Maryland Enacts Paid Leave Statute
April 12, 2022
On April 9, 2022, the Maryland Legislature voted to override Governor Larry Hogan’s veto of Senate Bill 275 and passed The Time to Care Act (“the Act”), which allows Maryland workers to take up to 12 weeks of partially paid, job-protected family and medical leave. The Act establishes a Family and Medical Leave Insurance Fund (“the Fund”), to which all employees of an employer, employers with 15 or more employees, and self-employed individuals that elect to participate, are required to contribute.
Although the Act takes effect on June 1, 2022, the Secretary of Labor shall set the applicable contribution rates for employers and employees on or before June 1, 2023 and contributions to the Fund will begin on October 1, 2023. Covered employees may begin submitting claims to receive benefits from the Fund on or after January 1, 2025.
Maryland workers covered by the Act include any employee who has worked at least 680 hours over the 12-month period immediately preceding the date on which leave is scheduled to begin, or, a self-employed individual who elects to participate in the program.
Covered workers are entitled to up to 12 weeks of paid leave in the 12-month period beginning on the first day of the week in which the employee applies for benefits. An exception to this rule exists for those employees that qualify for both parental leave and medical leave for the employee’s own serious health condition. In such circumstances, an employee is eligible for up to an additional 12 weeks of leave in the same application year.
Employees are eligible for benefits under the Act for the following reasons: (1) to care for a newborn child or a child placed for adoption, foster care, or kinship care during the first year after the birth, adoption, or placement; (2) to care for a family member with a serious health condition; (3) for the employee’s own serious health condition that resulted in the employee’s inability to perform the functions of the employee’s job; (4) to care for an employee’s next of kin who is a service member with a serious health condition; or (5) for a qualifying exigency arising out of the deployment of a family member in the armed forces.
A ”family member” under the Act includes a covered employee’s child, parent, spouse, grandparent, grandchild, or sibling, including all biological, adopted, foster, step-, or legal guardians or custodians.
The Act provides for replacement wages on a sliding scale, with up to 90% wage replacement for those employees whose average weekly wage is less than 65% of the State average weekly wage, and a maximum benefit amount of $1,000 per week. This weekly cap will be adjusted annually starting in 2026.
The Act also contemplates that an employee’s job is protected while out on leave pursuant to the Act, and that an employer is required to maintain the employee’s health benefits during any leave, consistent with the requirements under the federal Family Medical Leave Act.
The Act further requires that covered employers provide each employee of the rights and duties an employee has under the Act at the time of hire and each year thereafter.
The Act obviously will increase costs for employers in Maryland. In addition, there are a number of ambiguities that need to be worked out. Among the ambiguities is which employers and employees are covered by the Act. In this regard, contributions to the Fund shall be made by “each employee of an employer, each employer with 15 or more employees, and each self-employed individual participating in the program.” An “employer” is defined in the Act as “a person or governmental entity that employs at least one individual in the State.” This definition of employer is very similar to the definition of employer under Maryland Wage Payment and Collection Law (“MWPCL”). There has been some litigation under the MWPCL regarding what it means to be “employed in the State,” with certain individuals claiming protection under the MWPCL (and prevailing) even though they worked primarily in another state and “worked in the State” only sporadically. The few courts that have addressed whether employees employed primarily in other states are covered by the MWPCL have acknowledged that the Maryland Court of Appeals has not given any clear guidance on the issue yet.
With the statute mandating that “each employee of an employer” make contributions to the Fund, presumably that will not include employees of an employer who do not work in the State of Maryland, but that remains unclear at the moment. What about employees who reside and work primarily in another state, but visit Maryland for business only a few times a year? Will those employees be required to make contributions and, if so, at what rate? Will employers who employ a total of 100 or more employees (for example), but with less than fifteen employed in the State, have to make contributions? These are significant questions that will need to be answered, particularly considering the potential for civil penalties and civil litigation authorized under the Act. Perhaps these and other issues will be clarified when regulations are issued. If not, these and other issues are likely to be addressed in the courts through litigation. In the meantime, Maryland employers should monitor further developments under the Act and consult with counsel to understand and analyze the specific requirements of the statute (that go beyond what is described here) so they can plan accordingly.