United States: 2016 DC Metro Area Employment Law Year In Review

Today we continue with our Year in Review segment, which looks at the key labor & employment law developments from 2016 in New York, the DC Metro Area, Massachusetts, and California, while offering our thoughts about 2017. Today we turn to the DC Metro Area. In addition, please join us in NYC on April 6, 2017 for Mintz Levin's Third Annual Employment Law Summit as we address some of the key labor & employment issues impacting employers in 2017. Register here.

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The District of Columbia, Maryland (including Montgomery County) witnessed an active 2016 with respect to new and amended workplace laws that impose additional responsibilities on employers, and expand employee rights and avenues of enforcement. Employers should be aware of these new requirements and take immediate action to comply with them. We highlight below the most significant updates in both D.C. and Maryland; there were no changes or additions of significance in Virginia.

DISTRICT OF COLUMBIA

1. Universal Paid Leave Soon to Become Law in DC

As 2016 drew to a close, and over objections and criticism from Mayor Muriel Bowser, the Council passed the Universal Paid Leave Act, which, if enacted, would provide employees who work in the District of Columbia with the following paid leave benefits:

  • Eight (8) weeks of care for a new child (through birth, adoption, foster care, or assumed legal guardianship)
  • Six (6) weeks of care for sick relatives
  • Two (2) weeks of self-care

Employers would pay a 0.62% tax to fund the benefit system, which would generate a maximum $1,000 weekly benefit to employees. Employees would receive 90% of their salary, up to 1.5 times the minimum wage, then 50% of their wage, up to the maximum $1,000 weekly benefit.

Mayor Bowser and some Council members criticized the measure because of the flow of employer-paid taxes out of the District to employees who work in D.C. but live in Virginia or Maryland.

Just prior to publication of this article, Mayor Bowser announced that she would take no action on the bill, refusing to exercise her veto power where it seems likely that the Council would overturn a veto. Her inaction will allow the bill to become law, subject to mandatory Congressional review and approval. Congress has thirty (30) legislative days in which to review the legislation. Only days when either the House or Senate is in session are counted. If one or both of the Houses are out for three (3) days or longer, then the day cannot be counted. Holidays and weekends are also excluded from the count. Because Congress adjourns in October and doesn't convene until the following January, any act passed by the Council after July usually will not become law until the following year. Therefore, we can expect the mandatory Congressional review period to end at some time in the earlier part of 2017. Because of the current political climate, it is unclear whether Congress might attempt to block enactment of the bill, which would take approval of both houses and the signature of the President.

Mayor Bowser again signaled her continued resistance to the bill and threatened to not fund implementation of the law in her next budget, leaving it to the Council to identify alternative funding schemes to satisfy the $250 million anticipated annual cost of providing paid leave benefits.

2. Minimum Wage Increases

Pursuant to automatic adjustments built into the Minimum Wage Amendment Act of 2013, the minimum wage increased on July 1, 2016. For non-tipped employees, the rate increased from $10.50 per hour to $11.50 per hour; for tipped employees the rate remained at $2.77. Accordingly, the minimum overtime wage for non-tipped employees increased to $17.25 per hour of overtime.

The District of Columbia also enacted the Fair Shot Minimum Wage Amendment Act of 2016, which became law in August 2016 under which the minimum wage will increase each year until 2020, when the minimum wage will reach $15.00 per hour and $5.00 per hour for tipped employees. The successive increases will take effect on July 1 of each year through 2020, according to the following schedule:

NON-TIPPED EMPLOYEES TIPPED EMPLOYEES
July 1, 2017 $12.50 $3.33
July 1, 2018 $13.25 $3.89
July 1, 2019 $14.00 $4.45
July 1, 2020 $15.00 $5.00

Note that for tipped employees, if an employee's hourly tip earnings (averaged weekly) added to the minimum wage for tipped employees do not equal the minimum wage, the law will continue to require that the employer pay the difference.

Beyond 2020, the law provides for increases to the minimum wage tied to the consumer price index published by the Bureau of Labor Statistics.

3. D.C. Passes Fair Credit in Employment Amendment Act

Just before the New Year, on December 20, 2016, the District of Columbia Council unanimously approved the Fair Credit in Employment Amendment Act of 2016. The act amends the D.C. Human Rights Act to prohibit employers, employment agencies, and labor organizations from directly or indirectly requiring, requesting, suggesting, or causing any employee to submit credit information, or even using, accepting, referring to, or inquiring into an employee's credit information. Credit information means any written, oral, or other communication of information bearing on an employee's creditworthiness, credit standing, credit capacity, or credit history.

The bill makes clear that employers are not prohibited from requesting or obtaining an employee's credit information in the following situations:

  • Where an employer is otherwise required by D.C. law to require, request, suggest, or cause any employee to submit credit information; or use, accept, refer to, or inquire into an employee's credit information
  • Where an employee is applying for a position as or is employed as a police officer with the Metropolitan Police Department, as a special police officer or campus police officer as specified, or in a position with a law enforcement function
  • To the Office of the Chief Financial Officer of the District of Columbia
  • Where an employee is required to possess a security clearance under D.C. law
  • Disclosures by D.C. government employees of their credit information to the Board of Ethics and Government Accountability or the Office of the Inspector General, or to the use of such disclosures by those agencies
  • To financial institutions, where the position involves access to personal financial information
  • Where an employer requests or receives credit information pursuant to a lawful subpoena, court order, or law enforcement investigation

The law imposes fines of $1,000 for a first violation, $2,500 for a second violation, and $5,000 for each subsequent violation.

Mayor Bowser is expected to sign the act and it will take effect after mandatory Congressional review and approval.

4. Wage Theft Prevention Correction and Clarification

Under the District of Columbia's Wage Theft Prevention Act as originally enacted, employers seemingly had to require that precise time records be kept even by employees who were exempt from the overtime pay requirements under one of the "white collar exemptions." This obviously was a significant departure from prior law and at odds with the practices of most employers. Further, there was no good rationale for the requirement since exempt workers are paid on a salaried basis regardless of the number of hours they work. The Act also seemed to require that all workers be paid at least twice monthly, which is also a departure from the practice of many employers who pay at least some of their exempt staff on a monthly basis. On December 6, 2016, Mayor Muriel Bowser signed an act to clarify the law in these respects, as follows:

  • Exempt an employer from keeping precise time records "for bona fide executive, administrative, and professional, as well as certain other, employees" (typically exempt employees under the FLSA)
  • Exempt an employer from paying wages "to bona fide executive, administrative, and professional employees" (typically exempt employees under the FLSA) at least twice during each calendar month as long as the employer pays their wages on a monthly basis.

5. New Online Tax Portal for Employer Payment of Employment Taxes

The District of Columbia's Office of Tax and Revenue ("OTR") announced that beginning in November 2016, District employers can file employment tax returns and pay withheld taxes via the new portal located at MyTax.DC.gov.

Initially, the portal can be used for filing withholding tax returns and registration for businesses. Other taxes and fees will remain in the existing Electronic Taxpayer Service Center ("eTSC") and must be dealt with in the same manner as they are currently. It is expected that these will be converted to the new portal within the next few years.

MARYLAND (STATEWIDE)

1. Equal Pay for Equal Work & Establishment of Maryland Equal Pay Commission

Maryland's Equal Pay for Equal Work Act became effective on October 1, 2016 and represents an expansion of protections under the state's existing Equal Pay law. Prior to the amendments, Maryland statute (found at Labor and Employment Article Title 3, Subtitle 3) already forbade employers from discriminating between employees in any occupation by paying a wage to employees of one sex at a rate less than the rate paid to employees of the opposite sex if both employees work in the same establishment and perform comparable work.

The 2016 Act goes a step further, attempting to achieve pay equity by prohibiting wage discrimination in several ways. Notably, the law extends protections based upon gender identity, expands the meaning of wage to include "all compensation for employment," and expands the pool of comparator employees to include all similarly situated employees within the establishment's workplaces in the same county. The law also requires only upward adjustments in wages to correct wage disparities; in other words, an employer may not reduce an employee's wages to bring him or her into line with lesser paid employees. Additionally, employers may not engage in "steering," whereby an employer directs employees toward lower paying jobs and career tracks because of their sex or gender identity. Finally, the law seeks to increase pay transparency by permitting employees to discuss their wages with one another.

Maryland has also established an Equal Pay Commission ("MEPC") to study and enforce the law. In addition to enforcement by the MEPC's enforcement, Marylanders will also have a private right of action to pursue pay disparity claims.

This law could have a significant impact on employers in Maryland. Employers should be proactive to minimize the risk of pay equity litigation and take necessary steps to remedy unjustifiable disparities in pay based on sex or gender identity.

2. New Law Establishes Private Right of Action for Damages, Fees and Costs for Violations of Employment and Re-Employment Rights of Maryland National Guard Members

Signed by Governor Hogan in May 2016 and effective October 1, 2016, a new law authorizes members of the Maryland National Guard whose employment and reemployment rights have been violated to bring a civil action for economic damages, including lost wages and benefits. The law also authorizes a court to award specified damages, fees, costs, and other relief to members of the Maryland National Guard if the court determines that the member's employment and reemployment rights were violated.

3. Hiring and Promotion Preferences for Eligible Veterans

In May 2016, Governor Hogan signed an act giving Maryland employers the ability to grant a hiring and promotion preference to an eligible veteran, the spouse of an eligible veteran who has a service-connected disability, or the surviving spouse of a deceased eligible veteran without violating Title VII, Maryland or local anti-discrimination laws.

The Act defines "eligible veteran" as a veteran of any branch of the U.S. Armed Forces who has received an honorable discharge or a certificate of satisfactory completion of military service, including the National Guard and the military reserves. However, the Act does not define "service-connected disability," nor does it address whether Maryland employers may inquire about an applicant's or employ's veteran status.

4. Task Force to Study Family & Medical Leave Insurance

In June 2016, the Maryland General Assembly created a task force that will be co-chaired by two Montgomery County Democratic legislators to study existing family and medical leave insurance programs in other jurisdictions; review studies on such programs conducted in other states and by Montgomery County; and review the final report of the Task Force to Study Temporary Disability Insurance Programs and the Process for Assisting Individuals with Disabilities at Local Departments of Social Services.

The Task Force will hear public testimony and make recommendations for development of a State social insurance program to provide short-term benefits to eligible employees who lose wages due to non-work-related illness or injury; pregnancy or childbirth; caregiving for seriously ill family members; and other specified causes. Also, the Task Force will recommend a design for such an insurance pool, including tax rates and benefits.

Authorization for the Task Force ends June 30, 2018.

MONTGOMERY COUNTY, MARYLAND

1. Montgomery County Enacts New Sick and Safe Leave Act

Montgomery County's new Sick and Safe Leave Act became effective on October 1, 2016. The Act requires the following of employers in Montgomery County:

  • Employers with five or more employees must provide at least one hour of paid leave for every 30 hours worked, not to exceed 56 hours of earned paid leave in a calendar year.
  • Employers with fewer than five employees must provide leave at the same rate – one hour for every 30 hours worked – and up to 56 hours of leave per year. However, only 32 of those hours must be paid and 24 hours can be provided on an unpaid basis.

Exempt employees earn leave at a rate consistent with their normal workweek, up to 40 hours each week.

An employee may use earned sick and safe leave:

  • to care for or treat the employee's mental or physical illness, injury, or condition;
  • to obtain preventive medical care for the employee or the employee's family member;
  • to care for a family member with a mental or physical illness, injury, or condition;
  • if the employer's place of business has closed by order of a public official due to a public health emergency;
  • if the school or child care center for the employee's family member is closed by order of a public official due to a public health emergency;
  • to care for a family member if a health official or health care provider has determined that the family member's presence in the community would jeopardize the health of others because of the family member's exposure to a communicable disease; or
  • if the absence from work is due to domestic violence, sexual assault, or stalking committed against the employee or the employee's family member and the leave is used:

    • by the employee to obtain for the employee or the employee's family;

      • medical attention needed to recover from a physical or psychological injury due to domestic violence, sexual assault, or stalking;
      • services from a victim services organization related to the domestic violence, sexual assault, or stalking;
      • legal services, including preparing for or participating in a civil or criminal proceeding related to the domestic violence, sexual assault, or stalking; or
    • during the time that the employee has temporarily relocated due to the domestic violence, sexual assault, or stalking.

Shortly after the Act became effective, Montgomery County amended it to expand its coverage. As amended on October 28, 2016, the Act also allows employees to use earned sick and safe leave for parental purposes, including:

  • for the birth of a child, or for the placement of a child with the employee for adoption or foster care; and
  • to care for a newborn, newly adopted, or newly placed child within one year of birth, adoption, or placement.

2. Montgomery County Executive Vetoes $15 Minimum Wage Increase

On January 23, 2017 Montgomery County Executive Isaiah Leggett vetoed a measure that passed in a 5-4 vote on January 17 by the Montgomery County Council to increase the hourly minimum wage in Montgomery County to $15 by 2020 for most employers.

Prior to the vote by the Council, Leggett had expressed concerns about implementation of the increase and previously pushed for a delay to 2022 in implementation for all employers. The Council would have to vote 6 to 3 to override a veto by Leggett, which seems unlikely.

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Mintz Levin will continue to monitor these and other changes to employment laws in the metropolitan DC region and will be prepared to advise its clients accordingly.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Authors
David Barmak
Donald C. Davis
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