Maryland Enacts Paid Leave Law

The TCA establishes the Maryland Family and Medical Leave Insurance (FAMLI) Program and FAMLI Fund to provide up to 12 weeks of paid leave to (1) covered employees — those who have worked at least 680 hours over 12 months immediately before the date on which leave is to begin; and (2) participating self-employed workers who take leave due to their own serious health condition to care for a family member or due to a qualifying exigency resulting from a family member’s military deployment. The weekly benefit ranges from $50 to $1,000, based on the employee’s average weekly wage, and is indexed to inflation.

Funding

FAMLI Fund contributions are shared between employers and employees and are based on employee wages. Generally, all employers with at least one employee in Maryland must participate in the program. But only employers with 15 or more employees must contribute to the Fund.  

Self-employed workers may elect to participate in the program for an initial period of at least three years. Thereafter, a self-employed worker may withdraw from the program or renew their participation for at least a year.  

By June 1, 2023, Maryland’s Secretary of Labor must adopt implementing regulations and set payroll tax rates to fund the leave program. Employers and employees will be subject to the tax beginning on October 1, 2023. Participating self-employed workers must pay the full required wage contribution.

Employers may elect to self-insure so long as they make their self-insured plan available to all TCA-eligible employees and the plan meets or exceeds the TCA’s rights, protections, and benefits.

The Leave Entitlement

Beginning January 1, 2025, eligible employees may take covered leave to 

• care for a newborn child or a child newly placed for adoption, foster care, or kinship care with the employee during the first year after the birth, adoption, or placement;
• care for a family member with a serious health condition; 
• attend to a serious health condition that makes the employee unable to perform the employee’s job functions; 
• care for a next-of-kin service member; or
• attend to a qualifying exigency arising out of a family member’s deployment.

Employees may take leave on an intermittent basis, in at least four-hour increments, if (1) they make a reasonable effort to schedule the leave in a manner that doesn’t unduly disrupt the employer’s operations; and (2) they reasonably and practicably disclose to their employer why they need to take intermittent leave.

TCA leave runs concurrently with FMLA leave. And, a covered individual must exhaust all leave that their employer voluntarily provides before TCA leave benefits kick in.

Generally, employers may terminate an employee on TCA leave only for “cause,” which the statute does not define. Also, they may deny restoration of a covered employee’s position only in specified circumstances, such as when the denial is necessary to prevent “substantial and grievous economic injury” to the employer’s operation. What constitutes a “substantial and grievous economic injury,” TCA doesn’t say.

Prohibition of Retaliation

The TCA makes it unlawful for a person to take adverse action against covered employees for exercising their statutory rights.

Takeaway

The TCA may prove to be problematic for many Maryland employers. It imposes on them a new payroll tax. Its new leave entitlement could burden employer operations. And, it leaves some key terms undefined.

Not only that, the TCA is a complex statute, too extensive to cover in a single Alert. Readers with questions are welcome to contact the author, or your ArentFox Schiff counsel, to discuss them. Meantime, we will continue to monitor developments.