Quick Hits

• The Maryland Department of Labor has taken an extensive approach to rulemaking for the FAMLI program, including public engagement sessions and multiple iterations of draft and proposed regulations, with the latest section on dispute resolution now open for public comment.
• Proposed regulations for Maryland’s FAMLI program cover claims and dispute resolution, detailing procedures for benefit claims, employer responses, and appeals, while also highlighting significant employer concerns such as limited options to challenge fraudulent applications.
• Comments on the dispute resolution proposed regulations may be submitted through February 10, 2025.

We explained in part two of this series that the MDOL has taken an unusually extensive and inclusive approach to the traditional rulemaking process, which normally involves the release of proposed regulations for comment, followed by final regulations. Here, however, the MDOL first held a series of public engagement sessions, after which it issued informal “draft” regulations at the beginning of 2024. Following amendments to the FAMLI law made during the 2024 Maryland General Assembly session, the MDOL 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 now another section of proposed regulations, which are open for public comment.

The proposed regulations thus far are divided into five sections. In part two of this series, we discussed the “General Provisions,” “Contributions,” and “Equivalent Private Insurance Plans” (EPIPs) sections. In part three, we summarize the sections on “Claims,” and—just issued—”Dispute Resolution” as well as some significant employer concerns that have not been addressed by the proposed regulations.

Claims

The “Claims” section is a lengthy and detailed section of the regulations. Of particular note, there are extremely limited options for an employer to report fraud, and no guidance on how the MDOL’s FAMLI Division will handle such reports. Other important points include the following.

Definitions

The proposed regulations add the following significant definitions:

• “Alternative FAMLI Purpose Leave” (AFPL) means a separate bank of employer-provided leave specifically designated for medical leave, family leave, qualifying exigency leave, or leave under a disability policy. The regulations specify that such leave must be specifically designed to fulfill a FAMLI purpose, paid, not accrued, not subject to repayment upon departure, not available for general purposes, and available without a requirement to exhaust other leave.
• “General purpose leave” means employer-provided paid leave, such as general paid time off (PTO), vacation, personal leave, or sick leave.
• “Good cause” refers to the inability to file a complete claim application because of an unanticipated and prolonged period of incapacity due to a serious health condition; a demonstrated inability to reasonably access a means of filing (e.g., natural disaster, power outage, or a significant and prolonged MDOL system outage); or a demonstrated failure of the employer to provide the required notification to the employee.

Required Documentation

Claimants must provide certain documentation to support their benefits claims to include personal identifying information; information about their employers; proof of relationship, meaning a signed affidavit from the employee, official governmental documentation, or documentation from licensed foster care or adoption providers; and certification of a qualifying event containing information that generally mimics the certification requirements under the federal Family and Medical Leave Act (FMLA) (the FAMLI Division will provide forms for an employee’s own or a family member’s serious health condition, and military caregiving reasons).

Employer Response

• Employers have five business days to respond to notice of an application, and if they fail to respond, the claim is considered complete. If the employer challenges an employee’s eligibility for benefits, the FAMLI Division will investigate and make a determination. If the employer submits a response after the five-day period that establishes ineligibility, the employee will retain any benefits received, but additional benefits will not be paid and job protection will no longer apply.

Claim Updates

• Claimants must update their claims within ten days, or as soon as practicable if there is good cause, for changes in the following: the basis for leave, the dates that leave will be taken, the duration of the leave, and whether the claimant has begun receiving workers’ compensation or unemployment insurance benefits.

Employer Notice

The proposed regulations add “6 months prior to commencement of benefits” to the required points of time in which notice must be provided to employees. In addition, the FAMLI Division will issue forms and templates that employers will be required to use for such notices.

Employee Notice

In addition to reiterating the law’s notice requirements for foreseeable and unforeseeable leave, the proposed regulations provide that employers may waive notice and will be deemed to have done so if they did not include the failure of notice in their responses to claims or if they did not inform an employee that notice is required.

Intermittent Leave

Employees must provide reasonable and practicable notice of the reason, dates, and duration of the leave. If they fail to provide reasonable and practicable notice of their intermittent leave schedule, they may be held accountable under their employers’ attendance policies, but only if the employers first notify the FAMLI Division. If an employee’s use of intermittent leave is inconsistent with the FAMLI leave approval, the employer may request additional information related to the employee’s use of FAMLI leave.

State/EPIP Notice to Claimants

Claimants will receive notice from the state program or the EPIP of the following:

• submission of an application and whether it is complete;
• when notice is sent to the employer;
• when the employer’s response is submitted;
• whether the application is approved, including details of benefits; and
• whether the application is denied, with the reason and appeal rights.

State/EPIP Notice to Employers

Employers will receive notice from the state program or the EPIP of the following:

• submission of an application and, if initially incomplete, a complete application;
• claim determination;
• reconsideration of appeal of a benefits determination; and
• changes to benefits determinations.

Coordination of Benefits

• Alternative FAMLI Purpose Leave (AFPL): The proposed regulations assert that an employer may require employees to use AFPL concurrently or in coordination with FAMLI leave, but only if the employer provides advance written notice of this requirement. Then, if an employee declines to apply for FAMLI leave, the employee’s FAMLI benefit eligibility is reduced by the AFPL taken. If the employee receives both, the FAMLI benefit is primary and AFPL may be used to bridge the difference between the FAMLI benefit and full pay, but the employer may deduct the full amount of time taken from the AFPL balance.
• General Purpose Leave (GPL): Neither an employer nor employee can require the substitution of GPL for FAMLI leave, but they can agree in writing to use GPL to bridge the gap between FAMLI benefits and full pay. Employers must document and retain any such agreement. Unlike AFPL, only the actual amount of GPL used may be deducted from an employee’s GPL balance.
• Sick leave: An employee may use sick leave prior to receiving FAMLI benefits without the employer’s agreement.

Benefit Payment

The first payment will be within five business days after a claim is approved or FAMLI leave has started, whichever is later. Subsequent payments will be made every two weeks. If there is an overpayment, such as benefits being paid erroneously or based on a willful misrepresentation of the claimant, or a claim was rejected after benefits were paid, the FAMLI Division may seek repayment.

Fraud

If fraud is proven after benefits have been approved and issued, those benefits will be treated as an overpayment and job and anti-retaliation protections will not apply.

Dispute Resolution

This newest section of the proposed regulations establishes dispute resolution procedures for the denial of a claimant’s benefits, the denial or termination of an employer’s EPIP, and the reconsideration of an employer’s contribution liability determination. It does not provide an avenue for an employer to challenge the award of benefits. Some of the more significant points follow.

Definitions

• “Good Cause” for failing to timely file a request for reconsideration or an appeal is almost the same as that set forth in “Claims,” above, with the only difference being the failure by the entity issuing the adverse determination to provide notice of the dispute resolution procedures.
• “Party” means a claimant, an individual who has been disqualified from receiving benefits, an EPIP administrator, and the FAMLI Division. It does not include an employer.

EPIP Denial or Termination

Employers may request review if their application for an EPIP was denied or the EPIP was involuntarily terminated. Requests for review must be filed within ten business days (absent good cause), in writing, with an explanation of why the decision was in error. Decisions will be made within twenty business days by FAMLI Division personnel who did not participate in the EPIP decision at issue, and there may be an informal conference to discuss the review request during that time.

Reconsideration of Adverse Benefit Determination

Employees may request reconsideration of a denial of benefits within thirty (apparently calendar) days (absent good cause), in writing, with an explanation of why the decision was in error. Notice is provided to all “parties” and the employer. Decisions will be made within ten business days by the FAMLI Division or an EPIP administrator personnel who did not participate in the decision at issue, and there may be an informal conference to discuss the review request during that time.

Appeal of Benefit Denials, Underpayments, or Disqualifications

Employees may also appeal an adverse decision, following a request for reconsideration. The appeal must be filed within thirty days. Again, notice is provided to “parties” and the employer. An informal conference may be held at the sole discretion of the FAMLI Division. A hearing will normally be held within thirty days of the filing, with a detailed notice to the “parties” related to the hearing itself. There are also detailed regulations regarding the hearing including: how notice may be provided; the parties’ right to representation; proceeding with the hearing where a party has failed to appear; postponement of the hearing; subpoenas; the hearing procedures; evidence; creation of the record; interpreters; the claimant’s burden of proof; recording; and recusal of hearing officers. Decisions will be issued at the conclusion of the hearing in a final written order to the parties. Such orders are subject to judicial review.

Reconsideration of Contribution Liability Determination

Employers may request reconsideration of a determination of their contribution liability, meaning the amount the FAMLI Division determines to be due each quarter, including both the employer and employee portions. Requests for reconsideration must be filed within thirty days (absent good cause), in writing, with an explanation of why the decision was in error. Decisions will be made within thirty business days by FAMLI Division personnel who did not participate in the decision at issue,

Appeal of Contribution Liability Determination

Employers may also appeal a determination, following a request for reconsideration. The appeal must be filed within thirty days. A hearing will normally be held within sixty days of the filing, with a detailed notice to the employer related to the hearing itself. There are similar provisions to those related to claims appeals, above, such as: how notice is provided; representation; failure to appear; postponement; subpoenas; the hearing procedures; evidence; creation of the record; interpreters; the employer’s burden of proof; recording; and recusal. Decisions will be issued within ninety days, and subject to judicial review.

Enforcement

Although the “draft” regulations included this section, albeit without content, neither section of the proposed regulations does. Presumably, it will be released at a later date.

Continuing Concerns

The proposed regulations do not address some significant concerns for employers. One such concern is that the ability of employers to challenge fraudulent applications for benefits is quite limited. As noted above, employers have five days in which to respond to an application. The regulations contemplate that an employer may provide relevant information after that five-day period, but if that information would result in a revocation of benefits, the employee is still entitled to the benefits already received and, more troublingly, job and anti-retaliation protection continue to apply until benefits are revoked. A separate section states that job and anti-retaliation protections do not apply once fraud is “proven.” There is no clarification of what that means or timeline for how long that might be—meaning that an employer may be required to continue active employment for an employee whom it knows to have engaged in fraud until the FAMLI Division says otherwise.

The regulations provide that, where an employee is taking FAMLI leave to care for a family member and the family member dies, the benefits continue for an additional seven days—which effectively provides bereavement leave that is not one of the specified reasons that one can qualify for leave under the FAMLI law.

While the proposed regulations permit an employer to request additional information where an employee’s use of intermittent leave is inconsistent with the leave approval, there is no provision for an employer to request additional information in response to an initial notice of the need for leave, which may be necessary to establish fraud.

Interested parties may submit comments only on the Dispute Resolution section through February 10, 2025, to the FAMLI Division at FAMLI.policy@maryland.gov. As noted previously, the comment period for the sections on General Provisions, Contributions, Equivalent Private Insurance Plans, and Claims has already closed. The FAMLI Division may make additional changes to the proposed regulations based on the comments it receives before issuing them in final form.