What You Need to Know About the Washington, DC Universal Paid Leave Act

The Washington D.C. Council gave its approval December 20 to the Universal Paid Leave Act of 2015 (Bill B21-0415) that would require employers to provide employees up to 8 weeks of paid parental leave, up to 6 weeks of paid family leave and up to 2 weeks of paid sick leave (“8/6/2”). The Paid Leave Act is now awaiting approval from the mayor, who can decide to veto the bill or to allow it to become law without approval.

If it becomes law, the District of Columbia Council bill would be among the most generous mandatory paid leave measures in the nation. Here are some helpful insights to get you more familiar with the Paid Leave Act.

1. Beginning in 2020, the bill would pay 90 percent of an employee’s first $900 in weekly wages and 50 percent of any weekly wages above $900, up to a maximum benefit of $1,000 per week.
2. Payments to eligible employees, which would appear to include full and part-time workers, would be made by a new D.C. government agency created specifically to administer the paid leave program.
3. The legislation would establish a Universal Paid Leave Implementation Fund financed by a new 0.62 percent payroll tax beginning on March 1, 2019 on private sector employers based on total wages paid to eligible employees. The tax is projected to raise $250 million a year.
4. The new D.C. government agency, with some 100 employees, would determine individuals’ eligibility for paid leave and administer payments to qualified employees. Claims would be filed with the District Government, which would notify employers of claims being filed. In this sense the D.C. government would administer employers’ paid leave benefits.

The employer payroll tax and government administrative agency partly explain the D.C. business community’s opposition to the bill—and its unusual open letter to the D.C. Council published in the Washington Post on December 20.

Various employer groups proposed a substitute bill that would have required D.C. employers to provide the 8/6/2 paid leave formula as an employer-financed benefit. A tax credit would be available to small businesses to help defray the added costs. The mayor has also openly opposed the Paid Leave Act in its current form. 

In the end the D.C. Council voted to reject the substitute measure before adopting the more sweeping paid leave legislation by a vote of 9-4.

Outlook for Universal Paid Leave Act in Washington, DC

Notwithstanding support from a broad coalition of work-family advocacy groups and labor unions, the future of the D.C. Council’s paid leave legislation remains in question. It’s not yet clear whether Mayor Bowser’s opposition will translate into a veto of the bill, which the Council could override but which could set up a difficult confrontation with the mayor.

Also, certain D.C. tax and spending bills require the approval of the U.S. Congress, which will be controlled by Republicans in 2017. Congress could block funding for the new bill even if it were to become law.

Finally, the new paid leave program will require two or three years to ramp up before employees would begin receiving benefits. Some $40 million will need to be earmarked next year to develop an information system to administer the program. This start-up period might afford time for supporters and opponents to come together on an alternative formulation.

In any event, the D.C. Council has adopted a strikingly new approach to mandated employee paid leave benefits: employer payroll tax-funded and government-administered. With the incoming Trump Administration unlikely to support federal employer mandates, the D.C. Council legislation could become a model for state and local governments around the country.