- Actual hours worked on a daily and weekly basis
- Rate(s) of pay
- Total wages earned (including straight time, overtime, piece work units earned, and bonuses)
- Tips and service charges earned
- Addition to or deductions from wages
- Additional records required for paid sick leave
Step 9. Do year-end payroll tax reports. These are the federal Forms W-2 (for employees) and 1099 (for contractors.) Employees and contractors must have these by Jan. 31 of the following year. In addition, you must send copies of each along with a summary form that totals them all to the IRS. Washington does not require additional state-specific year-end forms.
Washington Payroll Laws, Taxes & Regulations
In addition to state laws, you are still responsible for federal income taxes, Social Security, FICA, and Federal Unemployment Taxes. (FUTA). Social Security is 6.2% of each employee’s paycheck and Medicare is 1.45%. Both the employer and the employee will pay these taxes, each paying 7.65% for the combined Social Security and Medicare taxes.
To learn more about federal requirements, check out our article on FICA and Unemployment taxes. Below, we cover Washington state tax considerations.
Washington State Taxes
Washington state does not have local or state income taxes. That makes things easier, but be sure to calculate unemployment insurance and workers’ comp.
Did you know? Washington automatically recalculates and mails updates whenever tax rates change. The latest mailing was February 2021. Missed it? Check your EAMS account for your latest rates.
Washington SUTA ranges from 0.2% to 6.0%, which doesn’t include the social-cost tax rate of no higher than 0.5% for 2021, and an employment administration fund tax rate of 0.03%. Taxes are against wages up to $56,500. The average rate is 1.06%.
You must file unemployment insurance on your hourly and salaried employees, including domestic workers earning more than $1,000 in a quarter. Below are general exemptions, but they almost all have specific circumstances. Get the complete list with conditions here.
- Small farms making less than $20,000 annually can exempt workers who attend school
- Appraisal practitioners
- Barbers, cosmetologists, massage therapists
- Yard workers
- Outside salespeople
- Musicians, entertainers, small performing artists
- Corporate officers
- Nonresident aliens
- Family employees
- Newspaper vendors
- Travel services
- Work relief/work training
- Patients working in a hospital
- Students or spouses of students working in the university in exchange for financial assistance
- Nongovernment preschool
There are 40 UI tax rates based on the cost of all employment benefits charged to you in the past four years divided by your taxable payroll of the same period. Then, they add a social-cost rate. You can calculate your total tax rate on the Washington State UI tax calculator online.
Workers’ Compensation Insurance
You must purchase workers’ comp through the Department of Labor & Industries (L&I). This will be set up when you apply for your business license. It’s no-fault insurance, protecting you from lawsuits for a work-related injury or illness. Your rates are based on the risk classification assigned to your business, the base rates for the classification, and the experience factor. The average employer cost is reported to be $1.57 per $100 covered in payroll.
For more information on your workers’ comp requirements, check out our guide to workers’ compensation in Washington.
Minimum Wage Laws in Washington State
The minimum wage for the state is $13.61 per hour, with a potential cost of living increase that is announced each September. Tips and service charges are not calculated into minimum wage. Seattle’s minimum wage is $16.69 per hour, and SeaTac’s minimum wage is $16.57 per hour.
The following workers may be exempt from minimum wage:
- Minors 14 to 15, though they must make at least 85% of the stated minimum wage
- Jobs exempt from the minimum wage act
You can apply for a sub-minimum wage certificate for the following workers:
- On-the-job learners, though they must make at least 85% of the stated minimum wage
- Certified student workers and student learners, though they must make at least 75% of the stated minimum wage
- Certified workers with disabilities
- Certain apprentices
Washington State Overtime Regulations
In the News: In November 2020, the Washington Supreme Court ruled that certain agricultural workers are entitled to overtime pay. (In this specific case, dairy farmers.) L&I is analyzing the court decision.
Employees who work over 40 hours in a seven-day workweek must get overtime pay at 1.5 times their regular hourly rate. Employees cannot waive their right to overtime pay. There are no limits on employer size. The following are exempt:
- Most agricultural employees
- Bona fide executive, administrative, or professional workers
- Outside sales
- Newspaper vendors or carriers
- Those engaged in forest protection and fire prevention
- Certain child care at nonprofits
- Maritime workers
- Ice hockey players between 16 and 21 years old
For more details, check the Minimum Wage Act.
Overtime for Medical Workers: The following medical workers cannot be made to work more than 12 consecutive hours without the option of at least eight consecutive hours of uninterrupted time off:
- Surgical Technologists
- Diagnostic Radiologic Technologists
- Cardiovascular Invasive Specialists
- Respiratory Care Practitioners
- Certified Nursing Assistants
This may be waived in emergencies or other specific circumstances.
In the News: In July 2020, several medical career fields were added to the nurses’ overtime law.
Overtime in Seattle: If you own a large retailer, food service company, or full restaurant in the City of Seattle, you may be subject to different scheduling and overtime rules. For example, if an employee works both closing and opening and the shifts are within 10 hours, they get overtime pay for the hours worked within that 10.
For help with overtime calculations, use our free overtime calculator.
Different Ways to Pay Employees
You may pay employees by cash, paper check, direct deposit, or payroll card, as long as employees are not charged to access their wages. In some cases, meals or room and board can be used as a portion of wages. Learn more on the L&I website.
Pay Stub Laws
You must provide employees with a pay stub each payday, and it must contain the following information:
- The pay basis (e.g., hours or days worked, piece-rate basis, or salary)
- Rate or rates of pay
- Gross wages
- All deductions for that pay period
- All records required for paid sick leave
Agricultural employers have additional pay stub and record-keeping requirements.
For help creating your own, download one of our free pay stub templates.
Minimum Pay Frequency
You must pay employees at least once a month unless federal law specifies a more frequent schedule. You must pay employees no later than 10 days after a pay period ends. If you pay monthly, by the end of the month, you must pay wages for hours worked from the first through the 24th. Wages earned after that may be folded into the next paycheck.
Overtime: If you cannot reasonably calculate overtime in time to make the regular payday, then you may establish a separate payday for overtime wages. Below is an example for a semiweekly pay period.
If pay period is:
And if payday for regular wages is:
Then payday for overtime wages must be no later than:
First-15th of the month
25th of the month
10th of the following month
16th-30th/31st of the month
10th of the following month
25th of the following month
Paycheck Deduction Rules
You cannot withhold more than 50% of an employee’s net income. In the case of federal deductions exceeding this amount, follow state law.
You may deduct federal income taxes, FICA, unemployment insurance, child support, union dues, retirement deductions, and other federal or state-mandated withholdings. Tips and gratuities are subject to collection action. Convert housing, rent, and other benefits paid in lieu of wages to dollar amounts and count them as part of net wages.
Child Support: The state issues the child support withholdings notice, and you must answer within 20 days, and pay the withheld amount within seven working days of each payday.
Final Paycheck Laws
Final paychecks must be paid on or before the next regularly scheduled payday. It cannot be withheld if employees do not turn in equipment, keys, uniforms, or other due items. However, you may be able to deduct money for court-ordered garnishments, deductions that benefit the employee (payroll advance), or deductions for medical, surgical, or hospital care. As an employer, you can choose to pay voluntary benefits like severance, personal holidays, or vacation in the final paycheck or separately.
State HR Laws That Affect Payroll
Washington State has quite a number of HR laws that you need to know when doing payroll.
State New Hire Reporting
If you are hiring employees for the first time, you need to refile your business license application with the state. Then the Employment Security Department will get you the information to set up your state unemployment tax account and the L&I will contact you to start your workers’ compensation insurance account.
You must report new employees within 20 days of hire using the SAW portal. You can create an account before filling out the form. To report, you need the employee’s W-4, birth date, and hire date.
Lunch and Other Break Time Requirements
Rest Breaks: Employees must get a paid rest break of at least 10 minutes every four hours. Youth under 16 get 10 minutes every two hours, and 16- to 17-year-olds, every three hours. This should be close to the midpoint of the work period and definitely before the third hour ends. They are considered in hours worked when calculating paid sick leave and overtime. In some cases, employees can take minibreaks that add up to 10 minutes. You must allow employees reasonable access to restrooms outside of rest breaks as well.
Paid Meal Breaks: You must give employees working over five hours a 30-minute paid meal break (every four hours for employees under 16). It must start between the second and fifth hours of the shift. You must pay them during the meal break if they are on-duty, on-call, or have their break interrupted to return to work. Any work done during meal break counts for hours worked when calculating paid sick leave or overtime.
Unpaid Meal Breaks: If the employee has no duties during their meal break, you do not need to pay them, nor do you count it as hours worked.
Additional Meal Breaks: If an employee works more than three hours after their scheduled shift, they deserve an additional meal break within five hours of the last meal break. They can waive this requirement if desired but cannot waive rest breaks.
Emergency Workers: If you have 20 or more employees and any serve as Volunteer Firefighters, Reserve Peace Officers, or Civil Air Patrol Members, you must allow them to arrive late or be absent from work if they are working at or returning from an emergency call.
Child Labor Laws
Washington State defines a minor as anyone under 18. To hire a minor, you need to:
- Get a minor work permit endorsement on your business license
- Have a completed parent/school or summer authorization form for the employee
- Verify the minor’s age and keep proof on file
Certain age groups are restricted from specific jobs. Check the L&I website for a full list. Immediate family members on the family farm are exempted from these restrictions.
Jobs deemed appropriate for various age groups include:
- 12-13 years old: Hand-harvesting berries, bulbs, cucumbers, or spinach (may need court permission to work)
- 14-15 years old: Retail, creative, some food service jobs, and foot- or-bike delivery
- 16-17 years old: Construction, manufacturing, sign-waving, landscaping, some food service jobs
The number of hours allowed depends on whether school is in session and the age of the employee.
14-15 years old
3 hours *
7 a.m.-7 p.m.
7 a.m.-7 p.m. **
*Eight hours Saturday through Sunday; **9 p.m. June 1 to Labor Day
16-17 years old
4 hours *
7 a.m.-10 p.m. **
6 hours *
7 a.m.-10 p.m. ***
*Eight hours Friday through Sunday; **Midnight Friday through Saturday or the day before a school holiday; ***Midnight Friday through Saturday.
For more information on federal child labor laws, check out our guide to hiring minors.
Washington State does not require you to pay for holidays, vacations, or bereavement leave. In addition, it does not enforce any agreements made between you and an employee concerning such leaves. There are exceptions for leave taken under the Family Care Act, and some local municipalities may have different rules. If you grant paid holidays, they are not included when calculating overtime.
You must give employees at least one hour of paid sick leave for every 40 hours worked. Up to 40 hours can carry over into the next accrual year. Paid sick leave can be used for mental or physical illness, injury, or for medical care. It also can be used for caring for family members, if your workplace or child’s school or place of care has been closed for health-related reasons, or for qualifying reasons listed in the state’s Domestic Violence Leave Act. Doctors, lawyers, and executive managers on salary are exempt.
Employees are allowed up to 12 weeks of paid leave to bond with a newborn or adopted child, deal with a serious health condition, help with the serious health condition of a qualifying family member, or for certain military events. Find the full details on Washington’s Paid Family and Medical Leave website.
Employees may take any kind of paid leave, including paid sick leave, PTO, or personal holidays, to:
- Provide treatment or supervision for a child with a health condition
- Care for a qualifying family member with a serious or emergency health condition
This leave does not apply to the employee’s own illness, however.
An employee whose spouse is called to active duty/deployment during a period of military conflict may take up to 15 days of job-protected leave. This applies to the armed forces or National Guard. Leave can be any combination of paid PTO or unpaid leave and must be taken prior to or during the deployment. The employee must work an average of 20 hours per week to qualify and should give you notice within five days of receiving the deployment order.
Victims of domestic violence, sexual assault, or stalking must be allowed time off from work. It is not limited to available PTO and can be unpaid leave. Time off can be requested for:
- Legal, law enforcement, or court proceedings
- Medical or psychological help
- Social service program help
- Safety planning
Employers also need to accommodate requests for safety, such as job transfer, changing work phone or email, or implementing safety procedures where it does not cause undue hardship.
You’ll need numerous federal forms and at least one state form for SUTA.
Washington State W-4 Form
No state income tax, so no state W-4 form. One less thing to worry about!
Washington State Unemployment Taxes Forms
- Amended Tax & Wage Report (Form 5208D): For reporting state unemployment taxes each quarter
- Quarterly Unemployment Insurance – Wage Detail (Form 5208B): The payment coupon to accompany unemployment insurance taxes
Federal Payroll Forms
- W-4 Form: To help employers calculate taxes to withhold from employee paychecks
- W-2 Form: Reporting total annual wages earned (one per employee)
- W-3 Form: Reports total wages and taxes for all employees
- Form 940: Reports and calculate unemployment taxes due to the IRS
- Form 941: Filing quarterly income and FICA taxes withheld from paychecks
- Form 944: Reporting annual income and FICA taxes withheld from paychecks
- 1099 Forms: Providing non-employee pay information that helps the IRS collect taxes on contract work
For more information on federal forms, check out our guide on federal payroll forms you may need.
State Payroll Tax Resources/Sources
- Washington State Department of Labor & Industries: You can find the information for labor laws, workers’ rights, and more. Much is written for employees rather than employers.
- Administrative Policies Page: The L&I page that lists all applicable salary and labor laws, from minimum wage to industrial welfare.
- Washington State Department of Social and Health Services: This is where you get information on employer resources, including new hire reporting.
- Washington State Unemployment Taxes Forms and Publications Page: Offers links to all the forms, plus publications and handbooks regarding unemployment taxes.
While Washington State does not charge state income tax, you are still responsible for SUTA and paying workers’ compensation insurance. It has some specific rules on overtime, exemptions to UI, and pay frequency, so be sure you understand the regulations when setting up your payroll. In addition, you’ll need to comply with HR laws, including required break time and sick leave plus nuances for certain groups of employees, like military members.