Federal City Council Presses for Paid Leave Reforms

The Federal City Council (FC2) testified before the DC Council in October that the District of Columbia the new Universal Paid Leave Act (UPLA) will impact DC’s regional and national competitiveness. The Oct. 10 hearing of the DC Council Committee of the Whole considered five pending bills designed to improve upon UPLA.

Kevin Clinton, FC2’s COO, testified that “By allowing some employers to self-administer, the bills begin to chip away at the negative impact on D.C.’s competitiveness, on the transfer of benefits to non-residents and begin to allow employers to retain more of their relationship with their employees,” Clinton said.

UPLA, which took effect April 7, 2017, applies to individuals employed in the private sector and exempts D.C. government and federal employees. The program provides eight weeks of parental leave, six weeks of family leave and two weeks of medical leave.

Clinton cited Chairman Phil Mendelson’s bill as the best alternative under consideration. It would reduce the 0.62 percent payroll tax that underwrites the program while maintaining the same levels of benefits. Businesses with 100 or more employees would be required to “self-administer” their leave benefits and pay a 0.15 percent payroll tax to subsidize smaller businesses.

The bill also would give smaller businesses the choice of self-administration at a cost of 0.15 percent of payroll or defer to the D.C. government and pay 0.54 percent. Employers that self-administer must provide benefits starting July 1, 2018; payroll tax contributions start July 1, 2019.

The D.C. Policy Center’s Yesim Sayin Taylor urged the Council to protect the District’s employers and employees from administrative risks that would arise with the lag between tax collections and benefit payments. She said the DC Council could mitigate financial risks on D.C. companies by reducing other tax burdens.

“Shifting the costs from the government to the private sector through a mandate will reduce the financial exposure of the D.C. government, but it will still increase risks in the private sector, especially considering that the District will be the only jurisdiction in the metro region with such a program,” said Taylor.