Maryland Employers: Prepare for Paid Family and Medical Leave Under the Time to Care Act
- Feb 9, 2023
The Time to Care Act of 2022 (“TTCA”), Maryland Senate Bill 275, enacted in April of last year, establishes a state-administered Family and Medical Leave Insurance (“FAMLI”) program funded by employers and employees, with contributions beginning October 1, 2023. Starting in 2025, covered employees can receive up to 12 weeks of leave insurance benefits to deal with a serious personal health need, bond with a new child, care for a seriously ill relative or address needs correlating with military deployment. The TTCA officially goes into effect June 1, 2023, and we expect to see further guidance and regulations then. Here are eight things Maryland employers should know about paid leave under the TTCA.
Who is eligible for paid leave under the TTCA?
Covered employees eligible for paid leave under the TTCA include part-time and full-time employees who have worked at least 680 hours over the 12 months immediately before the leave starts. Self-employed individuals may opt into the FAMLI program as well. Sole owners of a limited liability company, sole proprietorship or C or S corporation in which the owner is the only employee are treated as self-employed individuals. Covered employees must apply to take covered leave and meet other administrative requirements to receive benefits.
Who must contribute to the Family and Medical Leave Insurance program?
The TTCA applies to all employers, including state and local government employers, with at least one employee working in Maryland. Employees, self-employed individuals who opt into the program and employers with 15 or more employees will be required to contribute to the FAMLI program. Employers with 14 or fewer employees will not be required to contribute to the funds, but these employees will still be required to pay contributions. Employers may contribute all or some of the employees' required contributions. Until June 30, 2026, employees who earn less than $15 per hour will have their portion of the contribution paid by the state.
Employers are responsible for paying and withholding taxes from employees' wages to fund the program. The Secretary of Labor will establish the total contribution rates and percentages of the total contribution paid by employers and employees. For FAMLI purposes, wages are taxable up to the federal Old-Age, Survivors and Disability Insurance taxable wage base ($160,200 for 2023 and $147,000 for 2022). Further guidance will be issued regarding which types of payments constitute taxable wages under the FAMLI program.
Can employers opt out of contributing to the FAMLI program?
Employers may opt out of contributing to the FAMLI program and comply with the TTCA by offering a private plan (self-insured, insured or a combination) approved by the Maryland Department of Labor. To be approved, the private plan must cover all eligible employees and meet or exceed the Act's benefits, rights and protections.
What type of leave is eligible for paid family and medical leave benefits?
Covered employees are entitled to receive 12 weeks of intermittent or continuous leave per year with temporary benefits for any of the following reasons:
- Parental leave for the birth, adoption, foster care or kinship placement of a child
- The employee has a serious health condition resulting in their inability to perform regular job functions
- To care for a family member with a serious health condition
- To care for an employee's next of kin who is a service member with a serious health condition
- To attend a qualifying exigency related to a family member's military service
Covered family members include:
- An employee's spouse
- An employee's biological, adopted, step, or foster children
- Children under the guardianship of or in the legal or physical custody of an employee
- An employee's child/children for whom an employee stands in loco parentis (no age limit)
- An employee's legal guardian or the employee's or spouse's ward
- An employee's or their spouse's biological, adoptive, step, or foster parents
- Individuals who stood in loco parentis or acted as a parent to an employee or the employee's spouse during childhood
- An employee's biological, adoptive, step, or foster siblings
- An employee's biological, adoptive, step, or foster grandparents and grandchildren
If an employee experiences a serious health condition and qualifies for parental leave, they may receive an additional 12 weeks of benefits in the same application year. Employees must use any employer-provided leave not required by law before receiving TTCA benefits.
How are wages for paid leave determined under the TTCA?
Covered employees may receive up to 90% of their average weekly wage (subject to an initial $50 minimum and $1,000 maximum) per week, with the weekly maximum adjusted yearly. The FAMLI program pays workers on a sliding scale according to their income level, with lower-income employees receiving the highest portion of their average weekly wage while on leave.
An employee's average weekly wage is calculated by using the employee's total wages earned over the last 680 hours divided by the number of weeks worked, relative to the state average weekly wage, as follows:
- If a covered employee's average weekly wage is 65% or lower than the state average weekly wage, the employee may receive 90% of their average weekly wage.
- If a covered employee's average weekly wage is greater than 65% of the state average weekly wage, the employee may receive 90% of their average weekly wage of up to 65% of the state average weekly wage, plus 50% of the average weekly wage exceeding 65% of the state average weekly wage, subject to a $1,000 maximum cap.
Eligible employees are paid their first cash benefit five days after submitting a claim, and then paid every two weeks.
What protections are employees guaranteed under the TTCA?
Employers must continue to offer employees health benefits during their leave at active rates, as required under the federal Family and Medical Leave Act (“FMLA”). Employers must also retain a covered employee returning from leave in the same or equivalent position they previously held.
An employer can only deny an employee from returning to their position if restoring the employee's position would cause "substantial and grievous" injury economically to the employer's operations. If the employer does determine this, they must notify the employee about their intent to deny job restoration rights. Employees must receive this notice when they are already on leave and elect not to work. If an employee receives this notice prior to taking leave, they do not have the same opportunity to elect to return to work.
Employers may not retaliate or discriminate against employees who exercise their rights under the TTCA.
What types of notifications are required under the TTCA?
Under the TTCA, employers must give employees written notice about the FAMLI program at their time of hire and annually after that. The Department of Labor will establish mandatory poster, reporting and recordkeeping requirements.
Employers may require that their employees give notice of leave at least 30 days in advance if the leave is foreseeable. If the need for time off is not foreseeable, employees must notify their employers as soon as possible to request leave. After receiving a request for leave, employers have five business days to inform the employee of their eligibility.
How can employers prepare?
While we are still waiting for further regulations and guidance, here are a few things employers can do to prepare for the TTCA deadlines:
- Identify which employees are eligible for leave under the Time to Care Act.
- Review current paid time off policy and address its coordination with TTCA leave.
- Review private plan options and determine whether to insure or self-insure to remain compliant.
- Make the proper changes to your payroll system to account for TTCA leave.
- Factor TTCA requirements into any headcount changes or future workplace planning.
- Inform your staff about the Act's benefits and create a strategy for communication that includes the required notices.
Maryland employers can expect further state guidance in the coming months.
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Donald N. Hoffman
Donald Hoffman is Partner-in-Charge of the firm's Maryland office. His expertise includes accounting, tax planning, business consulting, strategic planning, business succession, buy/sell agreements, and estate planning.
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