Employers with at least one employee working in DC are subject to the new Paid Family (and Medical) Leave (PFL) benefit, under the Universal Paid Leave Act (UPLA). Effective July 1, 2019, DC will begin collecting the payroll tax from employers to fund the benefits. Employees working in DC can apply for benefits starting July 1, 2020.

To help employers and employees learn about the upcoming benefit, the DC Office of Paid Family Leave (OPFL) has created a website which includes employee notices, FAQs, and other written resources. Employers are encouraged to visit the website, register for or view a recorded webinar, and sign up for the mailing list to receive timely updates directly from OPFL.

Does PFL apply to your organization or company?

It applies to all employers that have employees working in DC and are required to pay DC unemployment insurance (UI). This includes non-profit employers and employers with only one employee working in DC.

How and when will the benefit be funded?

Starting July 1, a new tax will be assessed to employers, based on DC employees’ gross wages at the rate of 0.62% of payroll. The cost cannot be deducted from employee pay.

Employers will only need to submit one wage report (Form UC-30) to cover both UI and PFL requirements. While UI has $9,000 annual wage limit, PFL will be assessed without a wage limit.

Just like with UI, the wage reports and tax payments for PFL are due quarterly by the last day of the month after the quarter ends. The first report and payment will be due by July 31, 2019 and will include payroll for the 2nd quarter (April, May, and June) of 2019. If your payroll vendor (or other agent) reports and pays the UI on your behalf, they will likely also report and pay the PFL on your behalf. Employers who report and pay their UI through the DOES Employer Self-Service Portal (ESSP) will use that same online portal for their PFL tax.

Employers who already pay UI in DC do not need to register for a new account.

Who can benefit?

Your employees are eligible for benefits if their employment is based in DC, they regularly work in DC, and they do not spend more than 50% of their time in another jurisdiction. Self-employed individuals may also benefit if they opt to pay into the PFL Fund.

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 for 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.

When the first benefits are paid in July 2020, the DC minimum wage is scheduled to be $15.00 per hour. For a claim payable in 2020:

  • Employees 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).
  • Employees earning between $900 and $1,280 per week would receive an additional 50% of wages above $900 per week.
  • Employees earning more than $1,280 per week will receive the maximum benefit of $1,000 until the cap is adjusted in 2021.

Intermittent leave will be eligible only in whole day increments and benefits will be prorated.

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 one week within a 52-week period regardless of the number of qualifying events for the individual.

How will claims be processed?

Employees will be responsible for filing their own claims through a new online portal managed by the OPFL. Employees will need to submit proof of the qualifying event, expected dates of leave, and (for family leave) a description of the care or companionship they will be providing.

Employees will also need to provide their employer’s contact information. Once an employee files a claim, the employer will be notified within three business days and will have two business days to respond with any corrections.

Employees will be notified of approvals or denials within 10 business days after filing a claim. The first claim payment will be sent to the employee within 10 business days of approval.

What are the notice requirements for employers?

Employers will be required to post and maintain a PFL notice in a conspicuous place at each worksite no later than July 1, 2019. Employers will also be required to give paid leave notices to new employees when they are hired, to all employees annually, and to an individual employee when the employer learns of the need for eligible leave. The current Paid Leave Notice provided on the OPFL website does not explain the leave provisions or available benefits. It is expected that OPFL will provide a new notice before July 2019.

Does this replace Sick and Safe Leave or DCFMLA?

DC’s Sick and Safe Leave law is still in effect and will continue to require employers to provide each employee with a minimum amount of paid leave for absences related to medical and domestic violence. This could include short absences for annual physicals, well baby visits, as well as court appearances for a restraining order. Employees might also use their accrued Sick and Safe Leave during the one week elimination period for PFL benefits. In contrast, a qualified medical or family leave under PFL requires a serious health condition.

DCFMLA and federal FMLA are also still in effect. These laws provide job and benefit protections while an employee is on eligible leave, but do not provide paid leave.

How will PFL affect our current employer-sponsored leave and disability policies?

Even if the employer’s current leave or disability policy is more generous than the PFL benefits, DC employers are required to participate in the Fund.

PFL benefits are not affected by any employer-provided paid leave or disability benefits. Therefore, employer-paid leave policies (such as disability, maternity, parental, or even sick, vacation, and paid time off) may need to be revised to prevent overpayment of premium or benefits by the employer, and/or to prevent employees from receiving more than 100% of regular pay.

Below are two examples of how PFL may affect an employee’s short-term disability benefits. For both examples, the hypothetical employee has a serious medical condition and is unable to work for 5 weeks. The employee’s salary is $2,000 per week. The employee has no prior PFL claims.

Example 1 – Insured STD policy

  • STD benefit is 60% of regular pay up to $1,500/week.
  • Benefits are payable after a one week elimination period.
  • STD benefits are reduced by statutory disability benefits the employee is entitled to receive.

Starting July 1, 2020:

  • The PFL medical benefit pays $0 for the first week, and $1,000 for weeks 2 and 3.
  • The STD policy pays $0 for the first week, and $200 ($1,200 STD – $1,000 PFL) for weeks 2 and 3, and $1,200 for weeks 4 and 5.

The employer has paid both the STD premium and PFL tax, but there is no increased benefit to this employee. The employer should consider increasing the STD elimination period to 21 days to avoid the overlap and reduce the STD policy premium. However, this strategy would result in reduced weekly benefits for employees who do not work in DC, have previously exhausted their PFL benefits, or qualify for more than $1,000/week in STD benefits.

Example 2 – Internal, self-funded, salary continuation plan

  • Salary continuation benefit is 100% of regular pay.
  • Benefits are payable after a one week elimination period.
  • The salary continuation plan does not currently offset for other disability benefits.

Starting July 1, 2020:

  • The PFL medical benefit pays $0 for the first week, and $1,000 for weeks 2 and 3.
  • The employer pays $0 for the first week, and $2,000 for weeks 2 through 5.
  • The employee is receiving $3,000 for weeks 2 and 3, which is in excess of 100% of regular pay.

The employer can amend its plan to state that the employer benefit will be reduced as necessary to prevent an employee from receiving more than 100% of regular pay when they are also eligible for the statutory benefit. This way, the employee is not overpaid and the employer cost is reduced.

You may also be offering maternity, parental, or other paid leave benefits that should be revised to coordinate with PFL. For example, an employer who currently provides 100% paid parental leave could amend the policy either to reduce by amounts available from the PFL parental leave benefit or to supplement or wrap around the PFL parental leave benefit.

DC Employer Action Steps

  1. If you are a new DC employer, register for an Employer Self-Service Portal account to submit wage reports for Unemployment and PFL.
  2. Sign up for e-notifications from OPFL.
  3. Attend OPFL webinars and Town Hall meetings. For questions, you may contact the OPFL at opfl@dc.gov.
  4. Confirm with your payroll vendor (or other agent) that it is submitting the new PFL tax on your behalf starting with the 2nd quarter 2019 wages.
  5. Post an employee notice (provided by OPFL) at each DC worksite by July 1, 2019.
  6. Review current paid leave and disability policies and amend as necessary for July 1, 2020 implementation to address any overlaps of coverage.

Keller/OneDigital is creating materials that will help you align your benefits with the DC leave laws. Please contact your Keller/OneDigital account team with any questions.