Contributions to the D.C. Paid Family Leave Fund begin July 1, 2019
Pursuant to the Universal Paid Leave Amendment Act of 2016 (“Act”), all covered employers will be required to pay into the paid leave fund established by the Act through quarterly payroll taxes. Benefits from the fund will not begin for another year and will be administered by the government, but the taxes will begin to accrue on July 1, 2019.
Covered employers include “any individual, partnership, general contractor, subcontractor, association, corporation, business trust, or any group of persons who directly or indirectly or through an agent or any other person, including through a temporary services or staffing agency or similar entity, employs or exercises control over wages, hours, or working conditions of an employees and is required to pay unemployment insurance on behalf of its employee.” See Public Notice to District of Columbia Employees and Employees for Paid Family Leave (“Notice”). There are no exemptions or thresholds for business size or revenue. This definition will require employers to pay close attention to joint employer scenarios and will necessitate contractual updates for government contractors that place employees on jobs within the District of Columbia.
Covered employees include all employees that spend 50% or more of their time working for a covered employer in the District of Columbia or that are primarily located in the District and spend no more than 50% of their time working outside of the District. For each such covered employee, employers are required to contribute .62% of gross wages on a quarterly basis. The calculation is based on the prior quarter wages – similar to unemployment tax insurance. See Notice.
Employers are required to submit quarterly wage reports on the form provided by the Office of Paid Family Leave (“Office”), post a notice of rights, and maintain records of contributions for three (3) years. The Office will begin administration and distribution of benefits on July 1, 2020, and employers are not required to participate in that process. The contributions are independent of any employer paid or unpaid time off benefits and may not be offset by any provided or accrued leave; however, employers do have the right to determine whether or not sponsored paid benefits run concurrently with an employee’s use of the Office’s paid benefits. As such, employers are well advised to address the program in their leave policies.
If you have any questions on this topic, please contact us.
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