Starting in July 2020, the District of Columbia’s Paid Leave Act will provide up to eight weeks of parental leave to bond with a new child, six weeks of family leave to care for an ill family member with a serious health condition and two weeks of medical leave to care for one’s own serious health condition. Unpaid leave rules have been around for a while, but paid leave programs are still a rarity in the United States.

However, the act will affect employers starting in July 2019; that’s when D.C. will start collecting the tax that supports the paid leave. Employers will have to pay a new 0.62 percent payroll tax. According to initial guidance, employers will make quarterly contributions based on the immediate past quarter of wages paid, much in the way they pay unemployment insurance tax.

The program applies to employers with 20 or more employees. An eligible employee is one who has worked for the employer for at least one year without a break in service, and who has worked for at least 1,000 hours during the 12-month period preceding the request for leave.

The new law’s official site contains a simple calculator that lets employees estimate what their paid leave amounts will be. The maximum amount is $1,000.

Other Leave Players

D.C. is not the only jurisdiction offering paid leave. California, Rhode Island, Washington, New Jersey and New York also offer paid leave plans. The New York plan, for example, notes that most private employers with one or more employees are required to obtain paid family leave insurance. The state notes that this insurance is generally added as a rider on an existing disability insurance policy, but does not replace disability insurance. In New York, the employee contribution is 0.153 percent of gross wages each pay period. The maximum annual contribution is $107.97.

As with most new laws and regulation, the devil is in the details. Be sure to stay in touch for further details on eligibility and payroll requirements as the law is phased in.

If you questions, contact an MCB Tax Advisor at 703-218-3600 or click here. To review our personal financial planning articles, click here. To review our employee benefit plan articles, click here. To review our tax news articles, click here. To learn more about MCB’s tax practice and our tax experts, click here.

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