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
In order to fund the program, “covered employers” are required to make contributions to a “Universal Paid Leave Implementation Fund”. The amount to be contributed is 0.62 percent of the wages of each “covered employee” in a manner to be prescribed by the mayor. The payroll tax would generate about $250 million in revenue and allow for a maximum $1,000 weekly benefit for employees. 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 UPLA would provide up to 90 percent of income replacement to workers, depending on their weekly earnings. 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 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, 2016 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." Although Mayor Bowser disagreed with the program, she 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.
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.
The operational challenges imposed on employers by the UPLA, coupled with the increased labor costs District employers will face compared to their Maryland and Virginia competitors, could creative an incentive for businesses to relocate employees to surrounding counties in Maryland and Virginia.
Paid Sick Leave
(1) “Employee” and “Employer” Definitions
A “covered employer” under the UPLA is generally any type of entity that is required to pay District of Columbia unemployment insurance on behalf of its employees. There is no exception for businesses that currently provide paid leave to employees. The term “covered employer” for purposes of the Act does not include the United States, the District of Columbia, or any employer that the District cannot tax under federal law or a federal treaty. Additionally, self-employed individuals can choose whether to opt in to the UPLA benefits program.
A "covered employee" is generally an employee who spends more than 50 percent of his or her time working for the covered employer in the District, or an employee based in the District who does not spend more than 50 percent of his or her work time in another jurisdiction. The program does not cover federal government or District employees.
(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 may be subject to a $100 civil penalty 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.