Maryland DOL Releases Updated FAQs on Paid Family and Medical Leave

By Fiona Ong - Shawe Rosenthal LLP

September 16, 2024

As we await the proposed regulations to implement the forthcoming paid family and medical leave insurance (FAMLI) program in Maryland, the state Department of Labor previously issued resources for employers, including FAQs, to assist them in preparing for compliance, as we discussed in our May 2024 E-Update. And now the MDOL has updated and vastly expanded those FAQs to offer additional clarification.

Applicable to all employers with Maryland employees, the FAMLI law will provide most employees in Maryland with 12 weeks of paid family and medical leave, with the possibility of an additional 12 weeks of paid parental leave. Contributions to the state-administered fund by both employers and employees will begin July 1, 2025 and benefits will start on July 1, 2026.

The updated FAQs divide the questions up into sections and offer the following new items of interest:

General Questions

•    New definitions of employer and worker: In a new “Terms” section, the FAQs set forth these definitions:
    o    Employer: anyone who pays a salary or wage to at least one person who works in Maryland. No employers are excluded from FAMLI.
    o    Worker: anyone who receives a salary or wage for work done in Maryland. Workers do not include independent contractors or federal government employees.
•    Who qualifies for benefits: Workers based in Maryland and self-employed Maryland residents who opt in to the program.
•    Reporting requirements: The MDOL will be sharing sample reporting templates for the required quarterly wage and hour reports.
•    Notification requirements: The MDOL will also create sample notices that employers can use to meet the requirements to notify employees about paid family and medical leave at the following points in time:
    o    starting January 2026 (six months before benefits begin),
    o    when the employee is hired,
    o    once a year,
    o    when the employee requests paid leave, and
    o    when an employer knows that an employee’s leave request may qualify.
•    Registration with FAMLI: The MDOL anticipates that its online web application will open by the Spring of 2025. Details are coming later.

Contributions Questions

•    Payroll software?: The MDOL expressly disclaims any control over payroll software, but anticipates vendors will be able to offer solutions on calculating contribution amounts from employers and their employees.
•    Employer payment of employee contributions: Employers are free to pay the employee share of contributions, but the MDOL notes there may be tax consequences.
•    Calculating 15 employees: Remember that employers with fewer than 15 employees (across the US, not just in Maryland) will not be required to pay the employer contribution, although their employees will still be required to pay their share and will be eligible for benefits. To assist employers to determine whether they have fewer than 15 employees, the MDOL states that they can request an official determination, which will be based on the average number of out-of-state workers added to the average number of Maryland workers reported on the required quarterly reports. The determination will be effective for one year.
•    Rate changes: Each February, the MDOL will announce the rate that will apply for the following State fiscal year, July 1-June 30. The rate cannot exceed 1.2% of the employee’s wages up to the Social Security cap (which is currently $168,600 and is estimated to be $174,900 in 2025).
•    Collecting and remitting contributions: Employers will need to collect the employees’ portion through payroll deductions at the time wages are paid. If they fail to do so, they cannot collect these contributions after the pay cycle ends. They will remit those contributions as well as their own through the online web application on a quarterly basis.
•    No wages = no contributions: No contributions from either the employee or the employer are owed when the employee is not receiving wages from the employer (e.g. when receiving workers’ compensation benefits or unpaid leave).
•    Contributions from all Maryland-based employees: Employers must collect and make contributions for all these employees, even if the employees are not eligible to receive benefits (e.g. seasonal or part-time workers who do not meet the annual 680-hour service requirement). Contributions are not due from employees who live in Maryland but work in another state, or from those working remotely from another state. Occasional work in Maryland does not trigger coverage if the employee’s work is based in another state.
•    Medicaid provider reimbursement: Under the law, the State will reimburse the employer contribution for community-based agencies or programs funded by the Behavioral Health Administration, the Developmental Disabilities Administration, or the Medical Care Programs Administration to serve individuals with mental disorders, substance-related disorders, or developmental disabilities. Such providers are directed to contact the Maryland Department of Health for further information on reimbursement.

Claims Questions

•    Definitions: The FAQs reiterate the definitions for qualifying reasons (including military deployment reasons), family members, and serious health condition.
•    Employee accounts: Employee will only need to create an online account when they are ready to file a FAMLI claim.
•    Claim filing period: Employees can file a claim up to 60 days before or after their leave starts.
•    Employee notice to employer: For foreseeable leave, employers may require employees to provide 30 days’ notice, and for unforeseeable leave, employers may require employees to provide notice as soon as practicable. The MDOL will also notify employers electronically when a claim is filed and with each status change to the application (determination, appeal request, etc.)
•    Employer response to claim: After receiving notice of a claim from the MDOL, employers have 5 business days to respond with information that could affect the claim determination.
•    Determination of benefits: The MDOL has 10 days to make a determination on a completed claim, once the employer responds. (This means that it can take up to 15 days after the claim is filed before there is a determination).  
•    Benefit amount: Employees will receive up to 90% of their wages to a maximum of $1000 a week. Employers may permit employees to use employer policies to “top off” the benefit to the worker’s full weekly wage.
•    Leave amounts: Employees may take up to 12 weeks of leave on a continuous or intermittent basis (employers and workers should agree on the intermittent schedule). If employees receive FAMLI leave for their own serious health condition, they may also receive an additional 12 weeks of FAMLI parental leave – for a total of 24 weeks of FAMLI leave.
•    Employer-provided leave: Employers cannot require workers to use employer-provided paid leave before using FAMLI leave, unless the leave is specifically designed to cover a FAMLI qualifying event (like paid parental leave). If this is the case, employers can require employees to take this alternative FAMLI purpose leave (APFL) concurrently with FAMLI leave. (Employers should seriously consider whether to continue offering APFL since they will already be paying for FAMLI leave through their required contributions).
•    Short-term disability: FAMLI leave cannot be reduced or offset by STD benefits. Employers can amend their policy to account for FAMLI leave – such as by allowing employees to use STD to “top off” FAMLI benefits to the worker’s full weekly wage.
•    Fraud: Although MDOL says that “preventing fraud is a top priority,” it provides no detail and says only that they “are building the system accordingly.” It also notes that employers can share relevant information with the MDOL when the worker files a claim and again after a decision.

Private Plans Questions

•    Approval by the MDOL: Employers must seek MDOL approval of any private plan, which may be commercial or self-insured. Such plans must offer benefits and protections that equal or exceed the state program. More information on applying for approval will be released later.
•    Existing leave policies: In order to qualify as a private plan, an employer’s package of leave policies must meet every element of the FAMLI program and be approved by the MDOL, as well as demonstrating that the plan is financially solvent.
•    Application fees: The application fee for a commercial plan will range from $100-$1000, depending on employer size. The fee for a self-insured plan will be $1000, regardless of size.
•    Appeals: Although the plan administrator will handle claims and benefits, the State will handle appeals.
•    Reports: Employers with private plans must still comply with the quarterly reporting obligation. They must also submit quarterly claims reports.

While these FAQs provide a good amount of new information, employers should be aware that the MDOL is still in the process of preparing regulations to implement the law. At this point, the MDOL has released two versions of informal “draft” regulations, prior to the formal process of issuing proposed regulations for public comment and then the final regulations. We have summarized the latest “draft” regulations in our July 17, 2024 E-lert. However, we are expecting the MDOL to issue the formal proposed regulations shortly, which may contain some changes from the last set of draft regulations – although we are not expecting much in the way of substantive revisions. As always, we will keep you posted on further developments.

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