District of Columbia Paid Family Leave Payroll Tax Starts with July 2019 Payrolls
The UPLAA requires each DC covered employer, including nonprofits or household employers, to pay a family leave tax on DC wages paid to each covered employee.
The term “covered employer” is defined as: (1) 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 the services of a temporary services or staffing agency or similar entity, employs or exercises control over the wages, hours, or working conditions of an employee for whom unemployment insurance is required to be paid; or, (2) a self-employed individual who opts into the paid leave program. DC unemployment insurance is required to be paid, in order of priority, for any employee:
- Whose services are localized in DC
- Working at a base of operations in DC
- Whose services are directed or controlled from DC
- Who is a resident of DC, if none of the foregoing apply
The term “covered employee” is defined as any employee of a covered employer (regardless of where the employee lives) who spend more than 50% of their work time working in DC. The term “covered employees” includes telecommuters who spend more than 50% of their work time physically working in DC for a covered employer. The new law does not have tenure requirements. Therefore, new employees, as well as temporary, seasonal, and part-time workers, may qualify for paid leave benefits.
Coverage and benefits
The Act provides for three types of paid medical leave benefits:
- Family paid leave – employees are entitled to up to six weeks of family leave to care for a family member with a serious health condition.
- Parental paid leave – employees are entitled to up to eight weeks of parental leave to bond with a new child.
- Medical paid leave – employees are entitled to up to two weeks of medical leave to care for their own serious health condition.
Employees may begin to receive payments for paid leave beginning in July 2020. Eligible employees will be entitled to benefit payments at a rate that equals 90% of the eligible employee’s average weekly wage rate, initially, not to exceed a weekly maximum of $1,000. However, the $1,000 weekly benefit cap will increase, annually, at the same rate as the increase in the Consumer Price Index beginning Oct. 1, 2021.
Employer notice requirements
Beginning July 1, 2019, covered employers are required to post and maintain paid leave notices provided by DOES at each worksite. In addition, all covered employers are required to provide notices to covered employees at the time a covered employee is hired and then annually thereafter. A covered employer is also required to provide notice to a covered employee at the time the employer becomes aware that the leave is needed. The required notice can be accessed on the DOES website.
Accessing benefit payments
A covered employee is required to provide written notice to an employer regarding the need to use paid leave under the UPLAA. The written notice is required to include a reason for the absence and the expected duration of the requested leave. For foreseeable leave, the written notice must be provided at least 10 days before the start of the leave. For unforeseeable leave, an oral or written notification is required prior to the start of the work shift for which leave is being used.
Employer record-keeping requirements
Covered employers are required to keep payroll records for a period of not less than three years. These payroll records must include the following information:
- Name and Social Security number of each covered employee
- The beginning and ending dates of each pay period
- Wages paid for each pay period
- Dates of employment
To assist employers and employees in learning more about the new law, the DC Office of Paid Family Leave (OPFL) has created a new website that includes employee notices, employer notices, FAQs, and other resources. The site also provides information concerning upcoming webinars and town halls. DC employers should sign up on the website in order to receive email updates and other important information provided directly from DC OPFL.
Any advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues. Nor is it sufficient to avoid tax-related penalties. This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.
InsightDC 2020 Budget Support Legislation Brings Significant Tax ChangesDC Mayor Muriel Bowser signed the Fiscal Year 2020 Budget Support Act of 2019.
InsightCalifornia AB91 Closes Loophole, Provides Tax Breaks for Small Businesses, FamiliesHee Jo Chun, John OnOn July 2, 2019, California Gov. Gavin Newsom signed Assembly Bill 91 (AB91), which conforms to several provisions in the Tax Cuts and Jobs Act (TCJA) passed by Congress in 2017. This bill improves the state’s long-term financial stability by closing a series of loopholes and providing tax breaks to small businesses.
InsightNY, NJ, and CT Sue IRS for Disallowing SALT Deduction Cap WorkaroundCorey Rosenthal, Lance RothenbergNew York, New Jersey, and Connecticut filed a joint lawsuit against the IRS on July 17, 2019, setting up the next chapter and newest battlefront in the dispute between certain states and the federal government in response to the Tax Cuts and Jobs Act’s $10,000 cap on the state and local tax (SALT) deduction.
InsightCalifornia Gives Marketplace Sellers Limited Sales and Use Tax ReliefOn June 27, 2019, California Gov. Gavin Newsom signed legislation to allow marketplace sellers who had previously been contacted by the California Department of Tax and Fee Administration (CDTFA) .