Bowing to business unrest, D.C. Council will revisit paid-leave law, chairman says

The D.C. Council will begin considering dramatic revisions in the coming weeks to the District’s new law guaranteeing expansive family and medical leave benefits to private-sector workers, Council Chairman Phil Mendelson (D) said Friday.

In an interview, Mendelson said he was suggesting changes because opposition from local business leaders could hinder the success of the program, which would offer eight weeks of parental leave, six weeks to care for an ailing relative and two weeks of personal sick time — a package that would be among the nation’s most generous.

He said that in recent weeks, business groups have offered suggestions for changing the law that might be workable.

The bill, which the council passed 9 to 4 in December, advanced through the mayor’s office this week and must now be submitted to Congress for a 30-day review period. Even after that, there will be time to reviseD.C. C the legislation, whose main provisions are not scheduled to take effect for several years.

Mendelson said he expects alternative versions of the bill to be filed with the council over the next month. Although the benefits would remain the same, the means of paying for them may be redesigned in a way more palatable to the business community, with a lower tax rate and possibly the use of private insurance plans, he said.

Mendelson said the city may also turn to a private contractor to run the system rather than setting up the new government department envisioned in the current legislation.

“There’s a lot of pushback over the tax rate and the creation of a new, huge bureaucracy,” he said. While council members may ultimately decide not to amend the law, he said, “I think we should look at some alternative ideas and see if there’s something there.”

Mendelson’s remarks were an unexpected turn in the District’s efforts to establish paid family leave for all workers. The bill was a landmark victory for the council’s progressive faction and drew support from labor activists across the country.

By proposing that the council reexamine the law, Mendelson seemed in a sense to be snatching defeat from the jaws of victory: Just this week, Mayor Muriel E. Bowser (D), a fervent opponent of the bill, announced that she would not veto it. Mendelson oversaw the drafting of the existing bill and argued forcefully for its passage.

“This is surprising to hear, because the chairman has been such a convincing and passionate defender of the legislation,” said council member Elissa Silverman (I-At Large), who began leading the push for a paid-leave bill more than a year ago with council member David Grosso (I-At Large). “I would welcome improvements, but this does seem like a rehashing of a debate we’ve already had.”

In its current version, the law would levy a 0.62 percent tax on employer-paid payroll taxes. Using that revenue, the city would reimburse employees for 90 percent of their first $900 in weekly pay and 50 percent of their remaining weekly pay, with a cap of $1,000 per week. The District’s chief financial officer estimates that the city could begin offering those benefits during the 2019 fiscal year.

The benefits would not apply to federal workers or to the 35,000 people employed by the District government.

Mendelson said he plans to consider alternatives that would shrink the size of the payroll-tax increase and use the money solely to help pay for benefits for employees of small businesses, perhaps through insurance policies.

Larger employers — many of which already have leave policies — would be mandated to provide the amount of leave required by the legislation.

Many of the details are still being worked out, Mendelson said, such as what size constitutes a “small” employer and how far the tax rate should be lowered.

One draft plan from the business community that has been floated to council members suggests a fee on employers with 50 or more workers that would not exceed 0.1 percent of payroll.

Mendelson said he would introduce one or more bills fleshing out such ideas in the coming weeks unless other council members introduce similar legislation.

Business groups have been arguing for months for an “employer mandate” approach to paid leave. Mendelson had previously rejected their suggestions, saying they would create a burden for small businesses.

Council member Jack Evans (D-Ward 2), who sided with business leaders and voted against the leave bill, said Mendelson’s new openness could be the result of a political calculation as he looks forward to the 2018 election.

Evans said Mendelson may have realized only in recent weeks how unpopular the paid-leave law is among influential business groups, such as the Greater Washington Board of Trade and the D.C. Chamber of Commerce. “I’m sure he’s looking at the tea leaves, saying, ‘Wow, I pissed a lot of people off,’ ” Evans said.

Mendelson said it was “nonsense” to impute political motives to his willingness to listen to the business community. He said the new approaches suggested in recent weeks are more likely to address his concerns about small businesses than those put forward last year, before the law was approved.

As a practical matter, he said, supporters of paid leave also have a vested interest in securing the support of the mayor, who could still hinder the law — for example, by moving slowly to set up the technology system that would be required for the city to administer benefits.

“We can get the bill through — we can get the votes, we can get past the mayor, we can get the bill in place,” he said. However, “If the Board of Trade and the Chamber of Commerce are going to continue to scream and yell, it’s going to be more difficult.”

He added: “We know the mayor doesn’t like the bill. So if there’s a lot of business upset, then she’s going to be incentivized to move very slowly to implement the bill.”

Grosso said he was open to hiring a contractor to run the city’s benefit system and had made similar suggestions in the past. He said he was much more skeptical of arguments to lower the existing tax rate on businesses and said an employer mandate would be difficult to enforce

“I still am adamantly opposed to any kind of employer-mandate approach,” Grosso said. “There is no enforcement mechanism in D.C. government that is good enough to monitor whether these employers are providing these benefits to their employees.”

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