On Tuesday, November 29th, DC Council Chairman Phil Mendelson released the latest version of the Universal Paid Leave Act of 2016. The new legislation would begin in 2020 and be administered by the District of Columbia with an annual cost of $250 million. To administer the program, the District would create a new government agency with an annual administrative cost of $18 million. To fund the program, the District would impose a .62% payroll tax starting in 2019, which has been described by Mayor Muriel Bowser as the sixth largest tax in the DC’s history.
The program would apply to any individual who works at least 50% of their time in the District of Columbia and for whom their employer is required to pay unemployment insurance. Currently the bill does not differentiate between employees who work for employers outside DC or for companies licensed in DC.
The specifics of the program are as follows:
• Provide 11 weeks of parental leave for the birth or adoption of a child
• Provide 8 weeks of family leave to care for parents, grandparents, spouse and dependents
• 90% wage replacement for employees making no more than $46,000 a year and 50% wage replacement for workers making more than $46,000 a year with a weekly cap of $1,000
• Employees would be eligible for the program starting on their first day of work
On Thursday, December 1st, the City Council’s Budget Director released the Economic Impact Statement (EIS) for this legislation. EIS provides an outlook of how the proposed legislation would impact the District’s public and private sectors. The EIS indicates the implementation of this legislation would cause the city to suffer a loss in GDP of $122 million over the next decade. In addition, private sector job growth would see a projected decrease.
On December 2nd the Office of the Chief Financial Officer (OCFO) released the Fiscal Impact Statement (FIS) on the legislation. Based on the OCFO’s estimates, the program would cost nearly $680 million over the first four years. This projection includes the estimated revenues from the tax and additional budgeted $40 million outlined in the budget, for a net loss of $40 million over the first four years for the city. Based on these projections, which the OCFO states are conservative, the city would be tasked with finding an additional $40 million to launch the program. In addition, the FIS stated the average administrative cost of $18 million is above the cap of 5% highlighted in the legislation.
Since the release of the Chairman’s amendment in the nature of a substitute, ABC of Metro Washington, in conjunction with other members of the DC Business Coalition, have been working to get members of the City Council and the Mayor to table the legislation. This would give the business community time to work with the Council to address the changes in the new legislation as well as addressing the issues outlined in the FIS and EIS. ABC has joined with other organizations in supporting an effort by the DC Chamber of Commerce to have the Council consider an Employer Mandated Model of the program, which would not include a new tax and be managed in-house by employers.