DC Starts Paid Family Leave Tax

Paid LeaveOn July 1, 2019, the District of Columbia (DC) started collecting taxes from all private sector employers to fund the Universal Paid Leave Amendment Act of 2016. Every quarter, covered employers must file a wage report and pay 0.62 percent on that quarter’s wages or income. Covered employers include all DC employers subject to DC Unemployment Insurance tax and self-employed individuals who choose to opt in to the program. Although the tax is calculated based on employees’ quarterly wages, the cost cannot be deducted from employee pay.

The Act will provide covered employees with up to eight weeks to bond with a new child, six weeks to care for a family member with a serious health condition, and two weeks to care for their own serious health condition starting July 2020. Employees are covered if they spend more than 50 percent of their working hours in DC or regularly spend a “substantial” amount of their working hours in DC and not more than 50 percent of their working hours for a covered employer in any other jurisdiction. Employers who already provide equivalent or more generous paid leave benefits to their employees are not exempt from paying the quarterly payroll tax. However, these employers may opt to have their paid leave periods run concurrently with paid leave taken under the Act.

The Act requires employers to provide their employees with notice of the Paid Family Leave program by keeping a poster at each worksite in a conspicuous place where labor notices are customarily posted. The Department of Employment Services (DOES) expects to release the poster by January 1, 2020. Employers won’t be responsible for posting and maintaining the poster until DOES releases it. In addition to the poster, employers must annually provide their employees with the Paid Family Leave notice physically or electronically. Employers also need to provide the notice to new employees within 30 days of hiring, and at the time paid family leave is needed by an employee. Violations of the notice requirements may result in a civil penalty of:

  • $100 for each covered employee who didn’t receive individual notice; and/or
  • $100 for each day that a covered employer failed to post the notice in a conspicuous place at each worksite.

Employers must maintain records for all covered employees for information related to paid family leave for a minimum of three years. Information includes:

  • name and social security number,
  • the beginning and ending dates of each pay period,
  • the wages they were paid for each pay period,
  • method of payment,
  • their earnings, and
  • the dates they were paid their wages.

Employers may wish to review and update their leave policies to ensure compliance with the DC Paid Family Leave program and make any necessary modifications. CPC will continue to monitor this legislation. Make sure to visit our website for new updates!