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Maryland Passes Paid Family and Medical Leave Law

Maryland recently passed the Time to Care Act (Act), a paid family and medical leave insurance program for Maryland employees.

Tax contributions for the new law will begin on October 1, 2023. Eligible employees can start receiving benefits on January 1, 2025.

Does the Act apply to your company?

The Act applies to all employers with at least one employee in Maryland. Self-employed individuals are not required to comply, but may opt-in. Employers that already offer paid family leave can avoid the required tax contributions if their plan meets the following requirements:

  • The plan must be offered to all eligible employees
  • The plan must meet or exceed the rights, protections, and benefits of the Act
  • The plan must be filed with and approved by the Maryland Department of Labor (MDOL)

How is it funded?

Both Employers and employees contribute towards the cost, with payments starting on October 1, 2023. The contribution rate and cost-sharing between employer and employee will depend on a study by the MDOL. The initial rate and cost-sharing will be set no later than June 1, 2023 and will be in effect from October 1, 2023, through December 31, 2025.

Employers with fewer than 15 employees will not be required to contribute but the employee share of the tax must be paid. Employers may also not be responsible for contributions if they are community-based agencies or programs funded by specific state programs.

In 2025, and every two years thereafter, the MDOL will conduct a cost analysis of the program and the Secretary will then make recommendations on the appropriate contribution rate and cost-sharing formula between employers and employees. Once announced, the new rate and cost-sharing will apply for the next 24-month period beginning January 1.

What employees are eligible?

A covered employee is any employee that has worked at least 680 hours over the 12-month period immediately preceding the date they start eligible leave.

Individuals who are receiving unemployment are not eligible for benefits under the Act. Employees receiving workers’ compensation benefits are also not eligible unless the workers’ compensation benefits are for a permanent partial disability.

What are the approved reasons for leave?

Covered employees can take leave:

  • To provide care during the first year after a child’s birth or after placement through adoption, foster placement, or kin care
  • To care for a family member experiencing a serious health condition
  • To care for their own serious health condition
  • To care for a service member who is next of kin
  • For qualifying exigency due to a family member’s deployment

What is a serious health condition?

A serious health condition is defined as an illness, injury, impairment, or physical or mental condition that involves either:

  • Inpatient care in a hospital, hospice, or residential health care facility
  • Continued treatment by a licensed health care provider, or
  • Continued treatment or supervision at a home by a licensed health care provider or by an individual under the supervision of a licensed health care provider

Serious health conditions that continue over an extended period and require intermittent treatment also qualifies.

How long does the leave benefit last?

Covered employees can use up to 12 weeks of leave benefits in an application year. The application year begins the first day of the calendar week when the employee applies for benefits. Covered employees may use an additional 12 weeks of leave only if their initial 12 weeks was either to care for a new child or due to their own serious health condition and the additional leave is for the opposite.

When leave is foreseeable, employees must provide 30 days written notice or as soon as practicable. If the employee requires intermittent leave, the employee must make a reasonable effort to schedule the leave so that it does not unduly disrupt employer operations. The employee must also provide reasonable prior notice of their need for intermittent leave and may not use leave increments of less than four hours.

Employees are required to exhaust all employer-provided leave that is not required by law before they can receive paid benefits from the Act. Leave taken under the Act will run concurrently with leave that would also be eligible under federal FMLA. Clarification on this provision is needed and will hopefully be included in the regulations.

How much is the benefit?

A covered employee’s average weekly wage (AWW) is calculated by taking the total wages they received over the last 680 hours the employee was paid divided by the number of weeks worked. The employee’s AWW is then compared to the state’s AWW. If the covered employee’s AWW is 65% or less of the state AWW, the weekly benefit amount payable will be 90% of the employee’s AWW. If the covered employee’s AWW is greater than 65% of the state AWW, the employee’s weekly benefit amount with be the sum of:

  • 90% of the employee’s AWW up to 65% of the state AWW, and
  • 50% of the employee’s AWW that is greater than 65% of the state AWW

If the employee is taking partially paid leave, the weekly benefit will be the lesser of:

  • The amount required to make up the difference between wages paid while they are taking partially paid leave and the full wages they are normally paid, and
  • If the employee’s AWW is greater than 65% of the state AWW, the sum of
    • 90% of the employee’s AWW up to 65% of the state AWW, and
    • 50% of the employee’s AWW that Is greater than 65% of the state AWW

In 2025, the weekly benefit amount payable will be at least $50, but not more than $1,000. By September 1st each year, the MDOL will announce whether the maximum benefit will increase based on the Consumer Price Index. Any increase shall only apply for claims filed after the date the increase becomes effective on the January 1st following the announcement.

Are there any job protection requirements?

Generally, employees must be restored to an equivalent position when they return leave. An exception exists if necessary to prevent “substantial and grievous economic injury” to the employer’s operations, the employer notifies the employee, and the employee elects not to return to employment after receiving the notice.

Similar to the protections provided in the federal FMLA, employees will also continue to receive health benefits at their same cost while on leave.

Are there any notice requirements?

Employers must provide a notice to employees when they are hired and at least annually thereafter. Within five days of a request for leave that may be eligible, employers must also provide a notice that explains their rights to benefits, claims procedures, and other required information. The MDOL will develop standard notices.

What happens when a claim is filed?

Once an employee files a claim, the MDOL will notify the employer within five business days. The MDOL will also notify the employee and employer if the claim was approved or denied within 10 business days. Approved claimants will receive their first payment within five business days of approval. Subsequent payments will be made every two weeks.

When will regulations be adopted?

While the text of the law answers many questions, there are still a few questions left outstanding. The MDOL is required to adopt regulations by June 1, 2023. As always, OneDigital can help you align your benefits with this new law.

Please contact your OneDigital account team with any questions.