Employers will fund the paid leave program through a payroll tax on all Washington D.C. wages.
We’ve talked about mandatory paid leave laws in a couple of past episodes as this seems to be a hot issue around the country over the last couple of years. Laws are starting to take effect in many states with many more states following suit.
Go back and listen to episode 46 and episode 102 on mandatory paid sick leave for a refresher on our past discussions in regards to this topic. Today I wanted to focus on the newly enacted paid leave law that took effect in Washington D.C.
When does it take effect?
The law took effect on April 7, 2017 after a 30 day legislative review period expired and congress failed to overturn the law. In fact, no action took place to change the law during the 30 day period. That being said, employees will not be able to utilize the benefits until July 1, 2020.
Not surprisingly, the program will be funded by a new tax on employers, furthering the ever increasing burden on small businesses. The new employer tax will take effect in 2019 to start building a fund for the benefit that employees may start utilizing in 2020.
According to the act, employees who spend at least 50 percent of their time working in Washington D.C. are eligible to receive this benefit. This means employees living in Washington D.C. that also work in D.C. are eligible for this benefit. This also means that if employees live in surrounding states such as Virginia or Maryland, and commute into D.C., then they are also eligible to receive the same benefits that D.C. residents that also work in D.C. will get from this new regulation. Washington D.C. residents that work in Maryland or Virginia will not be covered by this regulation.
So to simplify, any employee working in D.C. is eligible regardless of where they live. Any employee working outside of D.C. is not eligible regardless of where they live.
What is the employee benefit?
Some states have passed mandatory vacation and sick time laws that are more of a limited benefit than what we are seeing with this D.C. benefit. This is more like the FMLA benefit, although FMLA does not require paid time off, just that the employees job is secure once they return from leave. It is also important to note that this benefit is not to be considered in addition to FMLA.
This means that an employee utilizing the benefit can take the time off and it will count towards both FMLA and this new Washington D.C. paid leave benefit. The paid leave benefit according to the act allows eligible employees to take up to 8 weeks of paid leave each year. The time does not need to be taken all at once. It can be broken up if needed. The benefit allows:
- Up to eight weeks of parental leave, to be taken within one year of the birth of a child, the placement of an adopted or a foster child, or the assumption of legal guardianship of a child;
- Up to six weeks of family leave, to be taken within one year of the diagnosis or occurrence of a family member’s “serious health condition;” and
- Up to two weeks of personal medical leave, to be taken within one year of the diagnosis or occurrence of the employee’s “serious health condition.”
“Serious health conditions” are defined broadly to include physical or mental illnesses, injuries, or impairments that require inpatient care or continuing health care-related treatment or supervision at home.
“Family” is defined as:
- A person to whom the employee is related by blood, legal custody or marriage.
- A child who lives with an employee who exercises parental responsibility.
- An individual with whom the employee lives and is in a “committed relationship.”
Employees utilizing the benefit should request paid leave following the occurrence of certain qualifying events, subject to a one-week waiting period during which time no benefits are payable.
Employers will fund the paid leave program through a payroll tax on all Washington D.C. wages. The tax that I mentioned early in this podcast that employers will be subject to will be 0.62 percent, of all wages paid to eligible individuals. On the surface that doesn’t sound like a big percentage, but all these taxes add up. If you have an employee that makes $35K per year then you will pay an additional $217 in taxes for that employee. Employers will begin to calculate and remit the tax to a Washington D.C. government-administered fund in 2019.
Also, employers may not take adverse action against any employee for utilizing the rights provided to them under this law. You cannot fire an employee, or eliminate their position if they take advantage of this paid leave benefit. Employers are also responsible for displaying a notice to their employees that explain their rights. The notice should include:
- Employees right to paid leave benefits under the act and the terms under which the benefits may be used
- That employers may not retaliate against employees for requesting, applying for or using paid leave benefits
- That employees who work for employers with fewer than 20 employees are not entitled to job protection if they take paid leave under the act
- That employees may file complaints under specific procedures
Employers that fail to post or distribute the notice may face a $100 penalty for each employee to whom they did not distribute the notice to.
Since the benefits do not take effect until July, 1 2020 there is the potential that changes to this law may still be implemented before that date. There have been a couple of bills recently introduced to amend certain provisions of the act. If you are an employer in Washington D.C. then you definitely want to keep an eye on these bills to see if any changes to the paid leave act occur over the next year or two before the benefits kick in.