On December 20, 2016, by a 9-4 vote, the Washington D.C. Council passed one of the nation’s most generous paid family leave proposals. The Universal Paid Leave Act (UPLA) provides private-sector employees eight weeks paid leave to care for a new child joining their household, either through birth, adoption, foster care or any assumption of legal guardianship. The UPLA also allows for two paid weeks for self-care and six weeks paid leave to care for sick relatives.
On February 15, 2017, the UPLA took effect as law without Mayor Muriel Bowser’s signature, and she has expressed her disapproval of the law publicly. All private-sector employees, including nonprofit workers, working in the District of Columbia are now eligible for paid leave under the UPLA, and even self-employed workers can reap the benefits.
Financing the UPLA
The paid leave program would be financed through a controversial 0.62 percent payroll tax on employers and would provide up to 90 percent of income replacement to workers, depending on their weekly earnings. The payroll tax would generate about $250 million in revenue and allow for a maximum $1,000 weekly benefit for employees.
For example, low-income workers who make up to 1.5 times the minimum wage would receive a benefit equaling 90 percent of their salary. The program would be funded by the government, so it wouldn't be directly paid for by employers, but employers will have to pay the 0.62 percent tax to fund the trust that the money will be paid through. There are no exceptions made for employers that already provide paid family leave, even if businesses offer more generous benefits than the proposed law.
The legislation requires the UPLA be reviewed three years after it is implemented to determine if the payroll tax rate or benefit levels should be adjusted. The Council rejected an alternative version of the bill that eliminated the payroll tax but left employers with the responsibility of figuring out how to pay for the benefits, amid criticism it was harmful to small businesses.
Opposition to the UPLA Bill
Mayor Muriel Bowser joined many leaders in the business community in opposing the bill, calling it a burden on businesses because it imposes a new tax. In a December 20, 2015 press statement, Bowser said “Chairman Mendelson and the Council passed a $250 million tax increase to mostly benefit residents of Maryland and Virginia." She continued, "It is wrong to raise District taxes to fund a costly, new government program that sends 66 percent of the benefits outside of the city and leaves District families behind."
Others opposing the bill suggest that the UPLA may further complicate the already difficult regulatory environment for employers in the nation's capital. Among other regulations, the District of Columbia already has a higher minimum wage, wage theft act, and stringent wage payment and record-keeping rules.
Though UPLA will likely have an effect on individuals’ increased desire to work in the District to reap the benefits of the UPLA, business may be more inclined to do the opposite—moving their businesses away from the District to neighboring states, such as Virginia, which doesn't have many of the regulations that present challenges for employers in Washington, D.C.
Though she disagrees, Bowser wrote a letter to the council on the day it took effect as law, saying she would not veto the bill and hopes to work with lawmakers to address its shortcomings.
Paid Sick Leave
(1) “Employee” and “Employer” Definitions
The UPLA governs any “employer” who employs or exercises control over the wages, hours, or working conditions of an employee and is required to pay unemployment insurance on behalf of its employees in accordance with D.C. Official Code §51-101 et seq.
A "covered employee" means any employee who spends more than 50% of his or her work time working in the District of Columbia for a covered employer.
(2) Notice Requirements and Enforcement
To adequately provide notice of the UPLA, employers shall also post and maintain notice in a conspicuous place in English and in all languages in which the Mayor has published the notice. Employers must also provide notice to each covered employer shall provide notice to each covered employee (1) at the time of hiring; (2) annually after hire, and (3) at the time the covered employer is aware that the leave is needed. Each covered employer.
A covered employer who violates this notice requirement shall be fined up to $100 for each covered employee that did not receive notice and $100 for each day the employer fails to post the notice in a conspicuous place. No liability for failure to post notice will arise under this section if the Mayor has not prescribed the notice required by this section.
(3) Conflicting Provisions
Typically, employers must comply with both local and state paid sick leave laws. To the extent that local and state laws conflict, the more generous provision controls. In light of the inherent complexity, we strongly recommend that District of Columbia employers consult with legal counsel and update all applicable sick leave policies.