In 2017, the District of Columbia passed the Universal Paid Leave Amendment Act of 2016 (the “Act”), which called for the creation of a paid-leave program for private sector employees who work in D.C.
The D.C. Office of Paid Family Leave adopted final regulations to implement this new paid-leave program. One of the most notable requirements implemented by the regulations is the imposition of the Act’s 0.62% payroll tax assessed on employers subject to the Act which began on July 1, 2019. Employers subject to the Act will have until July 31, 2019, to file the appropriate return and pay the tax without incurring a penalty.
With this deadline, employers with employees in D.C. need to determine whether they are subject to this tax, and if they are, timely report and pay the tax to avoid potential penalties.
All “covered employers” who employ “covered employees” must pay the tax.
A “covered employer” is any employer that performs business in D.C. and pays D.C. unemployment insurance taxes for its employees. The regulations make clear that the number of covered employees employed by a covered employer has no bearing on the employer’s obligation to pay the tax. In other words, employing a single individual in D.C. will result in a filing and payment obligation. All employees for whom a covered employer pays D.C. unemployment insurance taxes are presumed to be “covered employees.”
An employer’s liability for the tax will follow its liability for the D.C. unemployment insurance tax.