As part of the Fiscal Year 2023 Budget Support Act of 2022, the District of Columbia Council has voted to amend the DC Universal Paid Leave Act (UPLA) in ways likely to please both employers and employees.
More Generous Benefits for DC Employees
The “Universal Paid Leave Amendment Act of 2022” section of the legislation (the Act) will increase the maximum duration of paid leave benefits available to eligible employees to 12 weeks of parental, family, and/or medical leave benefits plus up to two weeks of prenatal leave benefits per 52-week period. Called either Universal Paid Leave (or UPL) or Paid Family Leave (or PFL) benefits, the program is administered by the District of Columbia’s Department of Employment Services (DOES) and funded largely through employer-paid payroll taxes.
Effective October 1, 2022, the paid leave available through DC’s UPL benefits will increase:
Prenatal leave benefits can be added to parental leave benefits, for a total of 14 weeks of paid leave benefits. Otherwise, the maximum combination of paid leave benefits any eligible individual can receive is capped at 12 weeks per 52-week period. Additionally, the Act also will eliminate the current one-week waiting period before an eligible employee may receive UPL/PFL benefits for a qualifying absence. This waiting period had previously been suspended as a temporary measure related to the COVID-19 pandemic.
Cost Savings for DC Employers, but Administrative Burdens
DC employers will also benefit from this round of amendments to the UPLA. Thanks to a surplus in the PFL Fund, even though benefits will expand for employees, employer contributions to the Fund now shrink from 0.62% to 0.26% of an employee’s salary, as of July 1, 2022.
As predicted in our previous client alert, UPL/PFL benefits provide an important safety net for many eligible employees whose employers do not provide generous paid leave benefits. However, the benefit has also proven to be a clumsy fit and an added administrative burden for both employers who do provide generous paid leave and their employees.
DC employers have wrestled with how to integrate the DC UPL/PFL benefits into their own paid leave plans. Employees must independently apply for the UPL/PFL benefits and typically do not receive the benefit check for several weeks after submitting the application. Some employers have reduced the overall paid leave they offer to DC employees, knowing that employees will be able to supplement employer-provided paid leave with the government-administered but employer-funded paid leave benefits. Others have maintained their prior levels of paid leave, especially if they have employees in other jurisdictions and find it administratively easier to have a single paid leave policy. And yet others have advanced paid leave to eligible employees on condition that the employees apply for the UPL/PFL benefits and later repay the advance. Regardless of the strategy a DC employer has adopted, however, the new Act’s reduction in the payroll tax owed will surely be welcome.
Maryland Institutes Paid Family Leave Under a Different Approach
The challenges of the DC approach are evident in comparison with Maryland’s recently enacted government-administered paid family and medical leave act—the Time to Care Act of 2022, passed by a legislative override of Governor Hogan’s veto on April 9, 2022. The Maryland law will, beginning January 1, 2025, provide up to 12 weeks of paid leave benefits to eligible employees, with a maximum benefit amount of $1,000 per week depending on the employee’s wage level, as with DC’s benefit level approach. Unlike under DC’s law, however, Maryland’s paid leave benefits will be funded by payroll taxes shared between the employer and the employee, at a yet to be determined rate, which will go into effect on October 1, 2023. Unlike their DC counterparts, Maryland employees will have to exhaust all paid leave voluntarily provide by their employer (such as vacation) before receiving the state-paid benefits. And, unlike in DC, Maryland employers that provide their employees paid leave benefits equivalent to or more generous than the state benefits through a private benefit plan, insurance, or a combination of the two, may apply to the Maryland Department of Labor for an exemption from the state program and mandatory contributions.
DC employers should prepare to implement the expanded leave provision in anticipation of the October 1, 2022, effective date by reviewing and updating their leave policies and all related postings to reflect the additional leave time available. DC employers should also educate their employees about the upcoming changes to available UPL benefits and continue to communicate clearly to employees about how an employee taking qualifying leave may access the employer’s benefits and UPL/PFL benefits. Employers must also comply with the requirement to give covered employees notice of their UPL/PFL leave rights upon hire, at least once a year, and whenever the employee requires leave that could qualify for UPL/PFL benefits.
Maryland employers should look for more information from the Maryland Department of Labor about the forthcoming rules and should begin considering whether to participate in the state-provided insurance plan or to provide their employees equivalent benefits through a policy the employer administers.