The District of Columbia Council has passed several pieces of legislation that impose significant obligations upon employers in the District of Columbia. Below is a roundup of recent laws that have been enacted in the District and key obligations of each.
Universal Paid Family Leave Law
The Universal Paid Leave Act of 2015 (Paid Leave Act), which became effective on April 7, 2017, will provide covered employees with eight weeks of paid parental leave, six weeks of paid family leave, and two weeks of paid personal medical leave starting in 2020. As we have previously reported, the paid leave will be funded by a 0.62% increase in DC employer payroll taxes.1
Proposed Regulations and Public Information Campaign
Since the law’s enactment, city officials have embarked on the tedious tasks necessary for implementing the District’s paid family leave (PFL) program. The Department of Employment Services (DOES), the agency tasked with enforcement of the Paid Leave Act, has proposed regulations that set forth a regulatory framework for employer and self-employed individual registration for the PFL program. The rulemaking also covers the PFL tax contribution, including the amount, payment schedules, and related collection procedures. These rules include the employer notice and recordkeeping responsibilities that must be completed in addition to the other employer obligations under the Paid Leave Act. Public notice and comment has been sought and the proposed rules await final approval from the D.C. Council.
As part of its public outreach campaign, DOES has created the Office of Paid Family Leave, which has launched a PFL webpage containing various resources related to the PFL program.2 DOES is also hosting numerous webinars providing guidance to the regulated community on the new obligations created as a result of the Paid Leave Act.3
The first collection of required PFL program employer contributions is due on July 1, 2019. This payment represents 0.62% of the wages paid to all covered employees located in the District of Columbia from April 1 through June 30, 2019.
Any business performing services in the District of Columbia that also pays Unemployment Insurance taxes for its employees is required to pay paid family leave contributions. This includes non-profit organizations and household employers that pay UI tax, as well as self-employed individuals who have opted into the PFL program.
For self-employed individuals who opt into the PFL program during the first 90 days after the Office of Paid Family Leave begins to collect contributions, the first collection of PFL contributions begins October 1, 2019 for income earned from July 1 through September 30, 2019.
Employers will use the same account they currently use for Unemployment Insurance via the Employer Self-Service Portal (ESSP). Prior to July 1, 2019, employers should update their ESSP accounts with any changes in contact information, including third-party administrator information.
Employer Notice Requirements
Pursuant to the Paid Leave Act, beginning January 1, 2020, employers will be responsible for posting and maintaining a notice the explains employees’ right to paid leave benefits and the terms under which such leave may be used. The Office of Paid Family Leave will prepare and provide this notice to the employer community.
In addition to posting the notice in a conspicuous location, employers must provide notice of PFL rights and obligations to employees at the time of hire, annually and at the time the employer is aware that the leave is needed.
Benefit Determinations and Modification of Current Benefit Plans
Eligible employees may begin to access PFL program benefits on July 1, 2020. Benefit determinations and payments will be issued to eligible individuals directly from the DOES. Employers with their own paid leave benefits, including short-term disability plans, are still required to participate in the program. Although employers cannot restrict an employee’s right to access PFL benefits under the District’s program, employers can modify their benefit and leave plans, including requiring that employees take covered leave concurrently with PFL program leave.
It is advised that all employers with District of Columbia employees review their current benefit plans to ensure compliance with the District’s PFL program and make any necessary modifications. In addition, District employers should begin to make their employer contributions starting on July 1, 2019.
Tipped Wage Worker Fairness Amendment Act of 2018
In October 2018, the D.C. Council passed the Tipped Wage Worker Fairness Amendment Act of 2018 (Tipped Worker Act), effectively repealing Initiative 77, which was approved by residents of the District of Columbia on June 19, 2018 as a measure to eliminate the “tip credit.”4 Although the Tipped Worker Act preserved the use of the tip credit for employers in the District as a mechanism to offset part of the minimum wage obligations for employees who earn tips, it also imposed significant new obligations on employers that employ tipped employees.
In addition to the notice that employers have historically had to provide to tipped employees prior to taking a tip credit, the Tipped Worker Act requires that all employers affirmatively provide all tipped employees with the following information:
- Inform the tipped employee of the percentage by which tips paid by credit card will be reduced by credit card fees.
- If tips are shared, post and provide each tipped employee with the employer’s tip-sharing policy, which is defined as the written calculation of any tips out to other employees or tip-pool structures, delineated by job position or any other factor. Information on the employer’s tip-sharing or tip-pooling policy must be provided at the time of hire and when updated during employment.
- If changes are made to the employer’s tip-sharing or tip-pooling policy, all impacted employees must be provided with a copy of the proposed policy before implementation if a tip-out revision occurs.
In addition, employers must provide itemized wage statements to all tipped employees that include the following: date of wage payment; gross wages paid; deductions from and additions to wages, including a separate line for gratuities; net wages; and hours worked. Employers must also give employees a copy of their tip-declaration form for the pay period that delineates cash tips and credit-card tips. Such a tip declaration form is defined as a printed form provided to the employee showing the total tips received, including the tip outs (amount of tips given to other employees) or share of a tip pool that the employee provided to or received from another employee. The form must also include a calculation by which the amount was determined, such as total tips received and hours worked.
Third-Party Payroll Provider and Wage Reporting Requirements
Perhaps the most onerous measure the Tipped Worker Act imposes is the requirement that, beginning January 1, 2020, employers of tipped employees (except for hotel employers) must use a third-party payroll business to prepare payroll. Also beginning January 1, 2020, the third-party payroll processor for non-hotel employers of tipped employees is required to submit the quarterly wage reports to the mayor.
Subject to budgetary approval, these wage reports are also going to include additional reporting requirements, including the weekly number of hours each employee worked, the weekly pay (including tips) received by each employee, the average weekly wage for each employee, and the employer’s current tip-out policy that the employer supplied to the third-party payroll business.
Mandatory Training and Notice Requirements
The law also imposes significant training and notice requirements on all employers of tipped employees. The deadline to implement such training and to provide the requisite notice is not yet determined, as these requirements are subject to budgetary funding approval. However, once funded and approved, the Tipped Worker Act will require mandatory sexual harassment training for all tipped employees, as well as for all managers and owners or operators of businesses that employ tipped employees. Employers will also be required to promulgate sexual harassment prevention policies that must include clear incident reporting procedures. Copies of these policies will be required to be provided to DOES. In addition, employers of tipped employees must also provide mandatory training on the Minimum Wage Act Revision of 1992 and provide certification to the DOES that the training requirements have been met.
The Tipped Worker Act requires the mayor to provide employers with a unified poster containing information on requirements related to tipped employees, as well as on several other District employment laws. Also included in the poster will be the address of a new website to be created and maintained by the District that provides the rights and benefits of all employees subject to District of Columbia employment and anti-discrimination laws. The website will provide a list of such laws and information about a future hotline. The poster and website are not expected to be made available until early- to mid-2020.
Public Awareness Campaign
The Tipped Worker Act also mandates the creation of a Tipped Workers Coordinating Council (Council), which will be made up of tipped employees, employers and public agency representatives.
The Council’s main responsibilities will be to improve the coordination of wage policies, investigate wage theft involving tipped employees, and conduct regular and anonymous case reviews of wage violations claims. Again, there is no set deadline for the creation of the Council as it requires approval and budgetary appropriation.
Employment Protections for Victims of Domestic Violence, Sexual Offenses, and Stalking Amendment Act of 2018
In December 2018, the District of Columbia Council passed the Employment Protections for Victims of Domestic Violence, Sexual Offenses, and Stalking Amendment Act of 2018 (Employment Protections Act), which amended the District of Columbia Human Rights Act of 1977 to add employment discrimination protections for victims, and their family members, of domestic violence, sexual offenses, or stalking. Although the mayor signed the Employment Protections Act on January 30, 2019, it is subject to appropriations and will not become effective until it is included in an approved budget and fiscal plan.
Once effective, the Employment Protections Act will expand the protections of the District of Columbia Human Rights Act to:
- Protect victims and family members who are victims of domestic violence, sexual offenses, and stalking against discrimination by employers and labor organizations from acts based wholly or partially upon a disruption or threat to the individual’s job or workplace by a person threatening to commit domestic violence, sexual abuse, or stalking;
- Make it unlawful to deny an individual’s request for a reasonable accommodation for the individual’s safety and security; and
- Make unlawful an adverse action that is based wholly or partially on the individual’s leave request for attendance, participation or preparation for a court proceeding relating to domestic violence, sexual abuse, or stalking.
Although the law is not yet in effect, it is recommended that employers review and revise their policies and procedures to prepare for the additional protections the Employment Protections Act provides. Employers should also implement training to ensure that managers and human resource professionals are aware of the new requirements, including the obligation to engage in the interactive process for employees who are victims, or are family members of victims, who request reasonable accommodations related to their safety or security.
Wage Garnishment Fairness Amendment Act of 2018
In an effort to protect the District’s lower-wage workers who struggle with debt, the District of Columbia Council passed the Wage Garnishment Fairness Amendment Act of 2018 (Wage Garnishment Act) in December 2018, which the mayor signed in February 2019. This law revises the amount of wages that can be garnished by debtors.
The key provisions of the Wage Garnishment Act include a full exemption for any wage garnishment for those making 40 times the minimum hourly wage rate or less in disposable income (currently $27,560 per year or less). It also partially limits wage collection for employees in certain income tiers (currently those who earn up to $208,000 annually) and requires advance notification to debtors of a court’s order to garnish an individual’s wages. Individuals are also allowed to file a motion to exempt certain wages from attachment by establishing a claim of undue financial hardship.
Although the projected effective date of the Wage Garnishment Act was April 11, 2019, the provisions of the act will not be enforceable until they are approved through the District’s fiscal budget process. District officials must determine how to close the financial deficit that the Wage Garnishment Act will cause; once certain garnishments for payment of District of Columbia taxes are disallowed.