Taking the middle road by returning the bill to the City Council without her signature, Washington, D.C., Mayor Muriel Bowser permits the D.C. Paid Family Leave law to continue down the path toward a 2020 payout for D.C. workers. Despite her letting the law take effect, it cannot be implemented until it passes a final 30-day review by Congress.
The law, one of the most expansive in the country, provides for a total of up to eight weeks of paid leave to D.C. employees. The full eight weeks can be used for the birth or adoption of a child, six weeks to allow an employee to care for a sick family member as well as two weeks of personal paid leave.
The benefits, which will not be available to federal workers or city employees, will be paid out from a yet-to-be-created D.C. government agency and funded by a new tax on D.C. businesses. The tax is a 0.62 percent payroll tax on all private businesses that have employees working in D.C., regardless of where they live.
Mayor Bowser’s decision not to endorse the bill is based on her belief that the tax is going to be a burden on small businesses and that forcing employers to pay an additional tax for benefits that may be sent outside of the city — i.e., to employees who live in Virginia or Maryland — does not meet her goal of helping D.C. families. In a December statement, the mayor expressed her belief that “[i]t is wrong to raise District taxes to fund a costly, new government program that sends 66 percent of the benefits outside of the city, and leaves District families behind.” In deciding not to sign the bill last week, Mayor Bowser stated that she hopes to work with City Council to address the law’s shortcomings. On Friday, D.C. Council Chair Phil Mendelson said that the Council will revisit the way the benefits would be funded in order to address the opposition from local businesses.
The breakdown of the payments is as follows:
Employees who earn less than one-and-a-half times the city’s minimum wage — roughly $46,000 and below — will be eligible to be paid 90 percent of their weekly wages while out on leave. Any wages above that get paid at a 50 percent rate. For example, an employee who makes $65,000 would be paid 90 percent of wages up to $46,000, with the remaining $19,000 paid at the 50 percent rate. In addition, there is a weekly payout cap of $1,000.
Although the D.C. law would be one of the most expansive in the nation if enacted in its current form, it will not be the only one. A number of states have enacted similar laws, including California, New Jersey, New York and Rhode Island. Employers should be aware of this growing movement toward paid family leave.
For further information or questions about the impact of the preliminary injunction ruling on the new overtime rule, please contact the authors, your McGuireWoods contact, or a member of the firm’s labor and employment group.