Maryland Paid Family Leave Is Around The Corner: It's Time To Prepare

Implementation of Maryland's Paid Family and Medical Leave Insurance ("FAMLI") program is slated to launch January 1, 2027. The program will provide partial wage replacement benefits starting January 1, 2028. Employers should take proactive steps now so they are ready by 2027.

The program covers four life events: welcoming a child, the employee's own serious health condition, caring for a family member with a serious health condition, and preparing for a family member's deployment. All employers, regardless of payroll size, will be required to provide FAMLI coverage to their employees, with no exemptions for private employers under state law.

The program will be funded by insurance premiums paid by employers and employees through payroll. Payments begin January 1, 2027. Benefits start one year later.

Employee eligibility requires working at least 680 hours for any employer in a position localized in Maryland over the previous four reported calendar quarters. Qualifying employees are eligible for benefits on their first day of work. The program will provide up to $1,000 per week for up to 12 weeks continuously or on an intermittent basis.

Key Dates to Remember

• Fall 2026: Registration and Declaration of Intent Due to FAMLI Division of the Maryland Department of Labor
• December 2026: Notify employees that FAMLI premiums will be withheld from their pay starting January 2027.
• January 2027: Begin withholding FAMLI contributions; keeping employer and employee contributions in an escrow account.
• April 2027: First quarterly payments and wage and hour report due
• July 2027: Employers are required to start providing notices to employees about benefits that are available under the FAMLI program. Employers who wish to opt out of the state plan in favor of creating an equivalent private program must apply for approval from the state.
• January 2028: Benefits become available to eligible employees.

Employer Responsibilities

Employers in Maryland, regardless of size, must participate in the FAMLI program. Here is what you need to do:

• Notify Employees of FAMLI Program: Employers must provide notices to employees:
  • One pay period before payroll deductions begin (starting January 2027).
  • At the time of hire.
  • Annually.
  • When an employee requests leave using terms like "paid family and medical leave" or indicates they want to take leave under FAMLI.
  • When the employer knows the employee is taking leave for a qualifying reason.
• File Reports and Remit Contributions: Employers must file quarterly wage and hour reports and remit both employer and employee contributions. Small employers (fewer than 15 employees) are exempt from paying the employer share of contributions but must still provide the program to their employees. The exemption from payment of premiums only applies to the employer, not the employees, of businesses with fewer than 15 employees.
• Provide Job Protection: Employees taking leave under FAMLI are entitled to job protection.

How FAMLI Differs From Federal FMLA

While both FAMLI and FMLA provide leave for family and medical reasons, there are key differences:

• Paid vs. Unpaid Leave
  • FAMLI: Provides up to $1,000 per week in wage replacement for up to 12 weeks (or up to 24 weeks for certain combined events).
  • FMLA: Only guarantees unpaid leave.
• Eligibility Requirements
  • FAMLI: Employees must work at least 680 hours in a Maryland-based job over the previous four reported calendar quarters. This means employees are eligible to take FAMLI leave on their first day of work if they have worked for any Maryland employer for at least 680 hours during the previous four quarters.
  • FMLA: Employees must have worked for the employer for at least one year and provided 1,250 hours of service in the last 12 months. FMLA also applies only to employers with 50 or more employees.
• Definition of Family Members
  • FAMLI: Covers a broader range of family members, including siblings, grandparents, grandchildren, and legal guardians.
  • FMLA: Limits family care leave to spouses, children, and parents.

While employers may run FAMLI and FMLA concurrently, in cases where leave is covered under FAMLI but not FMLA, employees will be eligible to take FMLA in addition to FAMLI. For

example, if an employee takes 12 weeks of FAMLI to care for a sibling (a type of leave not authorized under FMLA), they will remain eligible to take 12 weeks of FMLA (in addition to the already taken FAMLI) in connection with their own serious health condition or to care for a spouse or child for qualifying reasons.

Qualifying Events

• FAMLI: Includes preparing for a family member's military deployment as a qualifying event.
• FMLA: Covers military family exigencies but with narrower definitions.

Again, in cases where leave is available under FAMLI that is not available under FMLA, leave does not run concurrently, and employees will remain eligible for FMLA for qualifying reasons after exhausting FAMLI.

PTO Policies

Employers should also note that they cannot require employees to use employer-provided leave before or during FAMLI leave. However, employees and employers can agree to use employer-provided leave to supplement FAMLI benefits. Many employers require employees to exhaust PTO during FMLA leave, if an employee takes FAMLI (even if it runs concurrently with FMLA), employers cannot require the employee to use paid leave. They may, however, allow employees who wish to "top off" FAMLI paid leave benefits to use their PTO.

There is an exception for Alternative FAMLI Purpose Leave (AFPL). AFPL is Employer-provided leave designed for the same purposes as FAMLI, including disability policies. Employers may require AFPL to be used concurrently with FAMLI to bridge the gap between FAMLI benefits and the employee's full salary.

Elimination Period

Many employers covered by FMLA offer employees short-term disability insurance to provide partial pay replacement during FMLA. These private insurance policies, which are not required by law, typically include a one-week elimination period before benefits are available. These elimination periods have historically provided an incentive for employees to use PTO for this otherwise unpaid period of leave, even if they were not required to exhaust PTO under company policy. FAMLI does not include an elimination period, thus eliminating the incentive to exhaust PTO.

Minor Employees

Minor employees are eligible for paid leave under the FAMLI program.

Preparing for FAMLI

To ensure compliance, employers should:

1. Review Policies: Update leave policies to align with FAMLI requirements.
2. Educate Employees: Inform employees about their rights and benefits under the program.
3. Plan for Contributions: Prepare for payroll deductions starting in January 2027.
4. Consider Private Plans: Employers may opt for private plans that meet or exceed FAMLI's benefits and protections. State approval is required.

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.