Maryland Governor Larry Hogan’s Paid Leave Compromise Bill – What Does It Really Do?

By Fiona W. Ong - Shawe & Rosenthal LLP

November 30, 2017

As Maryland employers are likely aware, the General Assembly passed a paid sick leave bill (HB1) this past session, which was vetoed by Governor Hogan. The Governor has now introduced a new paid leave bill – the Paid Leave Compromise Act of 2018 – that will be filed as emergency legislation when the next legislative session opens on January 10, 2018. The General Assembly’s Democratic leaders have nonetheless stated that they still plan to override the veto, making HB1 the law.

HB1, the “Maryland Healthy Working Families Act,” mandates that employers provide paid leave to employees to use for personal and family illness and health care, maternity or paternity leave, and to address domestic violence issues. Employers with 15 or more employees would be required to provide up to 40 hours (5 8-hour days) of paid leave, while smaller employees would be required to provide the same amount of unpaid leave.

The business community had many concerns about HB1, which have been detailed in a report prepared by the Committee on Paid Leave, a task force that was created by Governor Hogan and led by Maryland Secretary of Labor Kelly Schulz. In his compromise bill, which uses HB1 as its starting point, Governor Hogan addressed a number of those concerns, including the following:

• The size of the employer required to provide paid leave is increased from 15 to 25 employees, and compliance is phased in over several years depending on the size of the employer.

• The requirement for smaller employers to provide unpaid leave is removed.

• The eligibility period to use the leave is extended from 106 days to 120 days (which eradicates the need to provide leave to seasonal employees).

• Local jurisdictions are preempted from enacting paid leave legislation (which eliminates the possibility that an employer would have to comply with a patchwork of local laws, in addition to state law).

• The rebuttable presumption of violation by the employer is removed, meaning that violations must be proven rather than disproven.

• Some of the more onerous penalties and damages have been eliminated.

• A hardship waiver is available based upon a showing of significant financial hardship.

In connection with his compromise bill, the Governor also stated that he would introduce the Small Business Relief Tax Credit, which provides tax credits to businesses with fewer than 50 employees that provide paid leave benefits.

Although the Governor’s compromise bill contains provisions that reduce the onerous impact of HB1 on businesses, there are still some points of concern from an employer perspective. Among these are the following:

• The leave is not limited to purposes of illness, health care, and domestic violence, but may be used for any reason. This essentially requires covered employers to provide paid vacation to all employees.

• Employers may not require verification of the use of leave. This affects the employer’s ability to ensure that unscheduled, last minute leave requests are for a valid purpose.

• Employers may not discipline employees for using leave. Thus, employees may abuse the leave by calling out at the last minute at a whim, and employers have no recourse despite negative impacts on business operations.

• Employers apparently may not deny the use of leave (except in the case of service providers to developmentally disabled or mentally ill individuals, and only under specific circumstances).

In his announcement of the compromise bill, the Governor invited the Democratic legislative leaders to work with him on a solution to the paid leave debate.

We will keep you posted on further developments.