After a legislative override of Governor Larry Hogan's veto, the Maryland Healthy Working Families Act (the "Act") is finally set to take effect on February 11, 2018. Although the General Assembly is currently considering emergency legislation that could postpone enforcement and/or the effective date of the law for several months, absent any such delay, the Act will go into effect on February 11.

Which Employers Are Covered?

All Maryland employers are covered by the Act. The Act requires employers with 15 or more employees to provide paid sick leave and employers with fewer than 15 employees to provide unpaid sick leave. The number of employees is calculated by determining the average monthly number of employees employed during the immediately preceding year, including part-time, temporary, and seasonal employees. The Act applies to most employees, with the exception of those who regularly work less than 12 hours per week, are under the age of 18, are construction workers covered by certain collective bargaining agreements, or are on-call healthcare workers. In addition, certain other individuals, including independent contractors and some employees of temporary staffing agencies and agricultural workers, are exempt from the Act's coverage.

What the Act Requires

Under the Act, employees must earn at least one hour of sick leave for every 30 hours worked, although employers may cap the amount of sick leave earned at 40 hours per year. Generally, employees may carry over up to 40 hours of unused earned sick leave from one year to the next. However, employers may limit the total amount of hours that may be accrued at any time to 64 hours. Alternatively, employers may comply with the Act by providing all employees with the annual maximum of 40 hours of sick leave at the beginning of each year, and then prohibit any carryover into the next year.

The Act requires employers to allow employees to take leave in the smallest increment used by the employer's payroll system or in increments of up to four hours. Employers may prohibit employees from using more than 64 hours of sick leave in a year. Employers may also prohibit newly hired employees from using sick leave during the first 106 calendar days that the employee works for the employer. Employers should take note, however, that even though employees may be prohibited from using sick leave under the Act until their 107th day of employment, they begin to accrue such leave on day one. In other words, a new full-time employee would likely have around three days of accrued earned sick leave as of their 107th day of employment.

Unlike earned vacation pay, which may be payable to an employee upon termination, the Act does not require the payment of unused earned sick leave upon an employee's termination from employment. If an employee is rehired by an employer within 37 weeks after his/her separation from employment, the employer must reinstate any unused earned sick leave existing at the time of the employee's separation date, unless the employer voluntarily paid the employee for his/her accrued leave at the time of separation.

Types of Leave Covered

Under the Act, employers are required to allow employees to use earned sick leave to care for or treat the employee's own mental or physical illness, injury, or condition; to obtain preventive medical care for the employee or the employee's family members; to care for a family member with a mental or physical illness, injury, or condition; for maternity or paternity leave; or if the absence is necessary because of domestic violence, sexual assault, or stalking committed against the employee or the employee's family member (which may include obtaining services from a victim's services organization or for related legal proceedings). Family member includes children, spouses, parents, grandparents, grandchildren, and siblings. Notably, the Act allows an employee to use leave to care for a broader group of family members than the Maryland Flexible Leave Act, which only allows an employee to use his or her leave to care for a child, spouse, or parent.

If an employee's need for the leave is foreseeable, he/she may be required to provide advance notice of up to seven days. If the need for leave is not foreseeable, the Act requires the employee to provide notice to his/her employer as soon as practicable and to comply with the employer's requirements for requesting leave, but only "if those requirements do not interfere with the employee's ability to use earned sick … leave." An employer may deny sick leave only if the employee fails to provide the notice required by the employer's policy and "the employee's absence will cause a disruption to the employer." The Act does not define a "disruption to the employer," which may create uncertainty and problems for employers tasked with determining or proving whether an employee's absence will disrupt their operations.

Employers may require employees to provide verification that the leave was used for an appropriate reason under the Act if an employee used the leave for three or more "consecutive scheduled shifts." It is not clear whether the employee must use the leave for the entirety – or only portions – of three or more consecutive shifts in order for an employer to request verification.

Recordkeeping and Notice Requirements

The Act imposes significant notice and recordkeeping obligations on employers. First, every time that an employer pays wages to an employee, it must provide the employee with a written statement of the amount of earned sick leave that is available for use by the employee or provide an online system through which an employee may ascertain his or her available leave balance. Notably, this requirement is not limited to employers with 15 or more employees – employers with fewer than 15 employees must also provide this notice concerning employees' unpaid leave balance.

The Act further requires that employers must provide notice to employees of their entitlement to sick leave under the Act, which shall include (1) a statement of how sick leave is accrued under the Act; (2) the purposes for which an employee may use sick leave under the Act; (3) a statement regarding the prohibition against an employer taking an adverse action against an employee who exercises a right under the Act, as well as the prohibition against an employee making a complaint, bringing an action, or testifying in an action in bad faith; and (4) information regarding the right of an employee to report an alleged violation of the Act to the Maryland Commissioner of Labor or to bring a civil action to enforce an order issued by the Commissioner.

The Act also requires employers to maintain records for at least three years of (1) earned sick leave accrued by each employee and (2) sick leave used by each employee under the Act. These records are subject to inspection by the Commissioner. The failure by an employer to have accurate and complete records is presumed to be a violation.

Impact on Existing Local Sick Leave Laws

Both Montgomery County and Prince George's County have already enacted local sick leave laws, but the Act will affect Montgomery County employers differently than Prince George's County employers. Because the Act preempts local sick leave legislation enacted on or after January 1, 2017, and Prince George's County's Earned Sick and Safe Leave Law was passed in December 2017, Prince George's County employers need only comply with the Act (and not the county sick leave law). On the other hand, the Montgomery County Earned Sick and Safe Leave Law was enacted in October 2016, which means that, absent legislative amendment, Montgomery County employers must comply with both the Act and the local Montgomery County sick leave law. Where the two laws impose different obligations, Montgomery County employers will generally need to comply with whichever law provides more generous leave.

Penalties for Non-Compliance

An employee who believes his or her employer has violated the Act may file a written complaint with the Commissioner, who will conduct an investigation into the complaint. There is no limitation period for an employee to submit a complaint. In the event that the Commissioner finds an employer has violated the Act and the parties are unable to resolve the matter through informal mediation, the Commissioner will enter an order directing the employer to pay the value of any unpaid earned sick leave and any monetary damages incurred by the employee. The Commissioner also has the discretion to award the employee an additional amount up to three times the value of the employee's hourly wage for each violation and a civil penalty of up to $1,000 for each employee for whom the employer failed to comply with the Act.

Employers have 30 days to comply with the Commissioner's order. In the event of non-compliance, an employee has up to three years to file a civil action to enforce the order in the county where the employer is located. If an employee prevails in a civil action under the Act, a court may award the employee, in its discretion, treble and punitive damages, attorneys' fees, and injunctive relief.

Steps for Ensuring Compliance

The Act provides that an employer is not required to modify an existing paid leave policy if the policy permits an employee to accrue and use leave under terms and conditions that are equal to the leave required under the Act. Thus, if an employer's existing PTO policy allows its employees (including part-time, temporary, and seasonal employees) to accrue leave at a rate that satisfies the requirements of the Act, and permits the accrual and carryover of leave in amounts that meet the Act's requirements, an employer will not need to provide additional leave under the Act. In this connection, employers may want to consider frontloading 40 hours of leave to their employees at the beginning of each year in order to avoid the carryover of leave from one year to the next, as well as to ease the administrative burden that would result from monitoring employees' accrual of leave at the rate of one hour per every 30 hours worked.

Moreover, although an employer may not be required to modify existing leave policies, the Act's various notice requirements (which are discussed above) may effectively require employers to add a Maryland Healthy Working Families Act policy to employee handbooks containing the required notices. Furthermore, employers without payroll software programs that allow employers to track and publish leave balances on pay statements should determine a feasible method of providing employees with notice of their leave balance on paydays.