On April 10, 2022, the Maryland General Assembly overrode Governor Larry Hogan’s veto to enact the Time to Care Act of 2022. The Act establishes a Family and Medical Leave Insurance (FAMLI) Program similar to those adopted by nine other states and Washington, D.C. The FAMLI Program takes effect on January 1, 2023, with contributions beginning October 1, 2023.
How does the FAMLI Program work?
The central focus of the Act is the FAMLI Fund, subsidized by employers and employees alike. 8.3-501. The Secretary of Labor will administer the special, nonlapsing fund, which will consist primarily of employer, employee, and self-employed individual contributions.
Starting January 1, 2025, an employee may submit a request to receive paid leave from the pool. Benefits comprise partial wage replacements between $50 and $1,000 a week.
Who must contribute to the FAMLI fund?
Generally, all employers who employ at least one employee must participate in the program, but only employers with 15 or more employees must contribute to the fund.
What types of leave are allowed?
In practice, the program enables covered employees to take 12 weeks of paid leave to care for a newborn child, a specified family member, the individual’s own serious health condition, or to attend to a qualifying exigency arising out of a family member’s military deployment.
Who is a covered employee?
The law defines a covered employee as one “who has worked at least 680 hours” in the last year. 8.3-101(d). By contrast, an employee would need to work 1,250 hours to qualify for federal FMLA leave. Now, a Maryland employee need only work about 17 weeks in order to qualify for paid leave through FAMLI.
Does this cover part-time employees?
Yes. The low 680 hour threshold means that many part-time employees will fall under the purview of FAMLI leave. For example, an employee who works 14 hours per week will qualify for FAMLI benefits within one year of part-time employment.
What if an employee works for more than one employer? Are all employers required to contribute?
As it currently stands, yes. The law designates paychecks as the primary focus of the contributions, not individual employers or employees. Absent any regulation that clarifies the issue (e.g., stating that only the primary employer must contribute), we can expect all employers (with 15 or more employees) to contribute for each of their covered employees.
How are contributions calculated?
Although previous drafts of the law included specific formulas to calculate contributions, the enacted law defers to the Secretary of Labor. By June 1, 2023, the Secretary will set the total rate of contribution, factoring in average wages, inflation, consumer-price index analysis, etc. Ultimately, contributions will involve (1) a portion paid from each employee’s wage and (2) a portion paid by the employer. Neither party’s portion can exceed 75% of the total contribution.
Can contribution rates differ between employers?
No. Once set, the contribution rate will last for two years and may not vary between employees or employers.
When must an employer start making contributions?
While the contribution percentage will be set by June 1, 2023, contributions need not be made until October 1, 2023.
Do employers have to make contributions for all of its employees?
From October 1, 2023 to June 30, 2026, the state of Maryland will pay the required FAMLI contribution for employees who earn an hourly wage of less than $15.00 per hour.
Can an employer pay a portion of its employees’ contributions?
An employer may choose to pay a portion of an employee’s required contributions. If an employer opts to do so, the employer may deduct an amount that is less than 75% of the rate of contribution required from the wages of the employee. Otherwise, an employer must deduct the employee’s required contribution from the wages of the employee. The law does not provide whether an employer can elect to pay a portion of the contribution for some employees but not others.
Can a self-employed individual participate?
A self-employed individual can participate in the FAMLI program by paying the total contribution rate. The total contribution rate must be applied to all wages up to and including the Social Security wage base. An election to participate becomes effective on the date the self-employed individual files notice with the Department of Labor and will run for three (3) years thereafter.
What happens if an employer fails to make the required contributions?
An employer may not willfully fail to pay contributions to the fund or take deductions from an employee’s wages to pay any portion of the employer contributions. A failure to pay the contribution will result in a civil suit. In fact, the Act enables (1) the Attorney General or (2) any qualified attorney employed or designated by the Department of Labor to bring the action in the county where the violation occurred.
Penalties for failure to contribute include: (1) payment of the amount in contributions owed plus interest; (2) a penalty of no more than twice the amount owed; and (3) an audit.
How will collective bargaining affect FAMLI benefits?
An employee’s rights to FAMLI benefits may not be diminished by a collective bargaining agreement or an employer policy. An agreement to waive the employee’s FAMLI rights is void. However, an employee will be required to exhaust employer provided leave benefits (whether negotiated in a collective bargaining agreement or not) prior to becoming eligible from FAMLI benefits.
What if an employer already provides a paid leave plan?
An employer may elect to keep its private plan if that plan meets or exceeds the rights, protections, and benefits guaranteed by the Act. Thus, the employer must offer its plan to all employees who have worked at least 680 hours in the last year (e.g., 17 weeks at 40 hours per week or 52 weeks at 14 hours per week) and paid leave benefits must match or exceed the amount an employee would receive in FAMLI benefits. An employer must also file its plan with the Department of Labor for approval. 8.3-705(b).
An employer that provides covered employees with a private plan that meets or exceeds the law’s requirements will be exempt from the law’s required contributions, as will the employer’s covered employees.
What if an employee wishes to use an employer’s paid leave plan and FAMLI leave?
A covered employee must exhaust all employer-provided leave that is not required to be provided under the law before receiving any Maryland FAMLI benefits.
Can an employee take more than 12 weeks of FAMLI leave?
As a general rule, no. The Act contemplates a maximum of 12 weeks paid leave. In certain cases, though, an employee may take an additional 12 weeks of paid leave. For example, an employee who already received 12 weeks of paid leave for childbirth/care can take another 12 weeks if the employee becomes ill, and vice versa. 8.3-702. Of course, the law provides no restrictions on employer provided leave plans that allow employees to take more than 12 weeks of leave, for example where employees are allowed to accumulate leave over a period of many years or where there is an employee sick leave bank.
Can an employee consecutively combine FAMLI leave and federal FMLA leave?
No, paid FAMLI leave runs concurrently with leave taken under the federal Family and Medical Leave Act (FMLA), which provides eligible employees up to 12 weeks of unpaid leave per year. Thus, a Maryland employee wishing to take paid leave can only receive 12 weeks total, not 24 (12 weeks state leave + 12 weeks federal leave).
What can a covered employee expect in paid leave benefits?
FAMLI benefits resemble unemployment insurance benefits – weekly cash payments based on an employees’ earnings, not continued payment of existing wages.
Specifically, the weekly paid leave will be 90% of the individual’s average weekly wage if that wage is 65% or less than the State average weekly wage. If the employee’s average weekly wage is greater than 65% of the State average, the weekly benefit is 90% of the portion of the individual’s wage up to that threshold plus 50% of the portion of the wage above that threshold. Payments are capped at $1,000, subject to change with inflation.
Must an employer continue to provide health benefits during an employee’s FAMLI leave?
If a covered individual is receiving FAMLI benefits or leave, the employer must continue any employment health benefits in the same manner required under FMLA.
Can an employer fire an employee while on FAMLI leave?
While taking FAMLI leave, an employee may only be terminated for cause. Upon return from leave, the employer must restore the employee to an equivalent position of employment.
Under certain circumstances, an employer may deny comparable restoration if (1) the denial is necessary to prevent substantial and grievous economic injury to the employer; (2) the employer notifies the individual; and (3) the individual elects not to return. See 8.3-706.
Can an employer fire an employee for taking FAMLI leave?
No. A person may not discharge, demote, discriminate, or take adverse action against a covered individual for taking leave, applying for leave, or inquiring about FAMLI rights or benefits. 8.3-904.
What are the penalties for a violation?
If an employee believes that the employer has violated the FAMLI Act, the employee may lodge a written complaint with the Secretary of Labor. 8.3-905(a). The Secretary will investigate and attempt to resolve the issue through mediation. If a violation is found, the Secretary will order the recovery of lost wages and damages equal to the amount of wages, salary, employment benefits, or other compensation denied or lost, as well as any actual economic damages.
The Act also authorizes the Secretary to “seek reinstatement or the hiring of employees with back pay,” see 8.3-905(b)(II)(3), and to “assess a civil penalty up to $1,000 for each employee for whom the employer is not in compliance.” 8.3-905(b)(II)(4).
If an employer does not comply with the Secretary’s order within 30 days, an employee may bring a civil action. If successful, the employee can recover treble damages, punitive damages, attorney’s fees, and any other relief a court deems appropriate. 8.3-905(c)(3).
Must an employee provide notice before taking FAMLI leave?
If the need to use leave is foreseeable, an employer may require a covered employee to provide written notice of the employee’s intent to take leave at least 30 days in advance of taking leave. If not foreseeable, an employee must provide notice as soon as practicable and comply with the employer’s procedural requirements for requesting or reporting other leave. Of course, those requirements must not interfere with the employee’s ability to use FAMLI leave, though.
Must an employer give notice to employees of FAMLI leave rights?
An employer must inform employees of their FAMLI rights in writing upon hiring and each year following. When an employee requests FAMLI leave or when an employer knows that an employee’s leave may be for a FAMLI reason, the employer must notify the employee of the employee’s eligibility to do so within five business days. The Department of Labor will develop standard notices for an employer to use.
Is the FAMLI Program subject to change?
Yes. The Act delegates a lot of discretionary power to the Secretary of Labor.
The Secretary, for example, will (1) adopt regulations to implement the bill by June 1, 2023, that are consistent with FMLA and any relevant State laws; (2) establish the procedures and forms for filing claims for benefits; (3) use information-sharing to disclose relevant information or records needed to administer the bill; (4) carry out a public education program; and (5) by December 1, 2025, and every two years thereafter, conduct a cost analysis of the program that is focused on the cost of maintaining solvency and paying benefits to covered individuals.
In other words, regulations, requirements, and rates of contribution will change over time. Consulting an employment attorney will be the best way to stay on top of these updates.
Andrew Will is an Associate in the firm’s Labor, Employment, and Education Group. Mr. Will graduated cum laude from the University of Baltimore School of Law in 2021. While in law school, he served as an Associate Comments Editor for the University of Baltimore Law Review and was inducted into the Royal Graham Shannonhouse III Honor Society. Prior to joining PK Law, Mr. Will worked as a law clerk for the Maryland Office of the Attorney General and aided the Honorable George L. Russell III as a judicial intern in the U.S. District Court for the District of Maryland. He can be contacted at 410-832-5676 or awill@pklaw.com.
