DC Getting Ready to Collect Tax Paments on Paid Family Leave

DC Employers: It’s Time to Begin Making Quarterly Tax Payments for DC’s Paid Family Leave Benefit

• Starting July 1, 2019, the District of Columbia will begin collecting taxes from D.C. private employers to fund the District’s Paid Family Leave benefit.
• D.C. employers should begin recording wages as of April 1, 2019 and anticipate making their first Paid Family Leave quarterly tax payment no later than July 31, 2019.

The D.C. Universal Paid Leave Amendment Act of 2016 (“the Act”) requires all covered D.C. employers to start making payments to fund the new Paid Family Leave (“PFL”) benefits for D.C. employees. Under the Act, virtually all private employers who employ one or more individuals in the District and who are required to pay unemployment insurance on behalf of their employees are considered a “covered employer.” Any employee who spends more than 50 percent of his or her work time working in the District for a covered employer is considered a “covered employee.” This includes remote workers who perform services for the employer for 50 percent or more of the time in the District. Eligible individuals may qualify for up to 2 weeks of paid medical leave for their own serious health condition, 6 weeks of family leave to care for a sick family member, and 8 weeks of parental leave to care for a new child (up to a total of 16 weeks of paid leave). An eligible individual is someone who has been a covered employee for at least some of the 52 weeks immediately preceding the paid leave. Eligible individuals will not be able to use the PFL benefit until July 1, 2020.

Beginning July 1, 2019, covered employers are required to make additional quarterly tax payments to the District to fund the PFL benefit. Generally, such tax payments are equal to 0.62 percent of the gross wages paid to covered employees for the preceding quarter. The PFL tax is 100% employer-funded and may not be deducted from a worker’s paycheck. No later than the last day of the month following the close of each calendar quarter, covered employers are required to remit to the District their PFL tax amount and provide a wage report. Employers will use the District’s Department of Employment Services Employer Self Service Portal (“ESSP”) to submit their quarterly tax remittance and wage reports. The first wage report and tax remittance will be due by July 31, 2019, for the quarter spanning April 1 through June 30, 2019.

D.C. employers should prepare for the PFL benefit requirements by ensuring their payroll systems will account for the additional tax. Employers should also create an ESSP account or update their existing ESSP account information. Additionally, covered employers must develop and maintain records related to compliance with the Act for no less than 3 years. Furthermore, at a future phase-in date, employers will be required to provide notice to their employees at the time of hiring, annually and when the employer becomes aware that the leave is needed.

If you have any questions regarding the requirements of the Act or the steps that you need to take to comply, please do not hesitate to ask us for help.

Contact info: Meredith S. Campbell Chair, Employment and Labor Group, Shulman Rogers mcampbell@shulmanrogers.com | T 301.255.0550 | F 301.230.2891

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