Under the District of Columbia’s Universal Paid Leave Amendment Act of 2016 (UPLA), paid family and medical leave will soon be a reality in DC.  The DC paid leave program will be funded entirely by employer payroll tax contributions. [1]  The first tax contributions from employers are due July 31, 2019 (unless that deadline is extended), and benefits will be available to covered employees starting July 1, 2020.  The DC Department of Employment Services (DOES) has issued tax regulations establishing UPLA tax collection procedures for employers, and the Office of Paid Family Leave (OPFL) is offering webinars and town halls this month to answer employers’ questions about the collection process.  Benefits regulations for employers and employees are expected in the near future.

Here are the highlights of what we know, and don’t know, about the UPLA so far, and what employers should be doing to comply.

UPLA Overview 

Employees can receive up to 8 weeks of paid leave benefits for new child bonding, 6 weeks to care for a family member with a serious health condition, and 2 weeks for the employee’s own serious health condition, with a cap of 8 weeks of total paid leave benefits per year.  Benefits will be paid to employees by the DC government based on application by the employee.  Benefits will be determined on a sliding scale based on the employee’s income, up to 90% of weekly pay with a current cap of $1,000 per week, which will increase over time.  The law does not entitle employees to reinstatement at the end of leave, although they may have reinstatement rights under the federal Family and Medical Leave Act (FMLA) or the DC FMLA.

An employer is generally covered by the UPLA if the employer controls the wages, hours, or working conditions of one or more workers for whom it pays DC unemployment insurance (UI) taxes, regardless of the employer’s size or whether it already has a paid leave program.  Employees are generally entitled to UPLA benefits if they spend more than 50% of their working time in DC or spend a substantial amount of time working in DC and no more than 50% in any other single jurisdiction, regardless of whether they live in DC.

Making Tax Payments

The DC paid leave program will be funded by a 0.62% tax on covered employees’ gross wages for each calendar quarter, payable by the employer at the end of the first month following the end of the quarter.  Because tax collections began on July 1, 2019, employers must pay taxes on Q2 2019 (April-June 2019) wages by July 31, 2019.   It is possible that OPFL will push back this deadline if technical difficulties arise with the tax collection process, but as of now the deadline remains in effect, and employers should act accordingly.

Employers with 5 or more employees must submit their tax contributions for the paid leave program electronically through ESSP, the DOES Employer Self Service Portal.  This is the same portal that employers use to pay UI taxes.  Employers can use third-party administrators to process the payments if they have a power of attorney form on file with ESSP.  The amount owed is based on the quarterly wage report form (Form UC-30) that employers submit for UI taxes.  Once a wage report is submitted, the ESSP automatically calculates the quarterly paid leave contribution.  If an employee does not meet the UPLA coverage requirements due to the limited nature of the employee’s work in DC, the employer can seek to except the employee’s wages from its paid leave tax obligation for the quarter.  OPFL’s instructions for requesting exceptions indicate that for now, the paid leave tax must be paid in full for all employees included in the UI wage report, and employers will be reimbursed for excepted employees later.

Employee Notification Requirements

OPFL will issue a paid leave notice that employers must post and send to remote personnel by January 1, 2020.  Employers will also be required to notify employees of their UPLA rights and obtain acknowledgments at the time employees are hired, annually, and when the employer becomes aware that an employee needs leave, but it is unclear when these requirements  go into effect.

Impact on Employer Leave Plans

The UPLA states that paid leave benefits run concurrently with FMLA and DC FMLA leave and that individuals cannot receive UPLA benefits while they are receiving long-term disability payments or unemployment compensation benefits.  Issues concerning how to coordinate UPLA benefits with an employer’s own voluntary paid leave benefits policies are not yet resolved, and we hope that the benefits regulations expected in the upcoming months will provide more information.  In a recent webinar, OPFL indicated that employers cannot restrict employees from applying for UPLA benefits but will be able to modify their own paid leave plans to ensure that employees do not receive more than 100% of their regular weekly pay—for example, by topping off UPLA benefits with employer-provided benefits, or by providing additional benefits after UPLA benefits are exhausted.

It is time now to start thinking about how UPLA benefits will mesh with your current leave and paid benefits policies.

 

[1]              This is unlike other jurisdictions.  For example, California’s paid family leave and disability insurance programs are paid for entirely by workers through payroll deductions.  In New York, workers cover the cost of paid family leave, and workers and employers share the cost of temporary disability insurance.