The DC Office of Paid Family Leave (OPFL), part of the Department of Employment Services (DOES), continues to promulgate regulations to implement the Universal Paid Leave Amendment Act of 2016.
OPFL posted proposed regulations in April, and solicited comments from the public. Those comments are available here. Per OPFL’s web site, “Based on comments received, and the statutory timelines, DOES decided to divide the regulations into two chapters, separating the employer contributions and paid-leave benefits. Additionally, these proposed tax regulations include significant changes from the initial proposed rules in order to address employer registration and responsibilities, opt-in and opt-out procedures for self-employed individuals, wages, and contribution and collection procedures.”
The new proposed regulations that deal with the employer contributions are available here. Comments to the proposed rulemaking can be submitted in writing by August 5, 2018, to the Department of Employment Services, Office of Paid Family Leave, 4058 Minnesota Avenue NE, Washington, DC, 20019, or via email to email@example.com.
The proposed regulations address some of the questions CHAMPS members raised at the paid leave implementation briefing in May. We are still awaiting a copy of the PowerPoint presentation from May, and that will be distributed to CHAMPS members when it becomes available from OPFL.
The proposed regulations clarify items that do not need to be reported as wages, such as:
- an allowance for automobiles, oil, and gas to a salesman required to work in his or her own car over an extended territory, all transit flash passes or tokens; telephone in an employee’s residence for the employer’s convenience; and entertainment money expended on the
- special uniforms that an employee is required to wear and the employer launders or pays for the cost of laundering the uniform;
- discounts provided to covered employees for goods purchased from the covered employer;
- so-called “supper money,” being an allowance for a meal when the
covered employee works overtime.
Employers do need to report all severance payments on quarterly wage statements to OPFL.
In addition to defining the wages that are subject to the .62 percent payroll tax, the proposed regulations also cover:
- how a self-employed individual can opt in or opt out of the paid leave program, the timeframes for opting in and opting out, and the requirements if a self-employed individual opts in;
- outlines contributions by covered employers, including noting that an employer must make contributions even if even if the covered employer provides additional leave benefits to its employees;
- collection procedures, including fines and timeframes for fines for late payments by employers;
- the requirements on the types of notice and frequency with which an employer must make employees aware of paid leave;
- and the record keeping requirements of the employer – which are similar to those for the UI system.
CHAMPS will continue to track implementation of the paid leave bill and will provide updates to members as necessary.
Last week, about 20 CHAMPS members heard from the Office of Universal Paid Family Leave on the process of implementing the paid leave measure. Associate Director Monnikka Madison introduced the office members and gave us an overview of the paid leave legislation. This was one of the first outreach briefings with the business community that the Office of Paid Family Leave has conducted.
As a reminder, that is:
8 weeks of parental leave
6 weeks of leave to care for a sick family member with a serious health condition;
and 2 weeks of paid medical leave for one’s own health condition.
Timing and Employer Requirements
The act is expected to go into effect as planned on July 1. For employers, collection of the .62% payroll tax would begin July 1 2019, and the system is expected to be similar to the Unemployment Insurance system, where an employer registers through the DOES online portal and pays the payroll tax electronically. An assessment of the employers’ quarterly contributions for each of the employees total wages would begin the quarter before – so April 1 through June 30. Employers would file a Paid Family Leave quarterly wage report through the DOES online portal for the previous quarter.
Employers are required to pay the payroll tax on the employees wages, which includes the cash value of non-monetary benefits, such as paid vacation. Employers do not have to include the cost of a dinner provided for the employer for a group of employees that works late on a project, for example, or a parking benefit.
Employers are also required to provide notice to employees about the paid leave benefit in several ways:
- post a notice in the workplace, which will be provided by DOES
- inform employees at the time of the employee’s hiring, annually to all employees, and at the time that the employer is aware that an employee needs paid leave.
Employers are also required to develop, maintain and keep records for at least 3 years on employees, including paystubs, schedules, and communications with employees regarding paid leave. This is important to the employer and the employee should a claim for paid leave be made.
The key question of which employees are eligible for the benefit (and thus must be included in the .62% payroll tax) is any employee working in the District of Columbia more than 50% of their time for that employer in the quarter preceding. This is the case whether an employee is full-time, part-time, or seasonal. The question of defining whether a seasonal employee is eligible came up several times. OPFL staff noted that the question of seasonal employment is more a question for the seasonal employee for whether they are eligible to claim the paid leave benefit and when, rather than a question for the employer. If the seasonal worker is a covered employee (generally, defined as an employee on whom the employer is required to pay Unemployment Insurance) then the employer has to pay the paid leave payroll tax on that person’s wages for the prior quarter.
In terms of part-time employees, an example used was a restaurant server who worked 10 hours a week. Those 10 hours all occurred in the District of Columbia, so the employer must pay payroll tax on the wages paid to that employee those hours for the preceding quarter.
Another example given was a delivery driver. If that driver spends 50% or more of his or her time in a given quarter in the District of Columbia, the employer must pay the paid family leave payroll tax on that employee. If for the next quarter, the drive spends less than 50% of work time in the District, the employer does not pay the paid family leave payroll tax on those hours.
For employers who do not pay the paid leave payroll tax on a quarterly basis, penalties will accrue. The penalty will be 10% of the total contribution amount due, or $100, whichever is higher. And an interest rate of 1.5% per month will be included.
A question was asked about the responsibility of employees to give notice to employers that they are taking paid leave. The law requires that employees give notice as soon as possible, but does not require notice, nor does it establish a penalty if notice is not given. And through discussion at the briefing, it was clear that some situations, like an employee who breaks a leg or has a serious medical issues like a heart attack, will not be able to give much or any advance notice, while leave for giving birth or adoption of a child would generally be able to be requested in advance.
Questions were also asked on how long it takes for DOES to make a determination on whether a employee can receive paid leave (less than 10 days for a determination), and whether there is a waiting period similar to the one week for Unemployment Insurance (there is).
In addition to the Q and A, CHAMPS members submitted questions and contact information to the staff from the Office of Paid Family Leave, in addition to questions previously submitted. We will send responses to the CHAMPS membership when those are returned to us. We have also asked that the Powerpoint presentation that was shown be made available for distribution to CHAMPS members. While some employer questions couldn’t be answered yet, DOES is beginning an outreach process and is determining if some issues surrounding paid leave will need to be address through regulations, and CHAMPS will also keep members posted on that process.
DOES responses to CHAMPS questions are available here: Office of Paid Family Leave_CHAMPS responses.
April 2, 2018
Universal Paid Leave Proposed Rulemaking
In our last update, we noted it is unlikely that changes will be made to the Universal Paid Leave measure that was enacted last year, and that DC’s Department of Employment Services (DOES) has begun implementation.
On Saturday, DOES posted a Notice of Proposed Rulemaking that would amend the Universal Paid Leave Act by adding a new chapter of clarifying information.
DOES will accept comments to the proposed rulemaking in writing within 30 days of publication of the notice in the DC Register, expected to be this week.
Comments can be sent to Department of Employment Services, 4058 Minnesota Avenue NE, Washington, DC, 20019, or via email to firstname.lastname@example.org
What Does the Rulemaking Propose?
The rulemaking proposes adding a new chapter that clarifies some of the definitions and processes around paid leave. For example, it outlines:
-how an individual applies through DOES for a paid leave benefit;
-how the weekly benefit payment will be calculated;
-the limits of total number of paid leave workweeks (8);
-how an employee must notify an employer;
-requirements for how and when employers must make employees aware of the benefit;
-a general list of the record keeping required by employers; and,
-how the universal paid leave benefit relates to other benefits, such as DC FMLA.
Businesses should particularly note:
- The regulations clarify that an eligible individual may not receive more than a maximum of 8 workweeks of paid leave during a 52 week period, regardless of the number of qualifying leave events that occur during that 52 week period. For example: an eligible individual can’t take 8 weeks of paid parental leave, and then also take 2 weeks of universal leave for a qualified medical event.
- The leave can be taken intermittently.
- An employee should provide written notice to the employer to the extent practicable, and the reason for leave (within parameters of HIPAA), the beginning and end date of leave, and whether it will be continuous or intermittent.
- There is no exemption for employers who already provide leave benefits. Per the regulation: “A covered employer shall make contributions under subsection 3311 even if the covered employer provides additional leave benefits to their employees.”
- In terms of recordkeeping, per the regulations,”All covered employers shall develop, maintain, and make available to DOES records regarding the employer’s activities related to the Act, including paystubs, personal checks, cash receipts, or bank deposits; work schedules; communications between employer and employee; any circumstantial evidence regarding the employee’s eligibility; and any other record as requested by DOES.”
- In terms of how universal paid leave intersects with Family and Medical Leave Act of 1993 or DC FMLA, if the paid leave in the regulation also qualifies as protected leave pursuant to FMLA or DC FMLA, “the paid leave shall run concurrently with, and not in addition to, leave taken under those other acts.”
- And lastly, the universal paid leave act does not provide job protection “to any eligible individual beyond that to which an individual is entitled under the D.C. FMLA.”
CHAMPS Questions to DOES
CHAMPS submitted questions to DOES in mid-March, some of which are answered by these proposed regulations. Our questions included:
-Are part time and full time employees covered by the legislation?
-If an employee telecommutes from outside DC, are they covered by the legislation? If an employee telecommutes and is not eligible for benefits, does the employer pay the .62 tax on that individual’s salary?
-Will there be fees or regulatory requirements on businesses, such as additional information that they need to file?
-How/when will payroll be audited to determine the tax? Are we paying .62 on salaries that is determined pay period by pay period? Or is there an audit and we pay based on an average? Or determined at the beginning of each calendar year or quarterly?
-When will this be implemented? When will outreach to the business community begin? Will there be an FAQ for the business community on how to comply?
-What kind of system is being put in place to collect the tax? Will this be like the sales tax system? Will this be like the Unemployment Insurance system?
– How will this intersect with the DC Family and Medical Leave Act? If I employ fewer that 20 people, under that measure I don’t have to hold a person’s job. Do I have to hold a person’s job under this legislation?
RESPONSES FROM DOES can be viewed here.
Where Can I Learn More?
Check DOES for updates here.
Wondering what the status of the paid family leave law is in DC? Here’s an update, a refresher on the legislation, and steps that have been taken to begin implementation of the law.
Chairman Phil Mendelsohn said in early February that he would not continue efforts to amend the DC Paid Family Leave Act, which was enacted February 17, 2017. This means changes to the act aren’t likely, and it is expected to go into effect as enacted.
Here’s a reminder on the details of the legislation that was enacted:
- For eligible employees, 8 weeks of parental leave, 6 weeks of family leave, and 2 weeks of medical leave for every 52 weeks work
- Eligible individuals must be part- or full-time employees in the District
- DC government and federal employees are not included
- Benefits are paid by employer contributions, a 0.62 percent tax on wages or annual self-employment income. Self-employed individuals can opt-in.
- Employer tax scheduled to begin July 1, 2019. Benefits scheduled to be available starting July 1, 2020.
What happens next?
- DC Office of Employment Service (DOES) has been tasked with implementation of the law, which has two basic purposes: to collect the tax that funds the paid family leave benefit, and to provide a benefit to eligible employees.
- DOES has a 3 year implementation schedule that started in 2017 – so we are just getting into year 2 of implementation.
- DOES has begun quarterly reports on progress. The first report came out in late December 2017. The agency has also created a “splash page” for the Office of Paid Family Leave, which will presumably have more information as implementation moves forward.
- The DC Council’s Committee on Labor and Workforce Development has also begun to hold roundtable discussions – the most recent was on January 31.
What does the report say?
The report focuses primarily on the technical systems that need to be purchased and developed into a tax and benefit system that can communicate well between the two functions. It lists and describes the functions that both systems will need to be capable of performing to collect taxes and disburse benefits.
While the report does not include very many specific milestones, it does talk about the importance of engaging community stakeholders and creating an education campaign. The report notes that (my emphasis added) “Additionally, the District will conduct a multi-year public education and outreach campaign that will include advertising (i.e. online, mobile, outdoor billboard, newspaper, radio, television, metro ads), informational and educational materials (i.e. brochures, posters, flyers, etc.), social media efforts, town hall meetings with stakeholders, and other direct outreach initiatives. As the program and marketing campaign progresses, a website or microsite will be developed to host paid leave information for the District’s targeted groups, including fact sheets, FAQs, press releases, contact information, etc.”
CHAMPS will continue to track the implementation and will make members aware of key points in the process where we can have input, such as public comment periods.