What happened?

On April 25th, the Maryland General Assembly passed SB 485, making significant updates to Maryland’s not yet-in-effect Paid Family and Medical Leave Insurance (FAMLI) program, established by the Time to Care Act.

What are the details?

Key Bites:

• Contribution date: The start date of employer and employee contributions to the program has been delayed from October 1, 2024, to July 1, 2025.
• Contribution Rate: The contribution rate is based on covered wages (all wages up to and including the Social Security wage base Insurance). The previously announced .90% contribution rate may change due to the delayed start date, and Maryland’s secretary of labor will set the applicable contribution rate on or before February 1, 2025.
• The amendment also aligns the definition of “wages” to determine the contribution amount with the definition of wages used under Maryland Unemployment Insurance (MD Labor and Employment Code Section 8-101(aa)).
  • Employers will not have to calculate two different sets of wages for the two programs
• Benefit Payments: Employees will now be able to apply for benefits beginning July 1, 2026, which is seven months later than the previously amended program start date, January 1, 2026.
• For purposes of benefit calculation, the average weekly wage is now calculated by dividing the employee’s highest wage from the 4 prior calendar quarters by 13, instead of the last 680 hours worked divided by the applicable number of weeks
• Private Employer Plans: Employers previously had three options to fulfill their obligations: a state-approved benefits program, an authorized insurance plan, or a mix of both. The mixed option has now been eliminated.

Now, employers not participating in the state program must use either have (1) a state-approved program or (2) an authorized insurance plan.

• If opting for a private plan, employers must secure Maryland Department of Labor (MDOL) approval and may incur application and renewal fees.
• The Maryland Labor Secretary will set the criteria for private employer plans.
• Appeal Costs: the law mandates the labor secretary to set up an appeals system for FAMLI program beneficiaries concerning benefit decisions. If a beneficiary wins an appeal against a private employer plan, the employer or insurer may be charged for the appeal costs by the MDOL.

For our previous updates:

• Reminder: Maryland Family and Medical Leave Program Coming Soon (VensureHR)
• May 2023: Maryland Modifies Paid Family and Medical Leave Insurance Program (VensureHR)

Business Considerations

• Employers should understand the new administrative deadlines, definitions, and components of the program’s administration.
• Employers should plan accordingly for the new start dates.
• Employers should review their private employer plans to ensure they meet the new requirements set by the Maryland Department of Labor (MDL) if they have one.
• Employers should consider informing their employees about these changes and how they might affect their benefits.

Source References

• SB 0485 / House Bill 571

Resources

• Maryland FAMLI Webpage
• Maryland FAMLI Employers FAQs

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