The regulatory environment related to managing employee leave is becoming more like a giant hairball with each passing year, thanks to the trend of states, counties, cities and even the federal government enacting their own laws with detailed and differing requirements.
Consider the complexity, then, for an employer with job sites in multiple locations. Then add in the fact that certain types of leave must be administered differently based not only by location, but also by employee type (such as workers subject to the Services Contract Act). Now, the District of Columbia has jumped into the fray by passing a new law called the Universal Paid Leave Act of 2016 (UPLA).
Lockton comment: At some point, the costs to multi-sited employers in monitoring and adhering to the myriad of leave laws will become administratively burdensome and cost-prohibitive. Companies may find a need to increase human resources staff or use outsourced administration to manage leave policies.
UPLA was approved by the DC Council in December 2016 and becomes effective in 2019 (although there is a possibility it could be implemented earlier). This new law requires additional paid leave benefits be provided concurrently with other District and federal required benefits.
UPLA Greatly Expands Eligibility for Paid Leave
A greater number of employees in DC will be eligible to receive benefits than those currently eligible under existing leave laws. UPLA provides expanded eligibility and benefits in the following ways:
- UPLA applies to all employers with employees in DC regardless of size (but does not provide job protection if an employer has 20 or fewer employees). UPLA establishes a far lower threshold than do current federal or DC leave laws which generally apply only to employers with 50 or more employees. Of course, the law’s protections apply only to the employer’s employees working in DC (more on this below).
- UPLA requires that leave be paid (as opposed to current leave laws permitting unpaid leave).
- To be eligible under UPLA, a person need only be an employee during some or all of the immediately preceding 52 calendar weeks, and both full and part-time employees are eligible. Other leave laws generally apply only to employees who have worked for the employer for at least 12 months and have minimum hours thresholds for eligibility.
- UPLA permits leave in broader categories than are offered under existing leave laws.
Lockton comment: One of the key differences under this law is that there is no requirement that a person be employed for any significant length of time. Unless the agency administering the benefits can carefully monitor entitlement to benefits, an unintended consequence may be that employees will game the system by frequently changing employers to gain additional paid time off. This could negatively affect employers that are already plagued with high turnover positions.
Who’s Eligible for Benefits Under UPLA?
To be eligible for paid leave under UPLA, an employee must spend more than 50 percent of his or her time working for an employer within the District of Columbia (note that federal and city workers are not eligible under UPLA). The amount of paid leave an eligible employee receives depends on the circumstances. For example, during any 52-week period, eligible employees are entitled to eight weeks of paid leave for the birth of a child, six weeks of leave to care for a gravely ill family member, and up to two weeks of leave for personal illness.
UPLA is administered concurrently with other leave laws such as the federal Family and Medical Leave Act (FMLA) and the local DC Family and Medical Leave Act (DCFMLA). DCFMLA already provides an opportunity to take up to 16 weeks of unpaid leave, longer than is currently permitted under FMLA.
Lockton comment: Before becoming eligible for unpaid leave under FMLA or DCFMLA, an employee may be entitled to paid leave under UPLA. To be eligible for leave under FMLA or DCFMLA, the employee must have been employed for at least 12 months. This 12-month standard outlined in both FMLA and DCFMLA was not included in UPLA. However, if an employee is eligible for leave under both UPLA and FMLA or DCFMLA, all leave periods under each law run concurrently, thus preventing employees from stacking leave under the different laws. With the addition of UPLA, an employee may be entitled to pay for the earlier period of leave that runs concurrent with FMLA or DCFMLA.
Defining “Family Member”
The definition of family member under UPLA is broad. It includes children that are biological, adopted, foster children, stepchildren, a legal ward, a child of a domestic partner, or a person to whom an eligible individual stands in loco parentis. If a person stands in loco parentis, it means that person is acting in place of a parent and assumes parental responsibilities and obligations, even if they are not biologically related to the child and/or do not formally adopt the child.
Family member also includes a biological, foster, or adoptive parent, a parent-in-law, a stepparent, a legal guardian, or other person who stood in loco parentis to an eligible individual when the eligible individual was a child. In addition, family members include both a person to whom an eligible individual is related by domestic partnership and grandparents.
Who’s Paying for UPLA?
Private employers and, at their election, self-employed individuals, will be required to make payments in the form of taxes to a pool (called the Universal Paid Leave Implementation Fund) intended to fund paid leave benefits under UPLA. A covered employer will be required to contribute 0.62 percent of the annual salary of each of its covered employees. These tax payments are expected to begin by or before March 1, 2019. No salary cap is applied to this required contribution.
How Much Will Workers be Paid?
Eligible employees will become entitled to benefits by or before March 15, 2020. A worker will be entitled to 90 percent of his or her average weekly wage, up to 15 percent of DC’s minimum wage. If the employee’s average weekly wage exceeds that threshold, they will receive the base amount plus 50 percent of the worker’s weekly wage, with an overall payment capped at $1,000 per week. The $1,000 cap is expected to be increased for inflation beginning in 2021.
To be an eligible employee, a person need only be employed during some or all of the immediately preceding 52 calendar weeks, and both full and part-time employees are eligible. A new DC government agency will be formed to determine eligibility and to administer payments to eligible employees. This agency will receive claims and notify employers of any payments.
Lockton comment: Because Congressional approval may be required, the formation of this agency may be prevented, thus derailing the implementation of UPLA altogether.
Employer Notice Requirement
Covered DC employers will be required to post notice of an employee’s rights under UPLA. Employers must also give an UPLA notice to each eligible employee at the time of hire, annually, and when the eligible employee requests leave subject to UPLA. A covered employer may be subject to a $100 civil penalty for each covered employee that did not receive the notice and $100 for each day the employer failed to properly post the UPLA notice.
Lockton comment: The DC Mayor is required to issue a model UPLA notice. Until the model notice is issued, an employer has no liability for failure to provide or post the notice.
What Happens Next?
UPLA has both strong supporters and opponents. Whether UPLA will ever be implemented in full is still in question. Some DC tax and spending bills require approval of Congress, which could derail UPLA by disallowing funding, particularly given the Republican-controlled Congress. In addition, DC will need a number of years to establish the program and infrastructure necessary to administer these paid leave benefits, giving time for opposition lobbying, or even time to establish a replacement benefit before UPLA ever takes effect.