New Employee Benefit Laws Are Coming. Here’s How to Prepare.
On April 9, 2022, Maryland became the 10th state in the nation to offer paid leave for all public and private employees when the State Legislature overturned Governor Larry Hogan’s veto. The new program, known as the Family Medical Leave Insurance (FAMLI) Program, is continuing a movement that is expected to be embraced by many states in the coming years.
Who is Eligible?
This new law allows employees to collect a maximum of $1,000 per week for a total of 12-weeks of leave on an annual basis. To be eligible, an employee (part or full-time) must work at least 680 hours over the 12 month-period immediately preceding the date on which the leave is set to begin. Additionally, employees will enjoy the security of job protection as they take their leave.
How is it Funded?
The program will be funded by a payroll tax set to go into effect October 1, 2023 and the paid leave itself will be available to employees beginning January 1, 2025. The funding will be split between businesses with 15 or more employees, and those eligible.
The process for applying and receiving FAMLI benefits will be very similar to unemployment benefits, meaning the benefits will replace 90% of weekly wages for low-wage workers, not to exceed $1,000 per week. Eligible employees that receive any level of employer-provided leave must exhaust all leave benefits before receiving any FAMLI assistance under the new law.
Exemptions
Employers that already offer extended paid leave will be exempt from the requirements of this new law. These employers will have to submit their private employer plan to the Maryland Department of Labor for review and acceptance. There will be requirements for employers to make sure their employees are aware of the rights and benefits that exist under FAMLI.
Properly Prepare Your Business
How can a business prepare for this coming legislation? The first step is to review any current leave policies. If it’s determined that the business would like an exemption, then make sure any changes necessary to exceed the benefits offered by the new law are put into place before October 1, 2023.
As with any new tax law, there are still many questions, including the applicable tax rate. Ellin & Tucker’s expertise with multi-state tax compliance and planning will point you in the right direction and help answer your questions. We will continue to share new FAMLI developments and details as they are released to make sure you’re always ahead of any changes.
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