Guide to Washington, D.C. employee benefits and HR rules

Is your organization compliant with D.C.'s employment laws?

If you have a D.C.-based company or employ D.C. workers, learning everything you need to know about HR compliance in D.C. is essential. This guide will provide a general overview of D.C.'s employment and benefit regulations for small to medium-sized businesses.

Topics covered in this guide include:

• What are employment laws in D.C.?
• What are employees’ rights in D.C.?
• Required and non-required employee benefits in D.C.
• Health insurance in D.C.
• Wage laws in D.C.

What are employment laws in D.C.?

The federal government sets minimum benefits and HR requirements for employers nationwide. Many states take it a step further and create their own employment laws to offer additional employee protections. And even though it’s a federal district and not a state, D.C. is no exception.

D.C. has several employee-focused laws, making it an excellent place for individuals to seek work. Before opening or expanding a business in D.C., you must familiarize yourself with the District’s employment laws.

In D.C., employers must follow several District-specific laws in addition to federal employment laws, such as:

• At-will employment
  • D.C. is an “at-will” employment district, meaning employers and employees can end an employment agreement at any time, with or without cause. However, by law, employers can’t terminate an employee due to discrimination or other illegal reasons.
  • Employees who believe their employer fired them illegally can file a complaint.
• Fair Criminal Record Screening Act (Ban the Box)
  • With few exceptions, it’s illegal for D.C. employers with 11 or more employees to ask job seekers about their criminal history until they make a conditional job offer. The law also prohibits employers from asking about any criminal charges that aren’t pending or didn’t result in a conviction at any point in the hiring process.
  • After they make a conditional job offer, employers can’t withdraw the offer due to the applicant’s criminal record unless it’s for a legitimate business reason.
• Background checks
  • Employers must run background checks that adhere to Fair Credit Reporting Act standards on all healthcare employees, firefighters, public school workers, D.C. agency individuals who work with minors, mortgage bankers and brokers, loan officers, and Department of Corrections staff members.
• The Fair Credit in Employment Amendment Act
  • Employers can’t ask about an applicant's credit history, refuse to hire them based on their credit history, or post a job listing outlining any preferences or limitations on an applicant's credit information.
• D.C. Human Rights Act (DCHRA)
  • This Act prohibits discrimination against employees based on race, color, religion, national origin, sex, age, marital status, personal appearance, sexual orientation, gender identity or expression, familial status, political affiliation, genetic information, disability, source of income, place of residence or business, homeless status, and more.
• Cannabis Employment Protections Amendment Act of 2022
  • It’s illegal for employers to terminate, threaten, or discriminate against an employee who uses marijuana. This includes recreational users, individuals who are patients in a medical marijuana program, or employees who test positive for marijuana during a workplace drug test without any prior signs of impairment.
  • Employers can only drug test prospective employees after they extend a conditional job offer.
• D.C. Child Labor Law
  • The law places certain restrictions on minors younger than 18 who work depending on their age, job type, time period, and hours of work. Minors can’t work in a hazardous environment. Employers must also hold the proper permit to employ a minor.
  • Employers who violate this law are subject to costly penalties.
• Non-compete restriction laws
  • It’s illegal for employers to enforce non-compete clauses for employees earning up to $154,200 or medical specialists earning up to $257,000 annually.
• Sexual harassment training
  • All employers must conduct sexual harassment prevention training within 90 days of a new hire’s first day unless the employee completed another sexual harassment training within the last two years.
• Workplace accommodations for nursing mothers
  • Unless it would create undue hardship on business operations, employers must provide nursing mothers daily unpaid breaks to express breast milk. The break may run concurrently with another break—whether paid or unpaid—the employee already receives.
  • Employers must make “reasonable efforts” to provide a private location, ideally close to the employee’s workspace, for them to comfortably complete their task. Bathrooms and toilet stalls don’t meet the private location requirement.
  • Employers must post their breastfeeding policy outlining these requirements in a visible place for affected employees.

Now that we’ve reviewed a few D.C.-specific laws, we’ll review D.C.’s employee rights.

What are employees’ rights in D.C.?

Employees in D.C. have many rights under district and federal law. Regardless of your organization's size, you must know your employees' rights if you have or plan to hire employees in the District.

Some rights in D.C. include:

• Fair wages
  • Employers must pay at least the District’s minimum wage and overtime pay.
• Meal and rest periods
  • The law doesn’t require employers to provide employees unpaid or paid meal or rest breaks. However, if employers allow them, breaks lasting less than 20 minutes must be paid breaks. Employers don’t have to pay for meal or rest periods lasting 30 minutes or more.
• Discussion of wages
  • The Wage Transparency Law gives employees the right to speak to their co-workers about their wages. Employers can’t require employees to sign forms limiting wage discussions or retaliate against any worker who chooses to talk about their salary.
  • Employees may file a complaint if their employer violates this law.
• Whistleblower protections
  • It’s illegal for employers contracting with the D.C. government to retaliate against a current or former employee for refusing to follow an unlawful order, such as mismanaging the contract, wasting public resources or funds, abusing authority, violating a law, or endangering public health and safety.
• Occupational Safety and Health Administration (OSHA) compliance
  • OSHA is a federal agency that outlines safety and health standards for all employees while they’re at work. Employers not following OSHA regulations can’t retaliate against employees who report violations.
  • The Office of Occupational Safety and Health (OSH) supports private-sector employers in D.C.
• Consolidated Omnibus Budget Reconciliation Act (COBRA)
  • Employees have the right to COBRA health coverage up to 18 months after employment ends. The extended coverage also applies to any plan dependents, like the employee’s spouse or children younger than 26.
  • Employers with fewer than 20 employees must comply with the District of Columbia's mini-COBRA law, which provides continuation coverage for up to three months for employees and their dependents.
  • An employer must notify employees of their rights under COBRA within 15 days of coverage termination.
• Smoke-free workplace
  • Most businesses with employees must maintain a smoke-free workplace. This includes work areas, employee lounges, bathrooms, conference areas, classrooms, cafeterias, and employer-owned vehicles.
  • Private residences are exempt unless they’re a childcare, adult day care, or healthcare establishment.

Health insurance in D.C.

Federal law requires employers with 50 or more full-time equivalent employees (FTEs) to provide health insurance with minimum essential coverage (MEC) and minimum value that satisfies the Affordable Care Act’s (ACA) employer mandate.

Even if the law doesn’t require you to provide health benefits, choosing to is a great way to attract and retain talented employees. Traditional group health insurance remains a popular option for employers. But, rising healthcare costs can make it challenging for small to medium-sized businesses on a budget to afford the premiums.

The national average premium for group health insurance in 2023 was $703 per month for self-only coverage. In contrast, the average monthly premium for a 40-year-old on a silver individual plan is $538 per month. This makes covering the cost of an individual health policy more affordable than offering a group plan in D.C.

Employers interested in offering a health benefit can take advantage of D.C.’s lower individual plan prices by implementing an alternative health benefit, like a health reimbursement arrangement (HRA).

Health reimbursement arrangement (HRA)

An HRA is an IRS-approved health benefit that’s entirely employer-funded. It allows you to reimburse your employees, tax-free, for their individual health insurance premiums and qualifying medical expenses.

With an HRA, your employees choose the individual health insurance plan that suits their medical needs and budget. They can shop for a plan using a private exchange or through D.C.’s health insurance marketplace, D.C. Health Link.

Employers save more money by not purchasing a group health insurance plan, not experiencing annual rate hikes, and only reimbursing their employees when they incur an approved medical care expense. HRAs are also tax-advantaged for employers as reimbursements are free of payroll taxes.

Some HRAs, such as the qualified small employer HRA (QSHERA), are only for employers with fewer than 50 FTEs. Others, like the individual coverage HRA (ICHRA), can satisfy the federal regulations for applicable large employers (ALEs). This makes an HRA a flexible health benefit that can work for employers of all sizes.

Learn more about each HRA

Wage laws in D.C.

Wages in D.C. are subject to various District laws. We've compiled the most important requirements to know below.

Minimum wage laws

Currently, the minimum wage in the District is $17 per hour for all employees, regardless of company size. Beginning July 1, 2024, the minimum wage will increase to $17.50.

Certain employee classes, like workers with disabilities, security officers, minors younger than 18, student employees, and workers performing miscellaneous acts, are exempt from minimum wage laws.

Tipped wages

Currently, the tipped minimum wage is $8 per hour. Effective July 1, 2024, the minimum wage for tipped employees will increase to $10 per hour. Under the District of Columbia Tip Credit Elimination Act, the tipped minimum wage will increase annually until 2027. At that time, it will change to match the regular minimum wage.

An employer must make up the difference if the employee’s base wages plus average weekly tips don’t equal the minimum hourly rate. If they make more than minimum wage in tips, the employer doesn’t need to pay anything extra.

Each tipped employee must receive all employer-paid wages and tip amounts. Their disaggregated paystub should also outline the percentage of tips paid via credit card that will be subject to credit card fee reductions.

Tip pooling is legal in the District under minimum wage laws. However, to pool tips, an employer must notify all employees in advance, post a copy of the tip pooling process in the workplace, and ensure that only the employees who receive tips participate in the pool. Other employees, like managers and supervisors, are ineligible.

Hours worked

Employers must pay employees for all hours worked. This includes time spent performing job duties on company property; off-site on-duty work; employer-required training time; travel time between two work sites; and repair, maintenance, and cleaning activities before or after the employee’s shift but as part of their required job duties.

Employers must cover the costs of employee’s travel expenses if the travel was for business reasons.

Show-up pay

Employers must pay employees for at least four hours of work at the regular minimum wage rate if they report for work for their entire shift but receive no work to do. This also applies if an employee receives fewer than four hours of work and the employer asks them to go home early.

Employees are exempt if they were scheduled in advance to work a shift of four or fewer hours.

Shift schedule pay

Under District law, employers must pay employees for one hour at the regular minimum wage rate for each day they work a split shift or have a daily schedule containing non-consecutive work hours. A meal period of one hour or less doesn’t count as a non-consecutive work hour within a shift.

Uniform pay

According to minimum wage laws, employers must cover the cost of purchasing, maintaining, and cleaning any employer- or law-required uniforms, tools, and protective clothing.

The three ways employers can cover these expenses are as follows:

• They can add 15 cents per hour to the employee’s regular salary to cover purchasing, maintenance, and cleaning expenses. The maximum amount the government requires an employer to pay for this option is $6 per week.
• Employers can purchase the necessary uniforms and tools but have the employee maintain them. In this case, the employer only needs to add 10 cents per hour to the employee’s wages.
• They can clean and maintain the uniforms and tools but have the employee purchase them. In this scenario, the additional payment to the employee’s wages is eight cents per hour.

Overtime pay

D.C.’s overtime requirements are similar to the federal overtime standards. Employers must pay employees an overtime rate of 1.5 times their regular pay for any hours they work more than 40 in a standard workweek.

Certain employee classes, like airline employees, automobile dealership employees, commissioned workers, railroad employees, seamen, etc., are exempt from overtime compensation. There are also overtime exemptions for white-collar employees, outside salespeople, newspaper delivery workers, volunteers, babysitters who work irregular schedules, and religious organization members.

Pay notice

At the time of hire, employers must provide employees with a written notice outlining:

• The company’s name
• The company’s physical address and the mailing address (if different from the physical address)
• The telephone number
• The employee’s regular rate of pay and what comprises the rate of pay, such as their salary, commission, applicable prevailing wages, claimed allowances, overtime, etc.
• The tip pooling policy (if applicable)
• The employee's regularly scheduled payday or pay frequency
• Any other necessary information

Employers must also provide employees with an updated written notice whenever the above information changes.

Pay frequency

Employers must pay non-exempt employees at least twice a month on designated regular paydays. Exempt employees must receive their wages at least once a month. In both cases, employees must receive payment by 10 working days after the end of the pay period unless a collective bargaining agreement or other employment contract states otherwise.

Regarding payment methods, employers may pay wages in cash, by check, or by direct deposit.

Pay deductions

Employers can only pay deductions authorized or otherwise required by law or a court order. No deductions may bring the employee’s total wages below the minimum wage rate. Additionally, employees must receive an itemized pay statement with each paycheck outlining all deductions.

Pay statements

Employers should give their employees pay statements each pay period detailing certain information.

Pay statements must include the following:

• The date
• Gross wages earned during the statement’s pay period
• All withholdings and deductions
• Net wages earned
• Hours worked
• Delineating cash tips and credit card tips (if applicable)
• The employee’s tip-declaration form for the pay period (if applicable)
• Any other regulation required information

Recordkeeping

Depending on your type of records, the length of time you must keep them on file to remain compliant will vary.

Retain the following for six years:

• Summary plan descriptions and annual employee benefit reports

Retain the following for at least five years:

• To comply with OSHA, employers must keep all records of job-related injuries and illnesses. However, some records, such as toxic substance exposure, must remain on file for 30 years.

Retain the following for at least three years:

• Payroll records, certificates, notices, collective bargaining agreements, employment contracts, sales and purchase records, each employee’s Form I-9, and relevant FMLA records.

Retain the following for at least two years:

• Timecards, wage rates, shipping and billing records, and pay additions and deductions.
  • You must also keep the files that show why you may have paid different wages to employees of different sexes, such as job performance, seniority, merit systems, or collective bargaining agreements.

Retain the following for at least one year:

• All employment records from each employee’s date of termination and benefit plans.

Final pay

In D.C., the final paycheck depends on how the employee leaves the organization.

The following situations outline how business owners should furnish the final paycheck:

• If an employee is fired or laid off, an employer must pay all final wages by the first business day after termination.
  • Suppose the terminated employee was responsible for handling any business funds. In that case, the employer has four days from the termination date to verify that the funds they were responsible for are accurate.
• If an employee quits, an employer must pay all final wages by the next regularly scheduled payday or within seven days following the resignation date, whichever comes first.
• If a labor dispute causes an employee to be suspended, an employer must pay all earned wages by the next regularly scheduled payday.

Frequently asked questions