On May 3, 2023, Maryland Governor Wes Moore signed into law SB 828, which amends the state’s Family and Medical Leave Insurance Program (the “Program”) that was originally established in April 2022. As we previously reported, the Program generally provides eligible employees with 12 (but in some cases, 24) weeks of paid leave to be used for certain covered family and medical-related absences. The Program and SB 828’s amendments—which will take effect on June 1, 2023—are nuanced, so below are five significant updates from the new legislation for Maryland employers to consider.

1. Start Dates for Making Contributions and Using Leave Benefits

Contributions from employees and employers with 15 or more employees will continue to fund the Program under SB 828. While these required contributions were set to begin on October 1, 2023, SB 828 pushes back the start date by one year to October 1, 2024. As a result, SB 828 also modifies several other Program deadlines, including delaying the date when employees may begin using Program leave benefits from January 1, 2025 to January 1, 2026.

2. Total Contribution Rates and Employee/Employer Cost Split

SB 828 does not identify the total contribution rate that will apply on October 1, 2024, but it does require the Maryland Department of Labor (MD DOL) to do so by October 1, 2023, and provides that this initial contribution rate will be effective from October 1, 2024 to June 30, 2026. The MD DOL will determine subsequent contribution rates annually by February 1, which will be effective for 12 months beginning each July 1. Importantly, SB 828 caps the total rate of contribution at 1.2% of an employee’s wages.

Finally, SB 828 provides that employees and employers with 15 or more employees will split the cost of the total contribution rate 50/50; provided, however, that employers may choose to cover more than 50% of the total contribution rate if they provide certain advanced notice to employees. Under the original legislation, the MD DOL was to determine a cost split of anywhere between 25% and 75%.

3. Reasons for Leave

When the Program was first enacted, it established five family and medical-related reasons for which leave could be used, including time to care for a newborn child or a child newly placed for adoption, foster care, or kinship care within the first year of the birth, adoption, or placement (“New Child Leave”). SB 828 clarifies and expands when New Child Leave is available in several ways:

• The child at issue must be the child of the employee seeking leave (either by birth or through placement).
• For children to whom the employee gives birth, employees may now use New Child Leave to care or to bond with the child during the first year after the child’s birth.
• For children who are placed with an employee through foster care, kinship care, or adoption, employees may now use New Child Leave during the placement process, as well as to care for and bond with the child during the first year after placement.

4. Interaction with Other Leave Laws

Leave taken pursuant to the Program will continue to run concurrently with leave available under the federal Family and Medical Leave Act (FMLA). Additionally, SB 828 now permits the MD DOL to count leave taken under  FMLA against an employee’s Program leave bank, even if the employee does not apply for benefits under the Program, if (i) the employer designates the leave as covered by  FMLA and the employee qualifies for FMLA benefits; (ii) the employer informs the employee of their eligibility for benefits under the Program; and (iii) the employee declines to apply for Program benefits.

Additionally, while the original legislation required employees to exhaust other employer-provided paid leave before using Program leave benefits, SB 828 instead generally provides that employers may not require employees to use or exhaust paid vacation, sick leave, or other employer-provided time off before or while receiving Program leave benefits. However, if the leave benefits available under the Program do not cover 100% of the employee’s average weekly wages, SB 828 permits employees to use these other employer-provided leave benefits to make up the wage differential if they and the employer agree to such use.

5. Expanded Definitions

SB 828 adds or amends the definition of the three following terms:

• The law defines “application year” based on when a covered individual’s benefits request is approved, rather than when the individual files an application for benefits. This term is used, among other things, to determine when an employee has exhausted available leave benefits.
• “Family member,” which previously identified ten different familial relationships for which Program leave benefits may be available, is expanded to include domestic partners.
• “Wages” is now a defined term and encompasses employees’ hourly wages or salaries, commissions, compensatory pay, severance pay, standby pay, tips and gratuities, holiday and vacation pay, and any other paid leave (including sick leave) that is paid to the employee entirely by the employer. This definition is particularly important as it relates to determining the total contribution rate, as well as the weekly benefits to which an employee may be entitled.

 What Maryland Employers Should Do Now

• Review and modify relevant leave policies to reflect SB 828’s changes to the Program, including the expanded definition of family member, permitted reasons for using New Child Leave, and coordination of Program leave benefits with other employer-provided paid leave benefits.
• Ensure that human resources and payroll personnel, as well as payroll service providers, are aware of the Program’s implementation delay.
• Continue to monitor the MD DOL for the release of relevant information, including the initial contribution rate that will apply on October 1, 2024, revised agency forms, and regulations.  

***

Alexandria Adkins, a Law Clerk – Admission Pending (not admitted to the practice of law) in the firm’s New York office, contributed to the preparation of this post.