HEARING ON
Pr23-0647, “Rulemaking for Paid Family Leave Benefits Approval Resolution of 2020”
and
The Implementation of Law 21-2614, The Universal Paid Leave Amendment Act of 2016
Committee on Labor and Workforce Development
Councilmember Elissa Silverman
January 30, 2020 11:00 AM
John A. Wilson Building
Testimony of Kevin Clinton
Chief Operating Officer, Federal City Council
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Good morning, members of the Committee on Labor and Workforce Development. My name is Kevin Clinton and I am the Chief Operating Officer of the Federal City Council, a nonprofit civic organization that works to make our city a better place.
Workers deserve a minimum level of sick, parental or family leave. Although we opposed the version of paid leave that is now law, we want the system to succeed on July 1. We are interested in the implementation of paid leave because if it doesn’t go well, it will be disruptive for employers, undermine the public’s confidence in the DC government’s ability to deliver on its promises, and, of greatest concern, harm our employees.
And yet with fewer than six months before July 1 and the regulations now just published, many questions remain unanswered.
For employees who currently do not receive paid leave benefits from their employer, implementation challenges may not be much of a concern to them. The program will still hold the promise of new benefits. However, for employees who currently receive paid leave benefits from their employer, the consequences of the program are significant and they have no idea what is coming.
We appreciate the hard work and committed effort to ensure that the program runs smoothly, but we remain apprehensive about readiness. UPL is a complex social program. DOES is scheduled to begin managing paid leave benefits for hundreds of thousands of people in less than six months. Information about the IT system that employees will be expected to use is still not available. There still is not enough information from DOES for employers to educate their employees. We hope there will be enough time for payroll providers and employers to test the system.
Employers do not have enough time to digest the current regulations and determine whether and, if so, how they will be able to supplement the DC program – after incurring the additional cost of the new DC payroll tax. This creates the very real possibility that employees who currently receive generous paid leave benefits from their employers will experience a benefit cut.
Employees may not realize they will be enrolled in UPL and that they may lose their more generous benefits provided by their employers. Navigating the city’s program may be more complicated than the employer-provided program. Coordinating benefits between both will be an added burden to employees, not to mention HR departments. Specifically, we are worried:
- Employees will be directed to the DC government instead of their employers’ human resources offices to secure their base benefit adding complexity to their lives during a period of stress.
- Employees will receive only 90% of their salary but capped at $1,000 a week. For many of workers this will mean a reduced paycheck.
- Employees will no longer have taxes withheld on their base paid leave benefit resulting in a higher tax bill at the end of year.
- Employees will no longer make 401(k) or 403(b) retirement contributions from their paid leave benefit and, significantly, no longer qualify for the employer match to which they are accustomed.
- How will employees make their monthly contributions to critical employer-provided employee benefit programs, putting their health insurance and other benefits at risk?
- How will employers who currently offer their employees more generous paid leave benefits than the law provides might make their employees whole given that the DC government benefit level is just 90% of an employees’ salary and capped at $1,000 a week? This could result in unanticipated salary reductions and disruptions – and at the most vulnerable times in people’s lives.
Taken individually, each of these issues could certainly be addressed with enough time. Our view is that we are running out of time for them to be addressed in a way that is not disruptive to employees, employers, and possibly even the government staff that will be dealing with the fallout. A few years ago, employers that already provide paid leave argued that the DC Council should consider allowing them to self-administer paid leave, so long as the current benefit levels constituted the permissible floor. This change would have helped reduce the intensity of the concerns I have expressed today.
Lastly, I would like to comment on the regulations released by the Department of Employment Services under Director Unique Morris Hughes. I would like to commend the department for including language that keeps the unemployment insurance program and the universal paid leave program separate. Particularly because we have an employer-funded system, we believe that benefits should flow to employees, not those who are unemployed.
Thank you for the opportunity to testify today.
