Washington Updates Employer Unemployment Reporting Rules

On March 14, 2026, Washington Senate Bill 5874 was signed into law, updating the penalty rules for employer reporting related to unemployment compensation, clarifying when penalties apply to late, incomplete, or incorrectly formatted reports, and allowing limited waivers for certain minor or insignificant reporting errors.

The law also clarifies that an employer whose tax and wage report is incomplete because it fails to report the standard occupational classification or job title of each worker is subject to the incomplete-report penalty only if the employer knowingly failed to report that information.

This update applies to Washington employers subject to unemployment compensation reporting requirements and took effect on June 11, 2026.

What Employers Need to Do

• Review unemployment insurance reporting processes to help ensure reports are filed on time and submitted completely and in the required format to the Washington Employment Security Department.

• Confirm payroll and reporting systems can accurately capture and report the information needed to avoid incomplete-report penalties, including standard occupational classification or job title information where required.

• Train payroll and human resources staff on the updated warning, penalty, and waiver structure for late, incomplete, or incorrectly formatted reports.

• Establish internal procedures to identify and correct reporting errors promptly, especially where minor or software-related issues may support a waiver request.

Overview

• Senate Bill 5874 amends Washington Revised Code section 50.12.220 and focuses on employer reporting obligations for unemployment compensation purposes.

• The law updates how penalties are assessed for late, incomplete, or incorrectly formatted employer reports and clarifies when penalties may be waived.
• An employer that files an incomplete or incorrectly formatted tax and wage report must receive a warning letter for the first occurrence. For later occurrences within five years, the law applies graduated monetary penalties that vary depending on whether unemployment contributions are due.

• The commissioner may waive penalties for minor or insignificant reporting errors, including inadvertent software-related problems that prevent proper reporting of the standard occupational classification or job title of each worker.

• An employer whose report is incomplete because it fails to include the standard occupational classification or job title of each worker is subject to the incomplete-report penalty only if the employer knowingly failed to report that information.

• The bill does not reduce penalties for employers that knowingly misrepresent payroll information or fail to pay required unemployment contributions. Those violations remain subject to separate enforcement and higher penalties under the statute.

Why This Matters

This law raises the stakes for accurate and correctly formatted unemployment insurance reporting while giving employers limited relief for minor or unintentional mistakes. Employers should expect continued enforcement of reporting obligations, especially where errors are repeated or where reporting problems affect contribution calculations.

At the same time, the revised waiver language gives employers a clearer basis to seek relief for certain small or software-related mistakes. That makes prompt error detection, internal review, and timely correction more important as part of routine payroll and reporting compliance.

Key Risks for Employers

• Employers face financial risk if unemployment reports are repeatedly late, incomplete, or incorrectly formatted, because penalties escalate after the first occurrence within a five-year period.

• Employers that knowingly misrepresent payroll information or fail to pay unemployment contributions remain subject to separate enforcement and higher penalties.

• Although the law allows waivers for minor or insignificant reporting errors, waivers are discretionary and not guaranteed, which makes accurate reporting and prompt correction efforts essential.

Source References

• WA SB5874 – Concerning employers’ information reporting for purposes of unemployment compensation

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