The Maryland legislature recently passed Senate Bill (SB) 828, which modifies the state’s upcoming paid family and medical leave (PFML) insurance program. Among other changes, SB 828 delays the start date for PFML contributions from October 1, 2023, to October 1, 2024 and delays the start date when employees can begin applying for benefits from January 1, 2025 to January 1, 2026. These changes will go into effect on June 1, 2023.
We discuss key changes to the PFML program in further detail below.
Changes to the Maryland PFML Program
In April 2022, Maryland passed the Time to Care Act (Act), which established a state administered PFML program funded by both employer and employee contributions. Employers that employ at least one Maryland employee are subject to the Act, though only employers with 15 or more employees are required to make contributions to the PFML program. We reviewed the initial iteration of the program in our prior blog.
Below Is a Summary of Key Proposed Modifications to the Law
- SB 828 pushes back the start date of employee and employer contributions from October 1, 2023, to October 1, 2024.
- Employers with 15 or more employees must contribute at least 50% of the total rate of contribution.
- Employers can choose to pay all or a portion of the required employee contribution. If the employer chooses to pay a portion of employees’ required contribution, the employer must notify employees of their required rate of contribution and the portion of that amount the employer is electing to pay.
- The Secretary of Labor is required to set the contribution rate before October 1, 2023. This rate will be effective between October 1, 2024, through June 30, 2026.
- The total rate of contributions is limited to no more than 1.2% of an employee’s wages and is applied to all wages up to and including the Social Security wage base.
- SB 828 pushes back the date in which employees can begin applying for benefits from January 1, 2025, to January 1, 2026.
- SB 828 expands the qualifying reasons for PFML leave to include time to care for or bond with a child (biological, foster, or adopted) during their first year after birth/placement. In addition, the definition of family members under the Act was also expanded to include domestic partners.
- Employees can now file for an application for benefits 60 days before the anticipated start date of the leave and no later than 60 days after the start of the leave.
Coordination with Other Benefits:
- SB 828 amends the Act so that it no longer requires employees to exhaust all employer-provided leave before receiving benefits under the Act. Instead, the Act prohibits employers from requiring employees to use or exhaust paid vacation, paid sick leave, or other paid time off under an employer policy before, or while, receiving PFML benefits. However, an employer may require that benefits under the Act are made concurrently or coordinated with payments made or leave allowed under an employer-provided parental care, family care, military leave, or disability leave policy.
- An employee and employer may agree to use paid vacation, sick leave, or other time off while the employee is receiving PFML benefits to replace the employee’s wages up to 100% of the employee’s average weekly wage.
- If PFML leave under the Act also qualifies as FMLA leave, the PFML leave will run concurrently with the FMLA leave.
Private Plan Option:
- An employer may satisfy the requirements under the Act through a private plan consisting of employer-provided benefits, insurance provided through an insurer that has a certificate of authority issued by the state’s insurance commissioner, or both. The plan must be offered to all eligible employees and provide benefits/protections equal or greater than under the state program.
- Employers that provide a private plan may not deduct from an employee more than the maximum contribution amount set by the Maryland Department of Labor (DOL).
Employers with Maryland employees now have additional time to determine how they will comply with the Act, either by collecting and remitting contributions to the state or by implementing an equivalent private plan.
The Maryland DOL is required to release implementing regulations for the PFML program by June 1, 2023. As such, Maryland employers should keep an eye out for the additional forthcoming guidance.
- SB 828: Family and Medical Leave Insurance Program- Modifications
- Time to Care Act of 2022
- Sequoia Foreword: Maryland Passes a Paid Family and Medical Leave Program Law (April 2022)
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