The District of Columbia is one step closer to having a paid family and medical leave benefit for DC workers. In December 2016, the DC Council passed the Universal Paid Leave Amendment Act (the Act) by a wide majority. Mayor Bower’s office has indicated that she will not veto the bill by today’s deadline.

Next, the Act goes to the US Congress for a 30-day review period. Congress has the opportunity to disapprove all DC legislation by a joint resolution. If Congress takes no action within the 30-day period, the Act becomes law and will be published in the DC Register. Here is a summary of the Act:

What is the implementation timeline?

  • Within 180 days of the Act becoming law, the Mayor’s office will:
    • Provide a notice to DC employers explaining the new payroll tax; and
    • Propose rules implementing the Act.
  • The DC Council will have 45 days to review the Mayor’s proposed rules.
  • By September 30, 2017, the Mayor will submit the first project plan with a detailed timeline for implementation, including software development.
  • By July 1, 2019, collection of the payroll tax will begin.
  • By July 1, 2020, the first claims will be accepted for payment.

Does the Act apply to your organization or company?

The Act applies to all employers that:

  • Have employees working in DC;
  • Are required to pay DC unemployment insurance;
  • Are not the US or DC government; and
  • Are not an employer that DC is prevented from taxing due to a federal law or treaty, e.g. foreign governments.

The Act was not completely clear regarding which employers would be exempt due to federal law or treaty, but Keller confirmed with Councilman Grosso’s office that “DC non-profits would be included in the paid leave law and are not exempt.”

How will the benefit be funded?

It is expected that the payroll tax will function similar to the tax under the DC Unemployment Compensation Act. On behalf of their DC employees, employers will pay 0.62% of wages to the Universal Paid Leave Implementation Fund (Fund). Self-employed individuals can opt to cover themselves by paying 0.62% of their own wages into the Fund.

Who can benefit?

Individuals who work in DC more than 50% of their time or whose employment is based in DC are eligible for benefits. Self-employed individuals may also benefit if they opt to pay into the Fund. There is no waiting period for eligibility.

How much is the benefit?

Weekly benefits will be paid based on the individual’s average weekly wages. The benefit will be:

  • 90% of wages up to 150% of the DC minimum wage based on a 40-hour work week; and
  • 50% of wages above 150% of the DC minimum wage; but
  • No more than $1,000 per week for claims before October 1, 2021.

The DC minimum wage is currently $11.50 per hour, but is scheduled to increase by $0.70 per year to get to $15.00 per hour in 2020. The maximum benefit cap will be adjusted for inflation each October 1, starting with 2021.

For example, for a claim payable in 2020, when the DC minimum wage is $15.00 per hour, an employee earning up to $900 per week ($15.00 x 40 hours x 150%) would receive a weekly benefit of up to $810 (90% of $900 = $810). An employee earning between $900 and $1,280 per week would receive an additional 50% of wages above $900 per week. Employees earning over $1,280 per week will receive the maximum benefit of $1,000 until the cap is adjusted in 2021.

How long is the benefit period?

  • Qualified medical leave: Maximum of 2 workweeks per 52-week period for an individual’s own serious health condition.
  • Qualified family leave: Maximum of 6 workweeks per 52-week period to care for a family member with a serious health condition.
  • Qualified parental leave: Maximum of 8 workweeks per 52-week period to bond with a newborn or a child who has been placed with the individual for adoption, foster care, or legal guardianship.
  • Overall cap: Maximum of 8 workweeks of paid benefits in a 52-week period.
  • Elimination period: A 1-week period for which no benefits will be paid. Only 1 week within a 52-week period regardless of the number of qualifying events for the individual.

How will claims be processed?

As part of the implementation process, the Mayor will establish “a user-friendly, online portal for the submission and management” of claims for benefits. When an employee files a claim, the employer will be notified within 3 business days. Within 10 business days, a claimant will be notified of the initial determination decisions on claims. Claimants will need to submit proof of their qualifying event. Claims will be paid from the Fund to the claimant beginning within 10 business days of the eligibility determination.

How will the Act affect our current leave and disability policies?

Once the Act becomes law, Keller will be reviewing all of our DC clients’ leave and disability policies to determine any overlaps in coverage and if adjustments are necessary. Even if your current leave or disability policy is more generous than the Act, affected DC employers are required to participate in the Fund.

Please contact your Keller account team with any questions.