Washington DC Payroll Taxes for Paid Parental and Sick Leave Kicks in July 1

Private employers in the District of Columbia will soon begin paying an additional payroll tax to pay for the District’s “Universal Paid Leave Amendment Act of 2016.” The act allows workers to start claiming benefits in July 2020.

The District will begin collecting on July 1, 2019 the quarterly payroll tax that will fund the benefits. All covered employers will be required to contribute 0.62% of the wages for each of its covered employees.

What is the Washington DC Paid Leave Law?

The paid leave act provides up to eight weeks of parental leave to bond with a new child, six weeks of family leave to care for an ill family member with a serious health condition, and two weeks of medical leave to care for one’s own serious health condition starting July 1, 2020, according to the Department of Employment Services (DOES).

How Does the Payroll Tax Work?

The payroll tax applies to private employers with at least one employee working in Washington, D.C. and includes non-profits and household employers that pay unemployment insurance tax as well as self-employed individuals who have opted in to the program, according to a paid leave notice provided by DOES. Federal and local government workers are not affected.

DOES has noted that the paid family leave tax is 100% employer-funded and may not be deducted from a worker’s paycheck.

The bill doesn’t make any exceptions for employers that already offer a paid family leave plan so, if an employer already offers a paid family leave plan, it will still be required to contribute to D.C.’s paid family leave plan.

Contributions will be collected electronically by payroll tax on a quarterly basis. The quarterly payroll tax will be based on the immediate past quarter of wages paid – the same as unemployment insurance tax, according to the employer FAQs provided by DOES.

To help employers understand what they must pay under the law, DOES offers a “Paid Family Leave Quarterly Tax Calculator” on its website.

Employers are required to keep payroll records for a minimum of three years.

Employers cannot retaliate against workers who take advantage of the leave.

Expansive coverage for employees

The law takes an expansive view of who is covered by the law. In general, covered employees are those who spend more than 50% of their work time in the District of Columbia during some or all of the 52 weeks immediately preceding a qualifying leave event, according to the FAQs for employees provided by DOES. Residents of other states with jobs in D.C. will be eligible if they meet the criteria.

Employees who telecommute are eligible for paid leave benefits, as long as they spend more than 50% of their work time physically working in the District of Columbia for a covered employer that is based in the District. In addition, temporary, seasonal and part-time workers can also qualify for D.C.’s paid family leave.

In general, the law provides that up to 90% of an eligible worker’s income will be paid out during qualifying leave. Paid leave benefits will be calculated based on an eligible individual’s average weekly wage, the total wages in covered employment earned during the highest four out of five quarters (the base period) immediately preceding a qualifying event, divided by 52. Employees can take advantage of a “Paid Family Leave Weekly Benefit Calculator” on DOES’ website to get an idea of their weekly benefit amount. The current maximum weekly benefit amount is $1,000.

An eligible individual starts the process by filing a claim for paid-leave benefits with DOES’ Office of Paid Family Leave. After a claim for paid leave benefits is made, the Office of Paid Family Leave will issue a determination within 10 business days. The first payment will be made within 10 business days of the determination of eligibility.

Eligible employees are required to provide written notice to their employers at least 10 days in advance of the paid leave or as early as possible, unless it’s an emergency, in which case, the employee or someone on their behalf either verbally or in writing must notify the worker’s employer within 48 hours of the emergency.

The leave can be taken intermittently. But it must be taken in increments of no less than one day.

D. C. Council approval, mayoral opposition

The proposal was approved by the D.C. Council in December 2016. But the measure became law without the signature of the District’s mayor. Mayor Muriel Bowser did not sign it because of concerns over the cost, primarily the estimated $250 million annual price tag, WAMU has reported. The city’s business and trade associations had urged the mayor to veto the measure, warning that it was expensive and would dampen the city’s economic growth, WAMU reported.

Only the District of Columbia and five states – California, New Jersey, Rhode Island, New York, and Washington – offer paid family leave, according to the Society for Human Resource Management. While 11 states and D.C. and about 30 localities require paid sick leave.

This article is intended only for informational purposes. It is not a substitute for legal consultation.