Update: On April 25th, the Maryland General Assembly passed SB 0485 , amending the existing Time to Care Act that establishes a mandatory paid family and medical leave program for Maryland employees. Notably, the amendment delays the start of employer and employee contributions to the program from October 1, 2024, to July 1, 2025. Employees will now be able to apply for benefits beginning July 1, 2026, (seven months later than the previously amended program start date). The amendment also aligns the definition of “wages” for the purposes of determining the contribution amount with the definition of wages used under Maryland Unemployment Insurance (MD Labor and Employment Code Section 8-101(aa)). For purposes of benefit calculation, average weekly wage is now calculated by dividing the employee’s highest wage from the four prior calendar quarters by 13, instead of the last 680 hours worked divided by the applicable number of weeks.

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

Contributions:

  • 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.

PFML Benefits:

  • 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).

Next Steps

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.

Additional Resources

Connect with a Sequoia consultant to learn how Sequoia’s compliance services are integrated in our benefits services and tailored solutions. And if you’re already a Sequoia client, stay on top of your employer obligations with your Compliance Checklist that highlights important compliance dates, action items, and resources.

Originally posted: May 2023

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Emerald Law — Emerald is a Senior Compliance Consultant for Sequoia, where she works with our clients to optimize and streamline benefits compliance. In her free time, Emerald enjoys stand-up comedy, live music, and writing non-fiction.