Universal Paid Leave Benefits Become Available in July
On July 1, 2020, the District of Columbia’s Department of Employment Services (DOES) will begin administering paid leave benefits as part of the Universal Paid Leave Amendment Act. These benefits—called variously Universal Paid Leave (UPL) or Paid Family Leave (PFL) benefits—will permit eligible employees working in the District to receive partial wage replacement benefits from the D.C. government for qualifying absences from work. Lower-wage employees may receive 90% of their average weekly wage—up to $840 per week. Employees who are paid more than 150% of minimum wage will receive larger benefits checks, although reflecting a smaller percentage of their earnings, up to a maximum of $1,000 per week. The benefits will be funded through a 0.62% payroll tax imposed on covered employers that went into effect on July 1, 2019.
UPL benefits are available for eligible employees taking qualifying parental leave to take care of a new child (up to eight weeks in a year), family leave to care for a family member with a serious health condition (up to six weeks in a year), and/or medical leave for the employee’s own serious health condition (up to two weeks in a year). While employees are permitted to take any combination of the three types of leave, they may receive no more than eight weeks of UPL benefits in a year. The statute does not require job restoration unless the absence is also covered under the D.C. Family and Medical Leave Act.
Employer Notice Requirements Are Already In Effect
As of February 1, 2020, covered employers must provide a notice published by DOES detailing the UPL and the payment of benefits to all newly hired employees in D.C. and to individuals employees “when the employer receives direct notice after February 1, 2020 of the employee’s need for leave for an event that could qualify for PFL benefits.” The notice must be provided to all employees prior to February 1, 2021, and at least once per year thereafter and must also be posted by employers in their worksites.
Mayor’s Draft Final Rule Imposes Administrative Burdens on Employees
On January 6, 2020, the Mayor’s office submitted its draft final rule regarding the procedures necessary to administer paid leave benefits to eligible individuals employed in D.C. If no action is taken by the D.C. Council, the proposed final rule will be deemed approved and final by March 26, 2020.
For employees whose employers do not currently provide generous paid leave benefits, the availability of UPL benefits will provide an important financial safety net for qualifying absences. For employees of employers who already provide generous leave benefits for qualifying absences, however, the new system may be perceived as an unwelcome and cumbersome transfer of administrative burdens.
Eligible individuals are required, to the extent practicable, to provide written notice to employers of the need for paid leave benefits before taking leave, and if leave is foreseeable, shall provide written notice at least 10 days prior to taking leave. The notice should include the type of leave requested, the expected duration of the leave, the expected start and end dates of the leave, and whether paid leave benefits will be taken continuously or intermittently.
To receive UPL benefits, eligible individuals are required to submit a claim for benefits through an online portal and may submit a claim for: 1) qualifying family leave; 2) qualifying medical leave; or 3) qualifying parental leave. Notably, an applicant may not submit a claim before the occurrence of the qualifying leave event, and no benefits are payable for leave taken before the applicant has submitted a claim to DOES for paid leave benefits, except in exigent circumstances. Applicants have the option of choosing continuous or intermittent leave. Accordingly, in most cases employees will need to submit their benefits claim on the first day of a qualifying absence.
Within three days of processing a claim for paid leave benefits, DOES will notify the covered employer of the filing of a claim by the applicant. DOES will request that the employer provide the applicant’s employment status, the last day worked by the applicant, and which type of leave the employee requested from the employer. Employers are required to respond to requests within four business days.
DOES will pay benefits on a biweekly schedule and will make the first payment within 10 business days after notifying the individual of approval of benefits. Accordingly, eligible employees may need to wait several weeks before receiving their UPL benefits payment.
Difficult Choices for Employers
The draft final rule makes clear that an eligible employee’s right to receive paid leave benefits from an employer while also receiving UPL benefits will be determined by the employer’s policies. An employer may not reduce or restrict an employee’s access to D.C. Accrued Sick and Safe Leave Act (ASSLA) accrued leave or to long-term disability benefits as a result of an employee’s eligibility for UPL benefits. Employers may, however, either leave unchanged or modify other short-term, employer-provided paid leave benefits, including but not limited to paid sick time in excess of ASSLA accrual amounts, vacation time, PTO, short-term disability benefits, and paid parental leave.
Because covered employers are already funding their employees’ UPL benefits through their payroll taxes, some employers plan to modify their paid leave policies to make corresponding reductions in the employer-paid leave benefits available under their policies. Employers may, for example, convert paid leave policies into an income replacement benefit, such that the paid leave benefit will be paid to employees only to the extent the employee experiences a loss of income due to a qualifying absence. For example, an employer may choose to modify its parental leave policy such that an employee who usually earns $1,300 per week would receive only $300 per week of parental leave benefits from the employer. The employee would eventually receive full income replacement once the employee applies for and receives her $1,000 UPL benefit payment from the D.C. Paid Family Leave Fund, but the employee would be responsible for applying for that benefit.
Some employers may be reluctant to modify their existing paid leave policies, however, for several reasons. First, their employees are accustomed to and may depend financially on a consistent paycheck from their employer. Because UPL benefits provide only partial wage replacement and will be paid on a delayed schedule, employees are unlikely to welcome instructions to apply for UPL benefits to cover their qualifying absences. Second, employers that also maintain offices outside of the District may find it easier to have a unified, company-wide approach to employee paid leave. Third, employers may consider it too great an administrative burden to convert existing paid leave systems into wage replacement benefits that bridge the gap between UPL benefit checks and the employee’s usual salary.
To address these challenges, employers may consider creating exceptions for small amounts of leave such that the employer will pay out full sick or vacation leave if taken in small increments. Employers may also consider entering into agreements to advance paid leave to employees who take leave for UPL-qualifying absences, on the condition that 1) the employee timely applies for the UPL benefits, and 2) assigns the benefit check to the employer to repay the advance or otherwise authorizes wage deductions. This approach could mitigate the administrative headaches involved in processing payroll, allow for the continuity of a full paycheck for the employee, and prevent employee double-dipping or loss to the employer of the benefit of its payroll tax contribution to fund UPL benefits.
All D.C. employers would be well-served, however, by reviewing their paid leave policies carefully prior to the July 1, 2020, availability of UPL benefits and by consulting legal counsel about any changes in policies the employer is considering. Employers should also educate their employees about the coming availability of UPL benefits and communicate clearly to employees about how an employee taking qualifying leave after July 1, 2020, may access the employer’s benefits and UPL benefits.