Maryland Makes Major Changes to Its Paid Family and Medical Leave Insurance Program, Including Implementation Delays | JD Supra

What you need to know

• On May 3, 2023, Governor Wes Moore approved the Maryland General Assembly changes (SB 828) to the Maryland Time to Care Act of 2022, which just over a year ago established the Maryland Family and Medical Leave Insurance (“FAMLI”) Program (the “Program”).
• Among its notable updates, SB 828 delays the implementation of Maryland’s FAMLI program.
  • In particular, employer and employee contributions to the Program will begin now October 1, 2024instead of October 1, 2023.
  • In addition, eligible employees can begin using the benefits of the Program at January 1, 2026instead of January 1, 2025.
• Another important aspect from SB 828 is the adoption of updated benefits language coordination between FAMLI leave and employer-provided paid time off, including vacation, paid sick time, parental leave, and benefits of disability.

Overview

Under Maryland’s FAMLI program,¹ eligible employees will generally be eligible to receive up to 12 weeks of paid family and medical leave per benefit year.² FAMLI benefits cover the following absences: (1) to take care of a child during the first year after the birth of the child or after placing the child through foster care, foster care or adoption, (2) to care for a family member with a serious medical condition, (3) the employee’s serious medical condition rendering him unable to perform the duties of his position, (4) to care for a service member who is next of kin of the employee or (5) for a qualifying need arising from the employment of an employee’s family service provider. Importantly, for purposes of Maryland FAMLI, covered employers include any person or government authority that employs at least one individual in the state of Maryland. See Seyfarth’s May 20, 2022 and April 12, 2022 updates for more details about employee rights and employer obligations under the Program.

Summary of additional changes

Coordination of benefits

The original FAMLI statute contained burdensome language involving the interaction and coordination of Maryland’s FAMLI benefits and employer-provided paid leave. Specifically, the original statute stated that employees must exhaust any employer-provided leave that is not required by law before receiving FAMLI benefits. Also, under the original bylaws, such employer-provided leave would receive the same protections as statutory leave and would not count against the number of weeks of FAMLI benefits available to the employee.

By comparison, the revised language notes that employees may not be required to use or use up paid vacation, paid sick leave, or “other paid vacation under an employer’s policy” before or while receiving FAMLI benefits. The employer and employee, however, may agree that the employee will use available paid vacation, sick leave, or other leisure time to receive up to 100% of the individual’s average weekly wage during the FAMLI leave period.

Additionally and notably, the coordination of benefit updates described in the previous paragraph does Not apply to “separate leave policies provided by the employer due to parental care, family care or military leave or under a disability policy”. For these employer-provided benefits, the revised statute states that an employer may require that FAMLI benefit payments be made concurrent with or otherwise coordinated with payments made or time off allowed under the employer’s policy.

Contribution breakdown

The revised legislation fixes the total FAMLI contribution rate for employers and employees, which was deliberately left open in the original statute. Revised legislation clarifies that the contribution rate will be split 50/50 between employers and employees³and that the total contribution rate cannot exceed 1.2% of an employee’s salary. The contribution rate will be applied to all wages (see below for definition) up to and including the social security wage base. The total contribution rate will be fixed by October 1, 2023. The initial contribution rate will take effect on October 1, 2024 and will be in effect until June 30, 2026.

Updated and new definitions within the program

The new legislation broadened the definition of covered ‘family member’ and added a definition of ‘salary’. “Family Member” now includes household partners of a covered employee for the purposes of the Program. “Wages” are defined as hourly wages or wages; commission; compensatory pay; severance pay; standby pay; tip or tip; vacation or holiday pay; and any other paid leave, including sick leave (paid in full by employers).

Employer Takeaways

The Maryland Division of Labor and Industry is expected to issue FAMLI implementing regulations by January 1, 2024, so employers with operations in Maryland should keep this date in mind as we approach the final months of 2023.

With the paid leave landscape continuing to rapidly expand and grow in complexity, we encourage companies to contact their Seyfarth contact for solutions and recommendations to address compliance with paid leave requirements.

¹In addition to Maryland, California, Colorado, Connecticut, Delaware, Massachusetts, New Jersey, New York, Oregon, Rhode Island, Washington, Washington, DC and San Francisco (CA) have already enacted obligatory Paid Family Leave (“PFL”) laws. Additionally, New Hampshire and Vermont have established volunteer PFL programs in recent years. And Virginia recently added paid family leave as a class of insurance that private insurers can offer employers. Some mandatory PFL laws are more appropriately called paid family and doctor leave laws because they include benefits for medically-related absences, as well as “family” leave (e.g. bonding with a new child; caring for a family member with a serious health condition; etc.). There are currently four PFL laws – California, New Jersey, New York and Rhode Island – that do this Not offer severance pay for an employee’s medical condition. However, each of these jurisdictions offer a separate state disability insurance benefit. The San Francisco program is tied to the California state PFL program and is limited to paid parental leave.

²An employee can receive an additional 12 weeks of FAMLI benefits if the individual qualifies for both parental leave (i.e. bonding with a new child) and medical leave due to their serious health condition in the same claim year .

³Employers with fewer than 15 employees are not required to contribute. For employees working for employers with fewer than 15 employees, the total contribution claimed will be 50% of the total contribution rate.