As of July 1, 2019, employers in the District of Columbia (DC) are required to pay a 0.62% quarterly payroll tax that will go towards the Paid Leave Implementation Fund. This program is part of the Paid Leave Act of 2016, which creates parental, family and personal medical leave for covered employees.
Costs and Benefits of DC Paid Family Leave
In exchange for the 0.62% quarterly tax, employees will be eligible for up to 16 weeks of paid family leave within a 52-work-week period. The total leave time breaks down into:
- 2 weeks of individual medical leave (for personal health problems)
- 8 weeks of parental leave (for new parents)
- 6 weeks of family leave (to take care of a family member with a significant health problem)
In order to be eligible for leave, both employees and the self-employed must have worked in DC for part of the 52 weeks that precede the requested time off.
For this DC paid family leave program, workers must submit evidence of their relationship with the ill family member, medical evidence of the person’s condition, and a summary of the form of care that will be given.
During their paid time off, workers will receive 90% of their average weekly salary if they earn no more than 150% of $13.25 per hour, which is DC’s minimum wage. If they make more than that, they will receive 90% of $19.88 per hour. The government imposes a $1,000 cap on benefits per week.
The Paid Leave Act defines a covered employer very broadly as any individual or group that has to pay unemployment insurance on behalf of its employees. A covered employer can also be a self-employed individual who has requested to participate in the new program.
The law defines a covered employee as anyone who spends at least 50% of their working hours working for a covered employer in the District of Columbia. Employees cannot spend more than 50% of their work time for a covered employer in a neighboring jurisdiction, such as Virginia or Maryland. Employees do not need to live in the District to qualify for benefits or tax obligations under the Paid Leave Act.
The employer is required to pay this new 0.62% payroll tax every three months. There is no cap on the amount, which is assessed against gross wages. The tax is calculated and paid along with your quarterly or annual unemployment tax return; there is no additional tax return to file.
Employers are also required to create an online account with the Department of Employment Services. Employers can report wages and submit tax payments electronically on this self-service portal. Alternatively, paper checks can be submitted with the PFL-30 form. Checks should be made payable to “DC Treasurer”.
Employers must post information about the new law in an area that is easily reached by all employees. Businesses are also required to inform new hires about the District’s paid leave policies. Current employees must be reminded annually or when family or medical leave is needed.
Public notices and additional information from the Department of Employment Services can be found by clicking here.
DC’s paid family leave program began in the second quarter of 2019 (April, May and June). The tax for these three months is due on July 31, 2019. For annual tax filers, the tax for the preceding 12 months is due on January 31, 2020.
If you’re an employer or self-employed person and would like help with complying with the Paid Leave Act, contact Glass Jacobson’s business consulting department today.
Please consider sharing this post
Recent Blog Posts
6 Year-End Tax Strategies for BusinessesNovember 27, 2019
As you enter the final stretch of the year, it’s time to figure out how to limit your business’s tax liability for 2019. Make sure ...Read More
ASC 842: What’s so tricky about the new lease accounting standard?November 18, 2019
At first glance, the lease accounting standard (ASC 842) seems relatively simple: Just add an asset and a liability to the balance sheet. The two ...Read More
What does the new lease accounting standard mean for your business?November 7, 2019
When the new lease accounting standard, Accounting Standards Codification (ASC) 842, is implemented, all leases will have to be reported on the balance sheet. A ...Read More