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Employment Law Update: Proposed Regulations Serve as a Reminder for Maryland Employers that Paid Family Leave is Approaching

In 2022, Maryland’s General Assembly passed legislation creating a program of paid family leave for Maryland employees, under which employees who need to miss work for a qualifying reason will be able to submit a claim for benefits and recoup a portion of the wages they would have otherwise earned. Since the paid family leave statute was first passed, its implementation has been delayed by the General Assembly twice. Currently, payroll tax contributions to fund the program are scheduled to begin on July 1, 2025, with benefits becoming available to Maryland employees on July 1, 2026. 
 
The Maryland Department of Labor has recently released a set of proposed regulations that offer a glimpse of how the paid family leave program will operate, which can be accessed at the following link: https://labor.maryland.gov/regs/pending.shtml. While the proposed regulations are subject to revision, they provide the most complete look to date at how the program will function in practice. 
 
Among the notable provisions in the proposed regulations is a clause establishing a “FAMLI Division” within the State Department of Labor that will be responsible for administering the paid family leave program. The proposed regulations also provide that employers will be required to create and maintain an online account for the purpose of remitting tax contributions in connection with the program and submitting required information reports. 
 
The proposed regulations provide significant additional detail on the claims process and required employee documentation for benefits under the program. The required documentation will vary depending on the covered purpose for which paid family leave benefits are sought, whether: (i) to care for or bond with a child during the first year after the child’s birth, (ii) for the placement of a child for foster care, kinship care, or adoption and to care for or bond with a child following such a placement, (iii) to care for a family member with a serious health condition, (iv) for the diagnosis, occurrence, or tending to of the employee’s own serious health condition, or (v) to care for a service member with a serious health condition for whom the employee is next of kin.   
 
Finally, the proposed regulations address the use of accrued sick leave by an employee to cover the gap between the lower benefit amount provided under the statute and the employee’s regular earnings. The proposed regulations allow for accrued leave to be used to ‘true up’ the employee’s earnings during the period for which benefits are received under the paid family leave program, so long as mutually agreed to by the employer and the employee and memorialized in writing. When accrued leave is used to cover the portion of the employee’s regular wages that exceeds the benefit amount provided via the paid leave program, the employer must then deduct the equivalent hours of accrued leave from the employee’s leave balance, based on their regular rate of pay.    
 
The proposed regulations mark a significant step toward the implementation of Maryland’s paid family leave program and provide insight into the administrative issues that will need to be managed as the program comes online. Whiteford’s Employment Law team will continue to track further developments concerning the paid family leave program and is available to assist with questions and compliance.   

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