Efforts are currently underway to try to amend the funding of Washington, DC’s paid leave act before its effects are felt by employers and employees. On October 10 the DC Council will hold a hearing on multiple paid leave bills which provide different funding mechanisms for the paid leave bill that passed in December of 2016.
If unchanged, the current law will go into effect and all DC employers will be subject to the 0.62% payroll tax on all employees on July 1, 2019. Employees would not be able to access the paid leave benefit until July 1, 2020 at a minimum, but very likely longer as technical delays are common with new government programs.
ASAE is working with a wide ranging coalition of other large DC organizations including the DC Chamber of Commerce and the Consortium of Universities of the Washington Metropolitan Area to support legislation that will best serve employees and employers.
While there are five bills that will be addressed at this hearing, the legislation introduced by Chairman Mendelson is expected to be the most likely to become law. Bill 22-334 would create an employer mandate for large employers with more than 100 employees as well as for smaller employers who want to provide their own leave. It would also create a government program for businesses with 100 or fewer employees. This legislation would amend the tax for small employers from 0.62% to 0.54% of employees’ wages. Employers who provide their own leave will still be subject to a 0.15% tax.
While the Mendelson legislation is a better option than the current law, ASAE still has strong concerns that employers who chose to provide their own paid leave to employees will still be subject to a .15% tax on wages of covered employees. This tax is simply for the privilege of providing their own leave. In addition, the reduced tax rate of 0.54% of employees’ wages for employers who enter the government program will still be onerous for many of our members.
The paid leave law passed by the DC Council last December established a paid leave program for individuals employed in DC. The program would increase employer-paid payroll taxes by .62 percent. If left unchanged, the bill will create roughly $250 million in new taxes on local businesses in the District to fund two months of paid time off for workers to care for newborns or adopted children. The bill, which applies to both full and part-time workers, also grants employees six weeks of paid leave to help ailing relatives. Two weeks of leave are available for personal sick leave. Employers would not be subject to the new tax until July 1, 2019, and employees would not be able to access the paid leave benefit until July 1, 2020.
For more about DC’s Paid Leave Act contact the ASAE Public Policy team at email@example.com.