Universal Paid Leave Amendment Act: Frequently Asked Questions
Posted by Ashley Fox on December 02, 2016 at 10:35 AM
On Tuesday, December 6th, the DC Council will consider and vote on legislation to create a paid family and parental leave program for District residents and workers. The bill would establish an insurance fund that would pay benefits for qualifying events including the birth or adoption of a child and the need to care for a seriously ill family member.
The United States is the only industrialized country without some type of paid leave, though California, Rhode Island, New Jersey, and New York have state programs. The District government, as well as some private employers, offer paid leave, but the vast majority of District employers do not. The initial bill was introduced in October of 2015. Since then, the Council has held three public hearings, released a discussion draft, and received input from the business community, members of the public, and paid leave advocates. Below is a breakdown of the updated proposal.
Who would be eligible and who pays?
- The fund would cover anyone who works for a private sector employer in the District, regardless of where they live. Employers would contribute 0.62% of their payroll to the fund. This means that an employer with a $1 million annual payroll will pay $6,200 each year into the fund.
- Ideally, the program would also cover District residents who work for the federal government or outside of the District, but Congress doesn’t allow the District to collect contributions to the fund from the federal government or employers in other states.
- Given that not all employers of DC residents can pay into the fund, the introduced bill had federally and non-DC employed residents pay 1% or less of their salary into the fund themselves so that they could still receive the benefit.
- Chairman Mendelson’s final version of the bill strikes federal and non-DC employed residents from the bill, meaning that they would not be eligible for benefits.
- Self-employed individuals may opt into the fund if they choose.
- DC government employees would remain covered by the District’s program with the District government covering costs. The introduced bill proposed an increase in benefits of up to 16 weeks and expanded the program to cover self-care. Chairman Mendelson’s final proposal keeps the program for these employees at 8 weeks and does not add self-care coverage.
What are the benefits?
- In Chairman Mendelson’s final proposal the maximum leave for a new birth or adoption is 11 weeks; and 8 weeks for the care of an ill close family member, including a child, parent, spouse, domestic partner, or grandparent. For both types of leave, there is a one-week waiting period before paid leave benefits will be paid.
- Additionally, under the final proposal, eligible workers who make up to one-and-a-half-times the minimum wage, or $46,800 a year, will be paid 90-percent of their typical wages during a leave. If a worker earns between $46,800 and $61,700 a year, the benefit during a leave will be between 84% and 90% of typical wages. Workers earning more than $61,700 a year will receive the maximum benefit of $1,000 per week.
How does this affect employers?
- This program is an insurance fund, similar to unemployment insurance or social security, not an employer regulation like sick days. It does not require employers to pay the salaries of people who are on leave. Instead, D.C. employers will pay into the fund at a rate of 0.62% of salaries, and when their employees get sick or otherwise need leave, the fund will step in and pay benefits.
- For the benefit payments, employees apply for benefits from the fund, and the administrator of the fund will handle determining their eligibility.
Do employers have to hold jobs open for workers who take the benefit?
- The final proposal doesn’t change the D.C. Family and Medical Leave Act, which already requires large employers to hold a job open for up to 16 weeks for most long-term employees who take leave due to a qualifying event, but exempts small businesses with fewer than 20 employees. The bill does not alter this requirement or the small business exemption.
Will this be a burden on businesses?
- Research from California’s longtime program shows that 90% of employers feel paid family leave had either a positive impact or no impact on profitability.
- The bill would also level the playing field for small businesses competing for talented employees with large employers that offer some type of paid family and medical leave. Many small businesses want to offer paid family leave, but they can’t afford to pay two salaries at once when they hire a temporary employee to replace someone on leave. This bill makes offering paid leave a lot easier, cheaper, and more predictable because businesses can budget to pay 1% or less of their payroll instead of a much higher bill in the years when employees need leave.
- The D.C. Council’s Budget Office has taken nearly a year to conduct an extensive Economic and Policy Impact Statement on how this particular program will impact the District’s economy and businesses, which is expected to be released on December 2, 2016. The report will discuss the economic and policy literature on paid leave’s effects, conduct a comparison of leave programs in other jurisdictions, and contain economic modeling of the likely costs and benefits of the program. We expect the report will show that the bill — like paid leave programs in other states and cities — will have a positive or negligible effect on our economy.