Quick Hits

• Maryland’s Family and Medical Leave Insurance (FAMLI) law will provide up to twelve weeks of paid leave, with some eligible for an additional twelve weeks, and contributions from employers and employees will start July 1, 2025.
• The Maryland Department of Labor has issued multiple iterations of draft regulations for public comment, including general provisions, contributions, and equivalent private insurance plans (EPIPs).
• Employers can opt for an EPIP instead of the state program but must meet stringent requirements and deadlines for approval.

Generally, an agency releases proposed regulations and, following a period of public comment, final regulations. The MDOL, however, has taken a far more extensive and inclusive approach to the traditional rulemaking process. After a series of public engagement sessions, the MDOL issued “draft” regulations at the beginning of 2024. Subsequently, the General Assembly amended the FAMLI law during its 2024 legislative session. The MDOL then released a second iteration of “draft” regulations. This was followed by a set of official proposed regulations, for which the comment period closed in November 2024 and, in January 2025, by another section of proposed regulations, which are open for public comment.

The proposed regulations are divided into five sections: General Provisions, Contributions, Equivalent Private Insurance Plans (EPIPs), Claims, and—just issued—Dispute Resolution. In the second part of this series, we summarize the first three sections of the proposed regulations.

General Provisions

This section of the proposed regulations contains definitions (although other definitions are scattered throughout the rest of the proposed regulations) and identifies forms and templates that the MDOL, through its newly-created FAMLI Division, will provide. Certain definitions closely follow—but are not identical—to relevant definitions under the federal Family and Medical Leave Act (FMLA). These include:

• “Continuing treatment” covers incapacity and treatment, pregnancy and prenatal care (although the proposed regulations specifically add childbirth, miscarriage, or stillbirth), chronic conditions, permanent or long-term conditions, and conditions requiring multiple treatments.
• “Incapacity and treatment” is defined as involving treatment two or more times within thirty days of the first day of incapacity or treatment by a health care provider with a regimen of continuing treatment. (The proposed regulations specifically include “home care administered by a competent individual under the direction of a licensed health care provider.”) Like the FMLA, an individual is required to visit the health care provider within seven days of the first day of incapacity, but the proposed regulations specifically permit the visit to be by telehealth. (The FMLA regulations state that the visit must be in person, but during the pandemic, the U.S. Department of Labor (DOL) began permitting telehealth visits as well).
• “Licensed health care provider” generally follows the FMLA definition of “health care provider,” but unlike the FMLA, it does not include Christian Science practitioners.
• “Serious health condition” means an illness, injury, impairment or physical or mental condition that requires either (1) inpatient care or (2) continuing treatment by a health care provider. The proposed regulations also add donation of a body part, organ, or tissue.
• “Service member’s next of kin” means the nearest blood relative other than a spouse, parent or child, in a specific order set out in the regulations.

Other important definitions include the following:

• “Application year” means the twelve-month period beginning on the Sunday of the calendar week in which FAMLI leave begins.
• “Carrier” means an insurer authorized by the Maryland Insurance Administration to sell insurance.
• “Equivalent private insurance plan” (EPIP) means a commercially insured or self-insured plan, approved by the FAMLI Division, that meets or exceeds the state plan.
• “Commercially insured EPIP” means an equivalent private insurance plan provided by an insurance company that has been approved to sell FAMLI products.
• “Domestic partnership” means a relationship between two individuals who are at least eighteen years old, not related within four degrees of consanguinity, not married or in a civil relationship with someone else, and agree to be in a relationship of mutual interdependence involving contributions to the maintenance and support of the other.
• “Kinship care” refers to existing definitions in Maryland law (meaning both a relative providing for the care and custody of a child due to a serious family hardship, and continuous twenty-four-hour care and supportive services for a child placed by a child placement agency in the home of a relative related within five degrees of consanguinity).

This section of the regulations also provides that the FAMLI Division may mandate the use of approved templates and forms, including the following:

• Employer notice to employee templates
• Claim application forms, certification of qualifying event forms, proof of relationship templates, good cause exemption forms, and intermittent leave use templates
• Request forms, reconsideration scheduling templates, decision templates, and good cause exemption forms

Contributions

This section of the proposed regulations establishes the following important points:

Online account

Employers must create an online account to make required information reports, remit contribution payments, and communicate with the state.

Qualified employment

All wages paid for qualified employment are subject to contributions up to the Social Security wage base. Employment is qualified if: (1) the employer pays unemployment insurance (UI) contributions to Maryland for that employee, or (2) the employer does not pay UI anywhere else and the employment is performed either wholly or partly in Maryland where (a) employment performed outside Maryland is “incidental” to the employee’s Maryland employment, (b) employment performed in Maryland is not incidental to out-of-state work and the base of operations or the place from which the employment is controlled or directed is in Maryland, or (c) the employment is performed by a resident of Maryland and not in a state in which employment is controlled or directed or where the base of operations is located.

Small employer

In determining whether the employer has fewer than fifteen employees, all employees in the company are counted—not just those in Maryland.

Failure to deduct contributions

If an employer fails to deduct an employee’s portion of the contribution from the employee’s pay, the employer is deemed to have elected to pay the employee’s share and may not recoup the payment from the employee. But if there were insufficient funds in the employee’s paycheck because of other required federal, state, and local withholdings, the employer may recoup the contribution within the next six pay cycles.

Wage reporting and payment schedule

On a quarterly basis, employers must make contribution payments and informational wage and hour reports covering each employee. To be considered for small employer status, employers must also report the number of nonqualified employees outside the state. Amendments to the quarterly reports may be made within a year.

Contribution delinquencies

Employers are given thirty days to address any delinquencies. If they fail to do so, the FAMLI Division can assess the amount of the contribution, interest, and a penalty in the amount of two times the contribution and order an audit of the employer.

Contribution overpayments

Employers may request reimbursement up to one year following any overpayment and must return the employee’s share to the employee. If the employee cannot be found within ninety days, the money goes back to the state.

Equivalent Private Insurance Plans

Many employers are interested in the option of an EPIP, rather than participating in the state program. An employer may purchase an EPIP from an approved insurance carrier or create a self-insured plan, and those employers will not be required to make the contribution payments to the state plan. However, it appears that establishing an approved self-insured EPIP may be quite challenging, if not virtually impossible, for most employers. Some of the more significant points in these proposed regulations with regard to EPIPs are as follows.

EPIP requirements

An EPIP must meet or exceed the benefits and requirements under the state plan, including: employee eligibility (and if the employee worked for the employer for less than 680 hours in the prior four quarters, the employer must contact the FAMLI Division for eligibility information); use of state-provided forms and notices; reasons, amount, and use of leave; benefit amounts; limits on the timing and amount of employee contributions; claims processing, appeals and reconsideration procedures; confidentiality of employee information; job protection; and provisions prohibiting retaliation for requesting or using FAMLI leave. Employers may not impose any additional conditions, restrictions, or barriers on the use of FAMLI leave beyond those imposed by the state plan.

Appeal to the state

Employees may appeal the denial of benefits to the state, and if the state determines that benefits are due and would not be paid by the employer, it may pay the benefits and require reimbursement from the employer and/or EPIP administrator. There may be additional consequences for repeated failure to pay benefits, including termination of the EPIP by the state.

EPIP application

Employers must submit a FAMLI application form (to be prepared by the FAMLI Division), which will be reviewed by the FAMLI Division. Employers must address any deficiencies of which they are notified within ninety days, or the application will be denied.

Application fees

For a commercially insured EPIP, the application fee ranges from $100 for an employer with fewer than fifteen employees in Maryland to up to $1,000 for an employer with 1,000 or more employees in the state. The application fee for a self-insured EPIP is $1,000. EPIP approval expires after one year, and the employer must reapply for approval at least ninety days before expiration.

Special requirements for self-insured EPIPs

Only employers with fifty or more employees are eligible for self-insured EPIPs. The employer must obtain a surety bond in the amount of one year of expected future benefits as calculated using a state-provided formula, and there are additional conditions and requirements as to the bond. An employer may apply for a waiver of the surety bond requirement based on its capitalization and existing bondedness. The EPIP funds must be maintained in a separate account from all other employer funds and used only for benefit payments. 

Oversight by the FAMLI Division

The division may initiate a review of an EPIP at any time, and employers must provide any requested documentation and information within thirty days. Failure to cooperate with the review may result in termination of the EPIP approval.

Recordkeeping

The following documentation must be retained for at least five years: applications; benefits paid; adverse determinations; internal reconsideration requests and outcomes; underlying documentation for benefits determinations and reconsiderations; and employee contributions.

Reporting

Employers are ultimately responsible for all reporting, even if they use a third-party administrator. Failure to submit timely and complete quarterly reports on claims and wage and hour data may result in termination of the EPIP.

Voluntary termination

Employers may voluntary terminate an EPIP after one year, and must give thirty days’ notice to the FAMLI Division and employees if they do so. Upon termination, they must either join the state plan or have an approved application for a different EPIP.

Involuntary termination

The FAMLI Division may terminate an employer’s EPIP if it determines that the terms or conditions of the plan have been “repeatedly or egregiously violated in a manner that necessitates termination.” This could include failure to pay benefits at all or in a timely manner, failure to make timely determinations, failure to maintain an adequate surety bond, misuses of EPIP money, and failure to submit required reports. Employers will be given fourteen days’ notice and may request review within that period. Employers will be required to pay the amount that would have been owed to the state plan for the year prior to the termination.

Continuation of benefits upon termination

The EPIP must pay benefits for valid claims filed before the termination until the earliest of the following: the total amount of the claim is paid, the duration of the leave ends, or the application year ends. The employer must also provide a report on claims paid and contributions collected or owing, and the FAMLI Division will determine if there are any contribution amounts due to the state plan.

Declaration of Intent (DOI) to obtain EPIP approval

From May 1, 2025, through August 29, 2025, employers may submit a DOI (that meets certain requirements) to enroll in an EPIP, and they must submit an EPIP application by April 1, 2026, for a self-insured EPIP and by June 1, 2026, for a commercially insured EPIP. The FAMLI Division will approve or deny a DOI within fifteen days of submission. If approved, the DOI will allow the employer to collect and hold the employer/employee contributions that would have been paid to the state until EPIP approval, at which point the monies are either released, with the employee portions returned to the employee or used to fund a self-insured EPIP. The DOI may be terminated for numerous reasons, including misuse of funds, failure to comply with FAMLI program requirements, excessive withholding of employee contributions, failure to submit reports, failure to respond timely to FAMLI Division requests, and failure to submit or denial of an EPIP application.

Deadlines for EPIP applications

Initial self-insured EPIP applications must be submitted between January 1, 2026, and April 1, 2026, while initial commercially insured EPIP applications must be submitted between March 1, 2026, and June 1, 2026, with the effective date for both on July 1, 2026.

Please stay tuned for part three of this series, which will cover the claims section of the proposed regulations and the newly issued section on dispute resolution, as well as some significant employer concerns that have not been addressed by the proposed regulations. Part one of this series, “Maryland’s FAMLI Program, Part I: An Overview of The Law,” covered the details of Maryland’s Family and Medical Leave Insurance (FAMLI) program.