June 23, 2017 at 2:20 pm EST | by Mark Lee
A fix for funding D.C.’s next-decade paid leave law
Paid Family Leave, Mary Cheh, gay news, Washington Blade

D.C. Council member Mary Cheh (Washington Blade file photo by Michael Key)

Three of the most seasoned and savvy elected city officials in Washington have been leading the effort to revise in multiple and varying ways the financing, structure and administration of the most extravagant planned paid leave entitlement mandate in the nation.

On Tuesday, D.C. Council Chair Phil Mendelson joined the group.

Due to widespread objections to the current scheme prompting near-universal business community opposition, D.C. Council members Mary Cheh, Jack Evans and Vincent Gray had previously proposed a total of four separate legislative repairs. Mendelson’s version has increased that number to five.

Mendelson’s move signals that the controversial paid leave law passed by the Council last December and which became law without Mayor Muriel Bowser’s signature will not survive as the final version.

Earlier this month, Council member Cheh proposed the most sensible revised approach so far. Her smart funding alternative, however, does not go far enough in remedying the central wrongheaded aspect of the pending program.

Cheh’s bill does not fully fix the fundamental flaw in financing the program – but it should be the solitary starting point for Council discussion regarding how to best salvage the mess of a measure.

The Universal Paid Leave Act is scheduled to be implemented sometime early in the next decade. Benefit conveyance to all non-federal-government employees working in the District will begin no sooner than 2021 and more likely in 2022, but perhaps even later given the gargantuan new city agency to be created and staffed, and the administrative infrastructure to be developed – at huge city budget start-up costs.

The pending “8-6-2” entitlement will provide up to eight weeks of paid parental leave for the birth of a child, six weeks to care for a family member experiencing a serious health ailment, and two weeks for a personal medical or self-care need separate from the existing paid sick leave mandate. It provides full wage replacement of up to $1,000 per week, longer allowed leave periods and broader leave-taking justifications exceeding other jurisdictions.

All of the proposed remedial measures essentially do not alter the benefit provisions ultimately passed by the most notoriously business-unfriendly Council in 44 years of self-government.

The primary problem with Cheh’s proposal is that it doesn’t go far enough in rectifying the central problem with the law – the fact that D.C. would become the national outlier in funding a paid leave program through a business tax rather than financing the benefit through employee withholding.

In all three states with a paid leave law, and New York soon phasing in a program through 2021, the benefit is fully funded by employees through payroll deduction. Only California, New Jersey and Rhode Island have a paid leave program in operation.

The D.C. law funds a paid leave entitlement by a new business tax of 0.62 percent on all wages paid. Employees would contribute nothing and would not fully finance the benefit, as is the policy everywhere else.

Cheh proposes merely a shared split, however, with employees underwriting only two-thirds the cost. Under her bill, employees would have 0.42 percent withheld from their wages, with employers paying the balance of 0.2 percent on wages paid, totaling the 0.62 percent amount to be paid by a new business tax under the current plan.

To her credit, Cheh has discerned a way around the city’s federal Home Rule prohibition on taxing the incomes of non-residents working in the District, unique among all U.S. jurisdictions. As a constitutional law professor, Cheh posits that a wage levy on workers is permissible by classifying it as a “fee” – and not a “tax” – collected for a particular purpose and benefiting a particular group of people.

That’s where the Council must start. A D.C. paid leave mandate should comport with the national standard of employee-paid funding. Other administrative policy corrections can then be considered but cannot precede this core correction.

Thank you, Mary Cheh. You’ve almost, but not quite, gotten it right.

Mark Lee is a long-time entrepreneur and community business advocate. Follow on Twitter: @MarkLeeDC. Reach him at OurBusinessMatters@gmail.com.

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