On April 10, 2023, the Maryland General Assembly concluded its 90-day legislative session. Notably, several of the bills passed will have a significant impact on employers. If Maryland Governor Wes Moore signs them into law (as expected), each should be effective October 1, 2023, unless noted below.
Here is what employers should know:
1. Expedited Minimum Wage Increase
Maryland's minimum wage is currently $13.25 per hour for employers with 15 or more employees and $12.80 per hour for employers with 14 or fewer employees. Under Senate Bill 555 (now the Fair Wage Act of 2023), Maryland will speed up its scheduled increase of the minimum wage of $15.00 per hour to take effect on January 1, 2024, instead of waiting until 2025 per prior law. This increase applies to employers of all sizes. However, the Fair Wage Act does not affect Montgomery County's minimum wage increase scale, which is higher than the state level. It is important to note that Montgomery County's minimum wage will increase on July 1, 2023, to (i) $16.71 per hour for employers with 51 or more employees (large employers); (ii) $15.00 per hour for employers with 11 to 50 employees (mid-sized employers); and (iii) $14.50 per hour for employers with 10 or fewer employees (small employers).
2. Changes to Paid Family Leave and Medical Leave
Senate Bill 828 amends Maryland's Time to Care Act. For background on paid family and medical leave in Maryland, see our Alert here. The Time to Care Act provides up to 12 weeks of paid leave (24 in certain circumstances) through an insurance-like program where covered employees apply to the state for benefits.
Importantly, Senate Bill 828 amends the Time to Care Act in multiple ways, including by (i) delaying implementation for one year (contributions will now begin on October 1, 2024, and benefits will begin on January 1, 2026); (ii) instead of fluctuating contributions by the Maryland DOL, the contributions will now be shared evenly between the employee and employer; and (iii) capping an employer's total contribution at 1.2% of an employee's wages.
3. Salary Threshold Increase for Non-Competes
Currently, non-compete provisions are not allowed if an employee earns equal to or less than $15.00 per hour or $31,200 annually. Senate Bill 591 increases the amount that an employee must earn in order for a non-compete provision in an employment contract to be permissible under Maryland law. Beginning October 1, 2023, at the current minimum wage rate, the threshold for large employers (15 or more employees) will be $19.88 per hour or approximately $41,350 annually. Under this Bill, the threshold is more than 150% of the State minimum wage rate.
On January 1, 2024, assuming a $15.00 minimum wage rate for all Maryland employers, the threshold will be $22.50 per hour or approximately $46,800 annually. This means that more employees will be covered by the ban on non-competes in Maryland, which is an increasing trend. For another recent update regarding non-competes, see our Alert here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
