April 12, 2017

DC Enacts Two Significant New Employment Laws: The Implications for Nonprofits with DC Employees

6 min

On April 7, 2017, the DC Universal Paid Leave Amendment Act (Paid Leave Act) and the DC Fair Credit in Employment Amendment Act of 2016 (Credit History Act) became law in the District of Columbia. These new laws will have a significant impact on nonprofit employers in Washington, DC. Under the Credit History Act, most DC employers are now prohibited from requesting or utilizing a current or prospective employee's credit information. Furthermore, the Paid Leave Act will soon require DC employers to provide employees with up to eight (8) weeks of family, parental, and/or medical leave each year, funded by a .62% payroll tax on DC employees.

The Fair Credit in Employment Amendment Act

What is prohibited?

The law eliminates a covered nonprofit employer's ability – during both the hiring process and the employment relationship – to investigate or use in its decision-making process an employee or applicant's credit information. Specifically, a covered organization is prohibited from "requiring, requesting, suggesting, or causing any employee [current or prospective] to submit credit information, and from using, accepting, referring to, or inquiring into an employee's credit information." "Inquiring" is defined by the Credit History Act as any method used to gather credit information, including job applications, interviews, and credit history checks. Moreover, "credit information" includes any communications regarding an applicant's or employee's creditworthiness, credit standing, credit capacity, or credit history. It is important to note that the Credit History Act also is applicable to unpaid interns.

Which employers and job positions are covered?

The new law applies to any nonprofit employer subject to the DC Human Rights Act of 1977.1 The Credit History Act defines a few limited exceptions, including certain positions requiring security clearance, some positions with the DC Police Department or the office of the DC Chief Financial Officer, and jobs with financial institutions that have access to personal financial information.

What penalties apply?

An aggrieved applicant or employee may file an administrative complaint with the DC Commission Human Rights (Commission). If the Commission finds a violation, it may impose monetary penalties, which are awarded to the complainant and range from $1,000 to $5,000. Because the penalty is awarded to the complainant, employers should take extra caution – covered employees and applicants will have an incentive to file charges.

As with other employment discrimination charges under the DC Human Rights Act, employees and applicants also may pursue a claim in court.

What should you do?

DC employers should review their employment applications and hiring policies and then:

  • Remove any questions from initial application forms regarding an applicant's credit information or credit history;
  • State in the employee handbook and/or other relevant policy documents that, in compliance with this law, the organization does not inquire about employee credit history or information;
  • Train your human resource professionals and others with interviewing responsibilities to avoid questions about credit history or that might indirectly cause an applicant to submit credit information;
  • Ensure that pre-employment background checks (including those performed by third-party agencies) do not investigate applicant credit history or a credit report; and
  • Educate the organization's managers and supervisors about the limited ability to consider applicant and employee credit history.

The DC Universal Paid Leave Act

Which nonprofit employers and employees are covered?

Employers – The Paid Leave Act applies to all employers – based in DC or elsewhere – that are required to pay DC unemployment insurance on behalf of their employees, excluding federal and DC governments as well as employers that DC is not authorized to tax under federal law or treaty.

Employees – An employee is covered by the law if he or she spends more than 50% of his or her work time in DC and has worked for a covered employer at any time during the twelve (12)-month period preceding the event for which leave is requested. It is important to note that an employee's personal residence is irrelevant to the determination of coverage. As such, employees who reside in Maryland or Virginia but work in DC will be entitled to benefits provided by the Paid Leave Act.

What benefits are provided?

Under the Paid Leave Act, a covered employee is entitled to up to eight (8) weeks of parental leave, up to six (6) weeks of family leave to care for a family member, and up to two (2) weeks of medical leave for a serious health condition. An employee may not take more than eight (8) weeks of any combination of the above-described leave in a fifty-two (52)-week period. Employees will receive up to a maximum of $1,000 per week during the leave period.

How are the benefits administered?

In order to receive the paid leave benefits, covered employees will be required to submit claims to the DC government in accordance with procedures to be established by the Mayor. Within five (5) days of receiving the employee's claim, the DC government will notify the employer.

Employees also are required to provide employers with at least ten (10) days' written notice of the need to use leave, if the need is foreseeable. If the need for leave is not foreseeable, verbal or written notification must be submitted prior to the beginning of the first shift for which the employee will be absent, except in cases of emergency, where notification is required within forty-eight (48) hours after the emergency.

In addition, under the Paid Leave Act, the Mayor is required to implement regulations that will provide further guidance to employers.

How does the law work in conjunction with other employment laws and policies?

Paid time off policies – The Paid Leave Act's benefit entitlements must be provided in addition to, and not in lieu of, any paid leave benefits offered by the employer.

Family and medical leave laws – The leave provided by the Paid Leave Act runs concurrently with any leave to which an employee is entitled under federal and/or DC family and medical leave laws. Said differently, any leave available under the Paid Leave Act is not in addition to other family and medical leave provided by federal and/or DC law.

Is there a possibility the law will change prior to the commencement of the tax imposition on employers?

It is important to note that the law in its current form may change in the near future. In response to the business community's opposition to the law, at least two alternative bills have been proposed by DC Council members. The first piece of proposed legislation would lower the payroll imposed on employers, whereas the second would not only lower the payroll tax, but also make the tax inapplicable to employers with fewer than fifty (50) employees.

[1] The DC Human Rights Act broadly defines employers and employees. As such, the Credit History Act arguably applies to all employers, employment agencies, and labor organizations located in DC, regardless of where an employee or applicant is located. The law also may apply to nonprofit employers located outside of DC with one or more employees in DC or even who are hiring a remote (work-from-home) employee in the DC. To determine whether the Credit History Act applies in particular situations, it is recommended that nonprofit employers seek the advice of counsel‎.