For Maryland employers, there are some big changes on the horizon when it comes to providing paid family and medical leave for employees. These changes will require careful planning and many proactive considerations to take now.
*The Maryland Department of Labor recently proposed extending the timeline for implementation of the FAMLI program. You can keep up with these regulatory changes on the Department of Labor website.
Essentially, the state is implementing a Paid Family and Medical Leave (PFML) program, known as FAMLI, that will impact all employers in the state. Established as part of the Time to Care Act, the FAMLI program aims to provide eligible Maryland workers with paid leave for various qualifying reasons, ensuring income while they are away from work.
What is MD Paid Family and Medical Leave (FAMLI)?
FAMLI is a state-mandated program that provides eligible Maryland workers with up to 12 weeks of paid leave for qualifying reasons. This leave ensures employees can take time off for their own medical care, care of a family member, bonding with a new child, care of a service member, or military qualifying exigency.
Key Points about Employee Eligibility:
- An eligible employee is someone who has worked at least 680 hours in Maryland in the four quarters immediately before their leave start date.
- This includes part-time and seasonal workers, and the hours do not need to be with the same company.
- Eligible employees can begin receiving benefits starting July 1, 2026*.
- There is no waiting period for using PFML once eligibility requirements are met.
- Leave can be taken in increments of no less than 4 hours.
Benefit Amounts:
- Employees earning 65% or less of the State Average Weekly Wage (SAWW) will receive 90% of their average weekly wages. The SAWW is $1,454 as of November 2024.
- Employees earning more than 65% of the SAWW will receive a scaled benefit, up to a maximum of $1,000 per week.
- Roughly, employees earning $50,000 or less annually will receive a 90% benefit, while those earning between $50,000 and $64,500 will receive between 80% and 90%. Employees making over $64,500 will receive 80% scaling down as income increases.
Funding Options for Employers:
Employers have several options for funding PFML benefits:
- State Administered Plan: A shared contribution plan where both employers and employees contribute. The total contribution rate is 0.90% of payroll (up to the Social Security Administration wage cap), split equally. For organizations with less than 15 employees, the employer share is 0, and the employee share is .45%.
- Private (Commercial) Insurance Plans: Employers can opt for private insurance plans. This option may offer advantages such as no pre-funding requirement, ease of administration, and faster claims adjudication. However, rates are based on risk, and the employer must absorb any increased costs for employees.
- Self-Funded Plans: Employers with 50 or more Maryland-based employees who offer benefits equal to or better than the state plan can apply to be self-insured. These plans must be approved by the Maryland Department of Labor, demonstrate financial solvency, and include a surety bond and annual renewal fee.
Important Dates and Timelines:
*Subject to change — regulatory updates will be posted on MD Department of Labor site
- April 2022: The Time to Care Act introduced paid family and medical leave legislation in Maryland.
- February 2025: The Department of Labor is still finalizing regulations for MD PFML.
- May 2025: Employers must decide whether to use the state or a private funding option.
- May 1st – May 30th, 2025: Employers choosing a private plan must submit a Declaration of Intent (DOI) to the state, with an exemption fee.
- June 20th, 2025: The DOI must be approved by the state.
- July 1, 2025: Pre-funding begins for the state plan. Contribution deductions begin for state plan participants and those without an approved DOI.
- March 1st – June 1st, 2026: Fully insured application timeframe.
- July 1, 2026: Benefits become effective, and private plan premiums begin.
Integrating PFML with Existing Leave Policies:
- Employers can allow employees to use PTO to “top off” PFML income but cannot mandate employees use PTO or sick time before applying for PFML benefits.
- Employers can require existing paid leave policies (e.g., parental bonding, family care, military leave, or disability) to run concurrently with PFML leave.
- In cases where a leave qualifies for both Short Term Disability (STD) and PFML, PFML pays first. STD rates are projected to decrease due to this overlap.
Reporting Requirements:
All employers must submit quarterly wage and hour reports to the state, regardless of their funding method. These reports determine employee eligibility and contribution rates for the state plan. In terms of penalties for non-compliance, employers without a valid exemption who do not contribute to the state plan face penalties:
- After 30 days of delinquency, the state will assess unpaid contributions plus 1.5% interest per month.
- The state may also assess a penalty of up to two times the contributions.
- The state may order an audit of the employer.
Other Considerations:
- Professional Employer Organizations (PEOs): Most PEOs do not have private plan offerings.
- Multi-State Employers: While FAMLI is specific to Maryland, other states have similar legislation.
Maryland’s PFML program requires careful planning by employers. Understanding the funding options, deadlines, and integration with existing leave policies is crucial for compliance. By taking proactive steps, employers can successfully implement this program and support their employees.
Please contact GSG here to learn more about how we can help you meet the requirements of the new Maryland PFML program.
* The dates included in this article encompass the original program proposal. The Maryland Department of Labor recently proposed extending the timeline for implementation of the FAMLI program. This change will require legislative action by the General Assembly. To stay up to date on the latest information, you may sign up for email updates from the MD Department of Labor.
Categories: Emerging Regulations, Small Business
