Changes to DC’s Universal Paid Vacation Program and an Upcoming Paid Vacation Program in Maryland | Pillsbury Winthrop Shaw Pittman LLP
More Generous Benefits for DC Employees
The Universal Paid Leave Amendment Act of 2022 section of the legislation (the Act) will increase the maximum length of paid leave benefits available to eligible employees to 12 weeks of parental, family and/or medical leave benefits, plus up to at two weeks. of prenatal leave benefits per period of 52 weeks. Called Universal Paid Leave (or UPL) or Paid Family Leave (or PFL), the program is administered by the District of Columbia’s Department of Employment Services (DOES) and funded largely through payroll taxes paid by the employer.
Effective October 1, 2022, paid time off available through DC’s UPL benefits will increase:
- from eight weeks to 12 weeks of parental leave;
- six weeks to 12 weeks of family leave;
- six weeks to 12 weeks of medical leave; and
- Prenatal leave, introduced at the end of 2021, will remain stable at two weeks of paid leave.
Prenatal leave benefits can be added to parental leave benefits, for a total of 14 weeks of paid leave. Otherwise, the maximum combination of paid leave benefits any eligible person can receive is capped at 12 weeks in any 52-week period. Additionally, the law will also eliminate the current one-week waiting period before an eligible employee can receive UPL/PFL benefits for a qualifying absence. This waiting period had previously been suspended as a temporary measure related to the COVID-19 pandemic.
Cost savings for DC employers, but administrative burdens
DC employers will also benefit from this series of amendments to the UPLA. Thanks to a surplus from the PFL Fund, although benefits will increase for employees, employer contributions to the Fund are now decreasing from 0.62% to 0.26% of an employee’s salary, effective July 1, 2022.
As expected in our previous customer alert, UPL/PFL benefits provide an important safety net for many eligible employees whose employers do not offer generous paid time off. However, the perk has also proven to be an awkward adjustment and additional administrative burden for employers who offer generous paid time off and their employees.
DC employers have wrestled with how to incorporate DC UPL/PFL benefits into their own paid leave plans. Employees must apply independently for UPL/PFL benefits and typically do not receive the benefit check for several weeks after submitting the application. Some employers have reduced the total amount of paid time off they offer DC employees, knowing that employees will be able to supplement employer-provided paid time off with government-administered but employer-funded paid time off benefits. Others have maintained their previous levels of paid vacation, especially if they have employees in other jurisdictions and find it administratively easier to have a single paid vacation policy. Yet others have advanced paid time off to eligible employees on the condition that employees apply for UPL/PFL benefits and later repay the advance. However, no matter what strategy a DC employer adopts, the new law’s reduction in payroll taxes owed will certainly be welcome.
Maryland institutes paid family leave with a different approach
The challenges of the DC approach are evident from the paid family and medical leave law recently enacted by the Maryland government – the Time to Care Act of 2022, passed by legislative override of Governor Hogan’s veto on April 9, 2022. Maryland law, effective January 1, 2025, will provide up to 12 weeks of paid vacation to eligible employees, with a maximum amount of $1,000 per week based on the employee’s salary level, as in the case of DC’s benefit level approach. Unlike DC law, however, Maryland’s paid leave benefits will be funded through payroll taxes shared between employer and employee, at a rate yet to be determined, which will take effect October 1, 2023. their counterparts in DC, Maryland employees will have to exhaust any paid time off voluntarily granted by their employer (such as vacation) before receiving state-paid benefits. And, unlike DC, employers in Maryland who provide their employees with paid time off equal to or more generous than state benefits through a private benefits plan, insurance, or combination of the two, can apply to the Maryland Department of Labor for an exemption. the state program and compulsory contributions.
DC employers should prepare to implement the expanded leave provision in anticipation of the October 1, 2022 effective date by reviewing and updating their leave policies and all related postings to reflect the additional leave time available.. DC employers should also notify their employees of upcoming changes to available UPL benefits and continue to communicate clearly to employees about how an employee taking qualifying leave can access employer benefits and UPL/PFL benefits. Employers must also comply with the requirement to inform covered employees of their UPL/PFL leave entitlements upon hire, at least once a year, and whenever the employee requires leave that may qualify for UPL/PFL benefits.
Maryland employers should seek more information from the Maryland Department of Labor about the upcoming rules and should begin to consider participating in the state-provided insurance plan or providing their employees with equivalent benefits through the through an employer-administered policy.