Seyfarth Synopsis: As previously reported, on April 9, 2022, the Maryland General Assembly passed the Time to Care Act of 2022, enacting a Family and Medical Leave Insurance Program in Maryland and making it the tenth state in the country to enact such a program. Paid leave benefits, knowns as FAMLI benefits, will be available to eligible employees for family leave, medical leave, and family military leave reasons beginning on January 1, 2025.
The Time to Care Act of 2022 (the “Act”) establishes a Family and Medical Leave Insurance Program that will be administered by the Maryland Department of Labor (the “Department”) and provide paid leave benefits in the form of partial wage replacement for certain qualifying leaves. While the Act provides a detailed framework of the program as outlined below, significant issues, such as the funding amounts and claims and benefit administration, will be developed through regulation over the coming year.
Here are highlights of Maryland’s pending Family and Medical Leave Insurance Program:
Eligibility. Employees who have worked at least 680 hours over the 12-month period immediately preceding the date on which the leave is to begin are “covered individuals” under the Act. Self-employed individuals may also elect to participate in the program.
Employer Coverage. Covered employers include any person or governmental authority that employs at least one individual in the state of Maryland. However, as described below, the funding requirements differ for employers with less than 15 employees.
Amount of Leave Benefits. An employee generally may not receive more than 12 weeks of benefits in an application year (i.e., the 12-month period beginning on the first day of the week in which an employee applies for benefits). However, an employee may receive an additional 12 weeks of benefits if the individual qualifies for both parental leave (i.e., bonding with a new child, as described below) and a medical leave due to their own serious health condition in the same application year. Leave benefits will be available on a continuous or intermittent basis; however, an employee may not take intermittent leave in an increment of less than 4 hours.
Covered Absences/Family Members. Maryland FAMLI benefits will be available for the following covered reasons: (1) to care for a child during the first year after the child’s birth or after the placement of the child through foster care, kinship care or adoption, (2) to care for a family member with a serious health condition, (3) for the employee’s own serious health condition that results in them being unable to perform the functions of their position, (4) to care for a service member who is the employee’s next of kin, or (5) for a qualifying exigency arising out of the deployment of a service member who is a family member of the employee.
Under the Act, “family member” includes: (1) the biological, adopted, foster or step-child of the employee, (2) a child for whom the employee has legal or physical custody or guardianship, (3) a child for whom the employee stands in loco parentis (regardless of the child’s age), (4) a biological, adoptive, foster or step-parent of the employee or the employee’s spouse, (5) the legal guardian of the employee or the ward of the employee or the employee’s spouse, (6) an individual who acted as a parent or stood in loco parentis to the employee or their spouse when they were a minor, (7) the employee’s spouse, (8) a biological, adoptive, foster or step-grandparent of the employee, (9) a biological, adoptive, foster or step-grandchild of the employee, and (10) a biological, adoptive, foster or step-sibling of the employee. Notably, the Act declined to define “next of kin” despite providing leave benefits “to care for a service member who is the individual’s next of kin.”
Funding. Beginning October 1, 2023, (a) employers with 15 or more employees, (b) all employees, and (c) all self-employed individuals who elect to participate in the program, shall start making contributions to the Family and Medical Leave Insurance Fund (the “Fund”). The Act is silent on whether employers should count all employees or only employees within the state for the purpose of this funding requirement. The Maryland Secretary of Labor (the “Secretary”) shall set the respective rates of contribution by June 1, 2023. However, the Act states that the total rate of contribution shall be applied up to the Social Security wage base. Employers may not deduct any portion of the employer contribution from employees’ wages. Funding requirements will be subject to change based on bi-annual studies and recommendations by the Secretary.
Private Plans. A covered employer can also satisfy the Act’s requirements through a private employer-plan that meets or exceeds the benefits and coverages provided in the Act and is approved by the Department. The private plan may consist of employer-provided benefits, insurance, or a combination of both. An employer that elects the private plan option (and its employees) will be exempt from the contribution requirements.
Amount of Wage Replacement. The Act provides for partial wage replacement of up to 90% of the employee’s average weekly wages, with a maximum weekly benefit amount of $1,000. Starting January 1, 2026, the maximum weekly benefit will be adjusted annually to reflect the annual percentage growth of the area’s Consumer Price Index.
Average weekly wages will be determined by calculating the employee’s total wages for the last 680 hours for which the employee was paid and dividing those wages by the number of weeks worked. The precise leave benefit will then be determined by a formula that considers (a) whether the employee’s average weekly wage is equivalent to 65% or less of the state’s average weekly wage and (b) whether the employee is taking an otherwise partially-paid leave, in which case FAMLI benefits will be limited to ensure that employee’s do not receive more than 100% income replacement.
Claims Process. The Act provides significant leeway to the Department to develop the FAMLI claims filing process, required certifications and benefit administration. However, it does provide that the Department shall (a) notify employers within 5 business days after an employee files a claim for benefits, (b) approve or deny the claim and notify the employee and the employer of the decision within 10 business days after the employee files a claim, and (c) make the first payment of benefits on any approved claim within 5 business days of approval. Subsequent benefit payments will be made every two weeks.
Job Protection. Leave for which benefits may be paid under the Act is job protected. The Act requires employers to restore an employee to an equivalent position of employment upon the expiration of the leave. This job protection extends to an employee who “receives benefits” or “takes leave from work for which benefits may be paid” under the Act. The Act provides that employers may only terminate an employee on such a leave “for cause.” Employers may only deny an employee’s restoration rights if (1) the denial is necessary to prevent “substantial and grievous” economic injury to the employer’s operations, (2) the employer provides the employee notice of the intent to deny restoration rights at the time the employer determines the economic injury would occur, and (3) the employee elects not to return to work after receiving notice of the employer’s intent to deny restoration rights. Employers must also maintain an employee’s health benefits during any leave in the same manner required under the FMLA.
In addition to job protection, the Act contains an anti-retaliation provision prohibiting an employer from taking any adverse action against any employee because the employee applied for or received FAMLI benefits, took a family or medical leave for which FAMLI benefits may be paid, inquired about the rights and responsibilities under the Act, communicated an intent to file a claim or appeal under the Act, or has testified or assisted in a proceeding under the Act.
Employee Notice. When the need for FAMLI benefits is foreseeable, an employer can require employees to provide up to 30 days’ written notice before commencing leave. If the need for FAMLI benefits is not foreseeable, employees must provide notice to their employer as soon as practicable and must generally comply their employer’s notice or procedural requirements for requesting or reporting other types of leave, so long as the employer’s requirements do not interfere with a covered employee’s ability to use FAMLI benefits.
Documentation. When using FAMLI for reasons other than the birth or placement of a child in the care of a covered individual, a certification is required. When FAMLI is used for the serious health condition of the covered individual or family member or to care for a service member who is the covered individual’s next of kin, the certification must include: (1) the date on which the serious health condition of the covered individual, family member, or service member commenced; (2) the probable duration of the serious health condition; and (3) the appropriate facts related to the serious health condition within the knowledge of the licensed health care provider.
If a covered individual is using FAMLI to care for a family member with a serious health condition, the certification must also include a statement that the covered individual needs to care for the family member and the estimated amount of time required to provide the care. If a covered individual is using FAMLI due to their own serious health condition, the certification must also include a statement that the covered individual is unable to perform the functions of their position.
For intermittent leave, the certification must include the expected duration of the intermittent leave and a statement that either (a) the covered individual needs to care for a family member or service member, or (b) the covered individual is unable to perform the functions of their position. Forthcoming regulations are expected to include standards for certifications for qualifying exigency leave and for verifying the identity of a family member when a covered individual uses FAMLI to provide care to a family member.
Intermittent Leave. As noted above, covered individuals may receive FAMLI benefits on an intermittent basis in minimum increments of at least 4 hours. When receiving FAMLI benefits intermittently, an employee must (1) make a reasonable effort to schedule the leave in a manner that does not unduly disrupt the employer’s operations, and (2) provide the employer with reasonable and practicable prior notice of the reason for which the intermittent leave is necessary.
Waiting Periods. There does not appear to be a waiting period for employees to receive FAMLI benefits.
Coordination of Benefits. The Act expressly states that employees must exhaust any employer-provided leave that is not required to be provided under law before receiving FAMLI benefits. The scope and contours of what is considered “employer-provided leave” for FAMLI purposes is unclear at this time. That said, according to the Act, employer-provided leave that is being exhausted prior to receiving FAMLI benefits is subject to the same protections as leave under the Act. Further and notably, the Act states that the above requirement does not reduce the number of weeks of FAMLI available to an employee.
FAMLI runs concurrently with leave taken under the federal FMLA where applicable. The Act precludes the ability of any local jurisdiction to enact a law establishing a paid family leave insurance program for employees of private employers after June 1, 2022.
An employee’s rights to FAMLI benefits may not be diminished by a collective bargaining agreement or employer policy. Any agreement to waive an employee’s rights under the Act is void as against public policy. Employers also may not rely on the Act to evade an obligation to comply with a collective bargaining agreement or employer policy that provides leave for a longer period that than provided by the Act.
Employer Notice & Posting Requirements. Employers must provide written notice of employees’ rights and duties: (1) to each employee at the time of hire; and (2) to all employees annually. When an employee requests FAMLI leave or leave that the employer knows may be for a covered FAMLI reason, the employer must provide to the employee a notice of eligibility within 5 business days. The Department will develop standard notices for employer use.
Recordkeeping. The Act does not address employer recordkeeping requirements. Recordkeeping may be addressed in forthcoming regulations or guidance.
Enforcement Mechanisms & Remedies. The Secretary is authorized to conduct investigations and bring civil actions to address alleged violations. An employer who fails to make required contributions to the FAMLI Fund may be assessed the amount due plus interest and may also be required to pay a penalty of up to twice the amount of the contributions withheld. The Secretary may conduct an audit of such an employer to ensure compliance with the Act for the next fiscal year.
If an employee believes that an employer has violated the Act, the employee may file a written complaint with the Secretary. If the issue is not resolved through mediation and the Secretary determines that the employer has violated the Act, the Secretary may order the employer to pay lost wages and damages, order the employer to reinstate employees with or without back pay, and assess a civil penalty of up to $1,000 per employee.
If the employer does not comply with the Secretary’s order as described above, the Maryland Attorney General (with the consent of the employee), the Secretary, or the aggrieved employee may bring a civil action. If the employee brings a civil action and prevails, the court may award treble damages for lost wages, damages for lost or denied wages, salary, employment benefits, or other compensation, punitive damages, attorneys’ fees and costs, injunctive relief, and any other relief that the court deems appropriate.
With the paid leave landscape continuing to rapidly expand and grow in complexity, we encourage companies to reach out to their Seyfarth contact for solutions and recommendations for addressing compliance with paid leave requirements. Although the contribution requirements and benefit availability will not take effect for some time, employers should begin to consider their optimal paid family and medical leave structure going forward so that they are prepared to take necessary steps for approval of a private plan or adjust their own internal leave policies to prepare for this new employee benefit.