January 1 Checklist: Payroll Compliance

January Payroll Compliance Checklist

Washington Employers

January 1 changes take effect immediately. Employers should complete the following before or during their first payroll run of the year.

Payroll System & Rate Verification

• Confirm all payroll software is updated to the current calendar year

• Verify Washington Paid Family & Medical Leave (PFML) contribution rates are current

• Confirm employer vs. employee PFML contribution splits are configured correctly

• Review any changes to state or local payroll tax rates affecting employee withholding

• Confirm benefit deduction caps and thresholds reset correctly for the new year

Employee Deductions & Pay Statements

• Review PFML deductions on sample pay statements for accuracy

• Confirm benefit deductions (health, dental, retirement, HSA/FSA) reflect current elections

• Ensure pre-tax and post-tax deductions are applied correctly

• Verify year-to-date balances reset properly where required

Washington PFML & Leave Tracking

• Confirm PFML leave tracking settings are active and accurate

• Review job-protection eligibility tracking (employment start dates and duration)

• Ensure payroll and HR systems are aligned on leave classifications

• Review coordination procedures for PFML and unpaid FMLA leave, if applicable

Employee Handbook & Policy Review

• Review Employee Handbook language related to payroll, deductions, and leave

• Confirm handbook PFML language aligns with current payroll practices

• Update notices related to job protection, reinstatement rights, and leave eligibility

• Communicate any policy changes to employees in writing

Health Insurance & Benefit Administration

• Confirm procedures for maintaining health insurance during protected leave

• Review employee premium payment processes during unpaid leave periods

• Ensure benefit billing aligns with payroll deductions and leave status

Reporting, Filings & Documentation

• Verify payroll tax reporting calendars for state and federal filings

• Confirm record retention practices meet Washington requirements

• Review internal procedures for responding to employee payroll questions

• Document payroll changes and updates made at the start of the year

Coordination & Oversight

• Confirm payroll provider updates have been implemented correctly

• Coordinate with HR, benefits administrators, and external advisors

• Schedule an annual payroll compliance review

• Identify upcoming mid-year changes that require advance planning

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Why This Checklist Matters

Payroll errors at the beginning of the year often go unnoticed until they trigger penalties, employee complaints, or agency inquiries months later. A proactive January review helps Washington employers identify issues early, correct them quickly, and maintain compliance throughout the year.

Pivotal Forensic Accounting & Audits assists employers with payroll compliance reviews, PFML alignment, policy updates, and ongoing support to reduce risk and improve accuracy.

Disclaimer:
This document is intended to provide general information addressing common payroll and compliance considerations relevant to many employers. It is not exhaustive and should not be relied upon as a substitute for individualized professional advice, as payroll obligations and compliance requirements vary based on each employer’s specific circumstances. This information is intended for employers operating in Washington State and reflects Washington-specific payroll and employment considerations. Employers are also responsible for ensuring that record retention and reporting practices comply with both Washington State and applicable federal regulations. Consultation with qualified accounting, payroll, or legal professionals is recommended to address employer-specific compliance obligations.