News Release: DC Set to Dramatically Expand Paid Leave Benefits for Workers and Slash Tax Rate for Employers
CFO Certifies Significant Tax Rate Cut to .26% from .62%, a $200 million savings;
Also certifies program increase in parental leave from 8 to 12 weeks, medical and family leave from 6 to 12 weeks for eligible workers beginning July 1, 2022
WASHINGTON, D.C., March 2, 2022 – D.C.’s Paid Family Leave Program is set to drastically cut the payroll tax rate for employers to 0.26% from the current 0.62% starting July 1 while, at the same time, significantly increasing the weeks of compensated time-off for eligible workers welcoming a new child into their family or taking care of themselves or family members. The momentous impending changes were announced today at a D.C. Council hearing by At-Large Councilmember Elissa Silverman (I-At-Large), chair of the Council’s Committee on Labor and Workforce Development and one of the authors of D.C.’s Universal Paid Leave law.
The changes are the result of a law Silverman put into D.C.’s current fiscal year 2022 budget, which required D.C.’s Chief Financial Officer (CFO) to review the projected revenue and expenses of the program. If the CFO found employer tax contributions were forecast to exceed the costs needed to sustain the current level of benefits, the law stipulated an incremental expansion of weekly benefits in the program up to 12 weeks for all three categories of parental, family, and personal medical leave, and when those benefit levels were reached and deemed sustainable, the CFO would then lower the tax rate accordingly.
“I always said that the CFO’s cost estimates for the program were way too high, which meant employers were paying way too much in tax for what their employees were getting in paid leave benefits, and that’s why I put the CFO review into law for this budget,” Silverman said. “But even I was stunned when I saw the CFO certified paying for up to 12 weeks in all three categories of paid leave AND slashing the employer tax rate starting July 1. I thought that would happen in a series of years, not in one single year!”
According to the CFO’s March 1 certification, which is attached, there will be enough money in the paid leave fund to allow for eligible workers to take up to 12 weeks parental leave, 12 weeks of family leave, and/or 12 weeks of personal medical leave if they have a qualifying medical event starting July 1–even with a significantly reduced employer payroll tax rate of 0.26% also starting July 1. The drastic lowering of the payroll tax (currently 0.62%) amounts to $202 million in savings for employers in the first year. By law, the CFO is required to certify the sustainability of the fund every year by March 1. In the letter, the CFO writes that the Department of Employment Services, which administers the paid leave program, is determining how quickly it can implement the changes and notes the changes “may be later than the fiscal certification date.”
Research and evidence-based studies have shown that paid leave not only helps keep workers and their family members stay healthy and care for loved ones, but also benefits employers by increasing worker retention, productivity and loyalty.
“This is validation that paid leave is a win-win-win for workers, for employers, and for our city,” Silverman said. “Now we need for the District of Columbia government to remain competitive with the federal government and the private sector by increasing paid leave weeks for our own DC government employees. We need to increase at least to 12 weeks to attract the best and brightest to local government. Our city will benefit!”
Silverman highlighted this point in her opening remarks at a Council hearing held today on two bills that would expand paid leave benefits for DC government workers. The first bill, the DC Government Paid Leave Enhancement Act, which Silverman wrote with fellow At-Large Councilmember Christina Henderson (I-At-Large) and was co-introduced by all 13 councilmembers, would provide D.C. government employees with up to 12 weeks of parental or family caregiving leave as well as permanently add personal medical leave and pre-natal leave. Currently, DC government offers up to 8 weeks of parental and family leave and has no personal medical or pre-natal leave.
The second bill under consideration today, the District Government Family Bereavement Act, was introduced by Mayor Muriel Bowser and would provide an additional 10 days paid leave for D.C. government workers who suffer the loss of a family member.
“Universal Paid Leave is an example of what is going right when it comes to D.C. government programs: It was implemented on time, despite some very vocal critics, and now it is delivering tax savings to employers while giving their workers enhanced benefits,” Silverman said. “I think this proves what dogged oversight can accomplish.”