Maryland revises paid family and medical leave
Covered employers and employees
Covered employers. The law applies to all employers (including state and local governmental employers) with at least one employee working in Maryland. An employer does not include the sole owner of a sole proprietorship or limited liability company or a C or S corporation whose owner is the only employee.
Covered employees. Full- and part-time employees are eligible for PFML if they worked at least 680 hours in 12 months immediately before the leave starts. Self-employed individuals may opt into the program. Individuals receiving workers’ compensation benefits (other than for permanent partial disability) or unemployment benefits are not eligible for PFML benefits.
Funding
The law creates the Family and Medical Leave Insurance (FAMLI) Fund administered by Maryland’s Department of Labor (MDOL). Contributions start Oct. 1, 2024, shared equally by employers and employees. Employers may pay all or a portion of the required employee contribution.
MDOL will set the initial contribution rate (not to exceed 1.2% of wages, up to the Social Security maximum taxable wage base) by Oct. 1, 2023, and that rate will be in effect from Oct. 1, 2024, through June 30, 2026. On or before Nov. 15, 2025, and annually thereafter, MDOL will conduct and report to the state legislature a cost analysis focusing on solvency and benefit payments. Using this analysis, MDOL will set the total contribution rate by Feb. 1, 2026, and annually thereafter that will apply on the following July 1.
Wages are defined by statute to include hourly wages or salary; commissions; compensatory, severance and standby pay; tips and gratuities; holiday or vacation pay; and any other fully employer-funded paid leave, including sick leave. Note that this definition of wages is broader than the definition provided by the state’s Wage and Hour Law (MD Code Lab. & Empl. § 3-501(c)).
Employers with fewer than 15 employees need not contribute (but their employees have to contribute 50% of the total contribution). Certain licensed community health providers will be reimbursed some or all of the required employer contribution for selected employees.
Qualifying leave
These reasons qualify for leave:
- Parental leave: birth, adoption, foster care placement or kinship care (an undefined term) of an employee’s child during the first year and preparations for adoption, foster, or kinship placement
- Family caregiving: care for a family member with a serious health condition, as defined by the statute
- Service member caregiving: care for an employee’s next of kin who is a service member with a serious health condition resulting from military service
- Medical: an employee’s serious health condition causing inability to perform the functions of his or her position
- Military qualifying exigency: any of 10 reasons related to a family member’s military service, as defined by the statute
Family member. Covered family members include:
- Employee’s biological, step-, adopted or foster children
- Employee’s children in legal or physical custody or under guardianship
- Employee’s children for whom an employee stands in loco parentis (no age limit)
- Employee’s or spouse’s biological, step-, adoptive or foster parents
- Employee’s legal guardian or employee’s or spouse’s ward
- Individuals who acted as a parent or stood in loco parentis to an employee or the employee’s spouse during childhood
- Employee’s spouse or domestic partner (an undefined term under the statute or general Maryland law, which does not recognize domestic partnerships)
- Employee’s biological, step-, adoptive or foster grandparents or grandchildren
- Employee’s biological, step-, adoptive or foster siblings
Duration. Except in one circumstance, leave cannot exceed 12 weeks in an application year (the 12-month period starting on the Sunday of the calendar week for which benefits are approved). Employees who experience a serious health condition and qualify for parental leave (as described above) may receive another 12 weeks of benefits in a single application year.
Employees may take intermittent leave, regardless of the reason, in minimum increments of four hours.
Wage-replacement benefits
Benefits will become available Jan. 1, 2026, with a $50 weekly minimum and $1,000 weekly maximum. No benefit waiting period will apply. The weekly maximum will be adjusted yearly by the annual percentage growth in the Consumer Price Index for All Urban Consumers (CPI-U), Washington–Arlington–Alexandria area. Beginning in 2026, MDOL will announce the maximum weekly benefit for the next calendar year by Sept. 1.
A covered employee’s wage replacement benefit depends on the employee’s average weekly wage (AWW) — total wages paid over the last 680 hours ÷ the number of weeks worked — relative to the state average weekly wage (SAWW):
- If the covered employee’s AWW is 65% of or lower than the SAWW, the benefit is 90% of the AWW.
- If the covered employee’s AWW is greater than 65% of the SAWW, the benefit is 90% of the AWW up to 65% of the SAWW, plus 50% of the AWW exceeding 65% of the SAWW, capped at the $1,000 maximum benefit.
Employees receiving workers’ compensation for reasons other than a permanent partial disability are not eligible for PFML benefits.
Employee rights
During leave, health benefits must continue at active employee rates “in the same manner as required under … the federal Family and Medical Leave Act (FMLA).” Employers must restore an employee returning from leave to a position equivalent to the one held before leave began. An employer may deny job restoration only by satisfying all three of these conditions:
- Job restoration would cause “substantial and grievous” economic injury to employer operations.
- After determining economic injury would occur, the employer notifies the employee about its intent to deny restoration rights.
- An employee already on leave when receiving this notice elects not to return to work. (Employees receiving this notice prior to taking leave do not have the same opportunity to elect to return.)
The law protects employees exercising TTCA rights from employer discrimination or retaliation.
Private plans
Employers may opt out of the PFML insurance program if their private plan meets or exceeds the TTCA’s rights, protections and benefits. This plan may self-insured, fully insured or a combination. MDOL must approve the plan. Approved plans exempt an employer (and covered employees) from contributing to the FAMLI Fund. Upcoming guidance should provide more details.
Coordination with other leave
Employers cannot require employees to use or exhaust paid vacation, paid sick leave or other paid time off (PTO) under an employer policy before or during a TTCA paid leave. Employers and employees can, however, mutually agree to use paid vacation, paid sick leave or other PTO to top off TTCA benefits up to 100% of the employee’s average weekly wage. This use of other PTO presumably includes time earned under Maryland’s Healthy Working Families Act, but confirmation would be welcome. Employers can require coordination of TTCA paid leave with employer-provided parental leave, family leave, military leave or disability policy.
TTCA leave runs concurrently with federal FMLA leave when both laws apply. If, after notice of TTCA eligibility from the employer, an employee declines to apply for benefits during an FMLA leave, the leave duration will still count against the individual’s total TTCA leave allotment for the application year.
The law does not diminish an employer’s obligations under a collective bargaining agreement or an employer policy that provides longer leave benefits.
Required notices
Employer notice. Employers must provide each employee a written notice about the law’s rights and duties on hire and annually thereafter. Employee leave requests potentially triggering TTCA leave require an employer to provide a notice of eligibility to the employee within five business days of the request. MDOL will publish model notices.
Employee notice. Employers may require at least 30 days’ advance written notice for foreseeable leave. For unforeseeable leave, employees must provide notice as soon as practicable and comply with the employer’s notice procedures and requirements for other types of leave, as long as those requirements do not interfere with the employee’s TTCA rights.
Administration
Guidance. MDOL must issue program regulations by Jan. 1, 2024. Upcoming rules should fill in the law’s gaps on topics like claim filings, appeals, certifications, notice standards, employer complaints of fraud and other aspects of benefit administration like recordkeeping. Under the TTCA, MDOL must:
- Notify employers within five business days of a completed application, a claim determination, an appeal or a change to a claim determination
- Approve or deny a claim, and notify the employee and employer about this decision within 10 business days after a claim filing
- Make the first benefit payment within five business days of a claim’s approval and every two weeks thereafter until leave ends
Claim substantiation. TTCA requires certification of the reason for leave other than parental leave. Certifications of serious health conditions must include:
- The first date of the leave and whether it will be continuous or intermittent
- When the serious health condition began
- The serious health condition’s probable duration
- Appropriate facts within the knowledge of the licensed healthcare provider
Depending on the certification, additional requirements may apply:
- A family member’s serious health condition certification must have a statement indicating the covered individual needs to care for a family member and the estimated amount of time needed.
- An employee’s serious health condition certification must contain a statement indicating the employee is unable to perform the functions of the position.
- An intermittent leave certification for a family member’s or service member’s serious health condition must include the expected frequency and duration. Such certifications for employees must also contain a statement indicating the employee is unable to perform the functions of the position.
The law provides no details on military-related qualifying exigency certifications
Enforcement
MDOL can investigate alleged violations and file suit under the law. Employer contribution failures are subject to the amount due (plus interest) and a penalty of up to two times the amount of overdue contributions. MDOL can also conduct audits and receive employee complaints. Those complaints may be resolved through mediation, or MDOL ultimately can order an employer to restore lost wages and damages, reinstate an employee with or without back pay (as applicable), and pay a civil penalty of up to $1,000.
MDOL and the state attorney general may also bring actions. Employees may bring suit in limited circumstances. Potential liability includes:
- Three times the amount of lost wages and benefits
- Court-assessed punitive damages
- Reasonable attorneys’ fees and other costs
- Injunctive and other relief that a court deems appropriate
Employer actions
While awaiting regulations and other guidance, employers have work to do. Here are some steps to take before deadlines in 2024 and 2026:
- Factor TTCA requirements into future workforce planning or headcount changes.
- Identify which employees are eligible for TTCA leave.
- Review current PTO programs and address coordination with TTCA leave.
- Explore the private plan option and decide whether to insure or self-insure.
- Ensure proper changes occur to your payroll system.
- Educate your staff on the law’s key features.
- Create a communication strategy that encompasses required notices.
- Watch for guidance and other developments (for example, regulations, sample notices and forms, posters, FAQs, and webinars).
The law preempts any local PFML laws or ordinances — except those applicable municipality employers — enacted on or after June 1, 2022. Multistate employers should also examine Maryland’s new mandate in light of PFML requirements in other jurisdictions. Current programs exist in California, Connecticut, Hawaii, Massachusetts, New Jersey, New York, Puerto Rico, Rhode Island, Washington and Washington, DC. For more details on these other jurisdictions, see 2022 state paid family and medical leave contributions and benefits.
Related resources
Non-Mercer resources
- 2023 Ch. 258, HB 988 (MD Legislature, May 3, 2023)
- 2023 Ch. 259, SB 828 (MD Legislature, May 3, 2023)
- Paid family and medical leave in the United States (Congressional Research Service, Feb. 28, 2023)
- 2022 Ch. 48, SB 275, the Time to Care Act (MD Legislature, April 9, 2022)
Mercer Law & Policy resources
- 2023 state paid family and medical leave contributions and benefits (Feb. 1, 2023)
- Delaware enacts paid family and medical leave law (July 7, 2022)
- Roundup of selected state health developments, first-quarter 2022 (May 31, 2022)
- Roundup: State accrued paid leave mandates (April 29, 2022)