Employment Law Update

Starting January 1, 2027, all Maryland employers (regardless of size) will be required to participate in the Maryland Family and Medical Leave Insurance or FAMLI program. 

That means employers will be required to begin withholding a percentage of their employees’ wages (and, if they employ 15 or more employees contribute an equal amount).

These contributions, from employees and employers, will be due on a quarterly basis, beginning in April 2027, together with quarterly wage reports. The Maryland Department of Labor (DOL) will administer the FAMLI program.

Maryland employers through an Authorized Officer are required by December of 2026 to have registered for the FAMLI program through a dedicated portal. Employers can fulfill their reporting and contribution obligations, directly or through a Third-Party Agent or TPA. TPAs must register separately and can invite clients to sign a Power of Attorney to sign up with the TPA.

Then, starting in 2028, all Maryland employees will be eligible to receive up to 12 weeks of paid leave for these life events: (1) welcoming a child, by birth, adoption, kinship care, or foster care; (2) addressing an employee’s own serious health condition; (3) caring for a family member with a serious health condition; or (4) addressing certain military family matters.

How Does FAMLI work?

Starting in January 2028, employees based in Maryland will be eligible to receive up to $1,000 per week for up to 12 weeks of job-protected leave. Employees also may be eligible for an additional 12 weeks of benefits for parental leave.

Which employees are eligible?

Any employee who works in Maryland for an employer of any size (union or non-union) will be eligible for FAMLI benefits if the employee works at least 680 hours at any job in Maryland in the four calendar quarters prior to his or her application for or receipt of benefits.

How will employees obtain FAMLI benefits?

An employee will file a claim for benefits on a new FAMLI website. Employers will have five days after a claim is filed to respond regarding whether the employer believes the employee is entitled to FAMLI benefits. The DOL will have up to ten days to decide whether an employee is due benefits.

How will FAMLI be funded?

FAMLI will be funded by contributions from both employers and employees. During 2027, the contribution rate will be .9% of an employee’s wages up to the annual Social Security taxable wage base ($184,500 in 2026). That amount will be split equally between employer and employee contributions. After 2027, the DOL will set the contribution rate annually based on actuarial estimates. Employers with fewer than 15 total employees will not be required to make the employer contribution.

What do employers have to do?

Each employer with at least one Maryland employee must register this year with DOL. An employer with a separate Employer Identification Number or EIN will have to register even if it is affiliated with another employer.

Starting with the first payroll in January 2027, employers must commence withholding the employee contribution from employees’ paychecks. For each quarter, an employer must file with DOL quarterly wage reports and claims data.

The employer also must remit to DOL the employee and employer contributions due each quarter. The reports and contributions will be due in the month after the close of the preceding quarter, with the first reports and contributions due by April 30, 2027.

Do employers have options other than the State Plan?

Yes, employers have other options. They may seek approval for a plan: (1) funded by a commercial insurer or (2) self-insured by the employer. Commercial and self-insured plans must offer benefits and protections that are at least equal to those provided by the State Plan. 

DOL may impose reasonable fees on employers seeking a commercial or self-insured coverage option. Employers with such private plans still must (1) submit to DOL quarterly wage and hour reports and claims data and (2) escrow employer and employee contributions starting in January 2027.

If an employee intends to apply for a private plan to provide coverage in 2027, it must submit a Declaration of Intent (DOI) with DOL by November 15, 2026.

How will employer-provided and other Government-provided leave policies relate to FAMLI?

Employer-provided parental leave. Employers cannot require employees to use employer-provided time off before using FAMLI leave.  But an employer and employee can agree to use employer provided paid time off to “top off” the FAMLI benefit. If an employer already offers leave that covers one or more of the qualifying events that trigger FAMLI benefits (for example, parental leave), the employer may require an employee to take such leave, known as Alternative FAMLI Purpose Leave (AFPL) concurrently with FAMLI leave.

MD Sick and Safe Leave. Under Maryland’s Healthy Working Families Act, employees accrue up to 40 hours of leave for the employee’s own illnesses, injuries or conditions, the illnesses, injuries, or conditions of the employee’s family member, to obtain preventative care for the employee or the employee’s family member, for maternity or paternity leave, and certain absences related to domestic violence, sexual assault or stalking committed against the employee or the employee’s family member.. That leave will continue in addition to FAMLI leave.

Federal Family and Medical Leave Act (FMLA). FMLA provides eligible employees with up to 12 weeks of unpaid, job protected leave if they face certain events, including a serious health condition or caring for a family member with a serious health condition. FMLA leave and FAMLI leave will run concurrently.

What penalties does an employer face if it fails to comply with FAMLI requirements?

If an employer fails to register and comply with FAMLI requirements, it faces potential penalties.  An employer that fails to deduct contributions from an employee’s pay, starting with the first pay period in 2027, is considered to have elected to pay the employee’s portion.  After a 30-day period to cure any delinquency, late employer contributions accrue interest at 1.5% per month.  The FAMLI Division may assess a civil penalty of up to two times the delinquent contributions.  Plus, the Division is authorized to order an employer audit, make estimates for missing or incomplete wage reports, and subpoena records.    

What are the next steps for employers with Maryland employees?

To prepare for the introduction of the FAMLI program, starting January 1, employers who employ one or more employees in Maryland should take these actions:

1. Register now for FAMLI online at paidleave.maryland.gov/register
    
2. If the employer intends to use a commercial insurer or self-insured program in 2027 to provide FAMLI benefits, submit a Declaration of Intent with the Maryland DOL no later than November 15, 2026.
    
3. Notify employees about Maryland FAMLI leave no later than one pay period before January 1, when payroll deductions begin. DOL is preparing template notice forms that should be available later this year.
    
4. Begin payroll withholding from employee pay for work performed starting January 1, 2027.

FAMLI will have an impact on all employers with at least one Maryland employee, starting on January 1.  It’s time to prepare for the program to ensure you comply with the new FAMLI program requirements on Day 1.

If you have any questions, please contact Theodore P. Stein.

Theodore P. Stein
410-576-4229 • tstein@gfrlaw.com