Private-sector workers in D.C. will be able to take up to 12 weeks of leave per year in a dramatic expansion of the city’s paid-leave system, the city’s chief financial officer said Monday, since the program has cost less than previously forecast and has excess funds.
But instead of a gradual climb, now those changes will come all at once: Starting this year, eligible workers will be provided with 12 weeks of paid parental, family and medical leave — with a cap of 12 weeks in a year, according to a letter from then-acting chief financial officer Fitzroy Lee. It represents a sharp increase from the current benefit of eight weeks of parental leave, six weeks of family leave and six weeks of personal leave, for a maximum of eight weeks per year. Private-sector workers are also guaranteed two weeks of paid prenatal leave.
Moreover, Lee said, the District can cut the payroll tax rate for employers from 0.62 percent to 0.26 percent. That change will result in a saving of $202 million for employers in the first year, said D.C. Council member Elissa Silverman (I-At Large), who pushed for the annual CFO review.
“I always said that the CFO’s cost estimates for the program were way too high, which meant employers were paying way too much in tax for what their employees were getting in paid leave benefits,” Silverman said in a statement, adding that she was surprised the changes were able to occur all in one year rather than over time.
Lee noted in his letter that the Department of Employment Services (DOES), which administers the program, is figuring out how quickly it can implement the changes, which could be as soon as July 1.
The District began taxing private-sector businesses large and small in 2020 to fund the Universal Paid Family Leave Act, which was passed by the council in 2016. The benefits are available to all eligible workers, including workers who spend more than 50 percent of their time working in D.C., even if their jobs provide additional leave benefits. Using the tax revenue, the city currently reimburses employees for 90 percent of their first $912 in weekly pay and 50 percent of their remaining weekly pay, with a cap of $1,009 per week.
Last year, as lawmakers sought to increase the maximum benefits to keep up with federal employees who can receive up to 12 weeks of paid parental leave, they asked the city’s chief financial officer to evaluate funding for the program each year to determine by how much the benefits could rise, with the goal eventually of reaching 12 weeks across the board.
Using some excess funding from the program last year, the council boosted medical leave benefits from two to six weeks and added the prenatal leave benefit.
But instead of a gradual increase, the changes will come essentially all at once, greatly boosting benefits for workers while also reducing the tax rate for the businesses helping to fund the program. Even with the expanded benefits, the program is still projected to have a surplus of more than $400 million this fiscal year, and more than $200 million in the coming years, according to Lee.
In a statement Wednesday, the DC Paid Leave Campaign, which represents a coalition of local businesses that advocated for strong paid leave programs in the District, cited January 2021 data from the DOES that shows 80 percent of workers who applied for medical and family caregiving leave in the program’s first six months were either Black, Hispanic, Asian or multiracial — and that 40 percent of people who applied for such leave have incomes under $50,000.
“The expansion of the DC Paid Family Leave program represents a concrete step towards addressing longstanding racial, economic and health disparities that have only been exacerbated by the pandemic,” the statement said. “We are deeply gratified by this announcement today.”
The D.C. Council approved the Paid Leave Act in 2016 on a 9-to-4 vote, in the face of intense opposition lobbying from the city’s major employers and businesses advocacy groups, which pushed back on the tax rate. Mayor Muriel E. Bowser (D) greatly opposed the bill and opted not to sign the law at the time, similarly citing concerns about the tax and noting that many of those who work in D.C. live in Maryland and Virginia.
Last month, a unanimous D.C. Council introduced legislation that would significantly expand paid-leave benefits for city government workers, including new paid medical leave for qualifying ailments such as cancer.
The employer contribution rate for the private-sector program will be evaluated again in March 2023, according to the letter.
A previous version of this article incorrectly referred to Fitzroy Lee as acting chief financial officer for D.C. He was acting chief financial officer at the time he wrote a letter about paid family leave but has since been made permanent chief financial officer. The article has been corrected.