Maryland’s New Family and Medical Leave Insurance Program: What You Need to Know

Set to launch in July 2026, Maryland’s Family and Medical Leave Insurance (FAMLI) Program will provide 12 weeks of paid leave (in a 12-month period) for Maryland employees. The program will be funded though a new payroll tax and provide up to $1,000 per week for eligible employees with certain life events such as health conditions or family caregiving responsibilities. Additionally, employees may be eligible for an additional 12 weeks, allowing up to 24 weeks in total if necessary.

Here’s what companies need to know:

• Unlike the federal Family and Medical Leave Act (FMLA), which only guarantees unpaid leave, FAMLI provides paid leave and broadens the coverage to include part-time workers, small business employees, and a wider array of family members for caregiving purposes.
• Additionally, employers must provide notices to employees about their FAMLI rights starting January 1, 2025, upon hiring, annually, and within five days of a leave request.
• The program requires any business with employees in Maryland to register and contribute through their payroll process. There are also reporting and employee notification requirements.
• Employers with 50 or more employees that provide benefits equal to or better than the state plan will be able to apply to be self-insured. The leave package is required to be approved by the Department.
• All employers in the state will be required to electronically register with the FAMLI division. After registering, employers will automatically be enrolled into the State plan run by the Maryland Department of Labor.  Employers can opt to seek approval for a commercial/self-insured plan.  The application for a self-insured plan is $1,000.

Key Features of FAMLI:

1. Eligibility. Employees need to have worked at least 680 hours in Maryland in the year preceding their leave request. This broad criterion includes part-time and seasonal workers, as long as their employment falls under Maryland’s jurisdiction. Unlike other programs, this does not require continuous employment with a single employer.
2. Funding and Contributions. Contributions for FAMLI will begin on July 1, 2025, and will be funded through a new payroll tax as a percentage of gross wage. The rate for small employers (less than 15 employees) is .45% and the rate for large employers (15 employees or more) is .90%.  Additionally, small employers may withhold the full amount from the employee’s pay and large employers may withhold half of the state contribution from the employee’s pay. In either case, the contribution is limited to 1.2% of the Social Security wage base.
3. Qualifying Events for Leave. FAMLI’s definition of “family member” is more inclusive than FMLA, covering a wider circle of individuals, such as grandparents and siblings. Situations include:
   • Welcoming a new child (through birth, adoption, or foster care).
   • Recovering from a serious health condition.
   • Caring for a family member with a serious health condition.
   • Handling arrangements related to a family member’s military deployment.
4. Job Protection and Employer Requirements. Employers are required to reinstate employees returning from FAMLI leave to their original or equivalent position. The only exception is if the employer can prove that reinstating the employee would cause significant economic harm. Additionally, employers must provide notices to employees about their FAMLI rights starting January 1, 2025, upon hiring, annually, and within five days of a leave request.

How Do Employers Prepare for FAMLI?

• Set Up Contributions. Payroll deductions will start in July 2025, with the first payments due in October 2025. Employers must register with the Maryland Department of Labor, choosing either the state plan or an approved alternative.
• Submit Quarterly Reports. Employers will be required to submit wage and hour reports quarterly through an online portal developed by the FAMLI Division.
• Provide Notifications. Employers must inform employees of their rights under FAMLI and ensure they understand the leave process and their eligibility.

Preparing for the Transition

Registration for FAMLI is required by July 1, 2025, for any employer with one or more employees. This means that payroll deductions and reporting begin on July 1, 2025, and employers must remit the first payment to the State in October 2025. Employers should start planning now to integrate FAMLI into their benefits structure.

Here are some key steps:

• Review and Adjust Current Policies. Evaluate how existing leave benefits will interact with FAMLI.
• Prepare for Contribution Requirements. Update payroll systems to accommodate new deductions.
• Stay Informed. Keep an eye on updates from Maryland’s FAMLI Division for detailed regulations and reporting requirements.

For more information about the insurance program and for frequently asked questions, please visit the Maryland Department of Labor’s website. As always, our audit and accounting professionals are here to assist with any questions and guidance you may require navigating this significant program.