• New law modifies Maryland’s Paid Family and Medical Leave program.
• New pay transparency requirements for job postings are in effect.
• Employers should expect new pay stub template for information that must now be included on all pay stubs.

The Maryland legislature addressed a wide array of labor and employment law topics this session. The laws discussed below were signed into law by Governor Moore and become effective in 2024 on the dates noted. This article includes highlights of new laws affecting Maryland employers but does not cover every new state and local law that was enacted this session.

Paid Family and Medical Leave Insurance

Senate Bill 485 (cross-filed with House Bill 571), signed by the governor on April 25, 2024, makes significant updates to Maryland’s not yet in effect Paid Family and Medical Leave Insurance (FAMLI) program, first established by the Time to Care Act in 2022. The bill modifies the FAMLI program by altering key administrative deadlines, definitions, and components of the program’s administration, and authorizes the Maryland Department of Labor (MDOL) to adopt regulations that establish fees for private employer plans. The modifications take effect October 1, 2024.

The FAMLI program will cover all Maryland employers with at least one employee and is funded by contributions from employers and employees. Employers with 14 or fewer employees are not required to make contributions, but their employees will be required to do so and will be entitled to FAMLI benefits. Eligible employees may receive up to 12 weeks of paid family and medical leave per benefit year for any reason specified in the FAMLI program (including to care for a child after the child’s birth and to care for a family member with a serious health condition, among other reasons). Last year, the General Assembly passed modifications to the FAMLI program that delayed implementation for a year, split contributions 50-50 between employers and employees, and capped contributions at 1.2% of an employee’s wages. The FAMLI Division of the MDOL encountered challenges in implementing the program, which led to the most recent modifications. Key changes to the law include:

Delayed Implementation Dates: The start dates are delayed by nine months from October 1, 2024 to July 1, 2025 for required contributions and six months from January 1 to July 1, 2026 for benefit payments.

Coverage and Eligibility: Covered employees must have worked at least 680 hours performing employment in Maryland over the four most recently completed calendar quarters immediately prior to taking FAMLI leave.

Contribution Rate: The contribution rate is based on covered wages, meaning all wages up to and including the Social Security wage base. The previously announced .90% contribution rate may change due to the delayed start date. Maryland’s secretary of labor will set the applicable contribution rate on or before February 1, 2025.

Private Employer Plans: Previously, employers could meet FAMLI program obligations through a state-approved private employer benefits program, an authorized insurance plan, or a combination of both. The recent modifications remove the combined option. Employers that decide not to participate in the state program must either offer benefits through a state-approved program or an authorized insurance plan. Among the hurdles employers will face if they choose to implement a private plan is that they must obtain approval from the MDOL for any private plan and may be required to pay application and renewal fees. Regulations regarding application and renewal fees are authorized and may be forthcoming. The law indicates that the Maryland secretary of labor will establish criteria for determining which employers meet the requirements for private employer plans.

Appeal Costs: The law provides that the secretary of labor will establish a system for appeals by covered individuals regarding determinations of benefit amounts, durations, and denials of benefits under the FAMLI program. If a covered individual prevails in an appeal of an adverse decision under a private employer plan, the MDOL may assess costs of the appeal against the employer or insurer.

The FAMLI Division of the MDOL issued “draft” regulations in January 2024. The Division anticipates revising those regulations.

The timing for actual implementation of the FAMLI program remains unclear given continued delays. A number of questions remain regarding the practical implications of the program’s requirements. Employers will presumably obtain clearer guidance about FAMLI obligations when the Division releases formal regulations.

Pay Transparency – Wage Range Posting Requirement

Maryland’s Pay Transparency Law, part of the broader Equal Pay for Equal Work Act of 2020, adds proactive disclosure requirements for employers and replaces the existing requirement to disclose a wage range to an applicant upon request. Beginning October 1, 2024, Maryland employers must disclose the specific wage range or salary, benefits, and any other compensation information for a posted position. Positions covered by this legislation include those whose work will be physically performed at least in part in the state of Maryland. The requirements apply to public postings and internal postings.¹ Maryland’s commissioner of labor and industry (“commissioner”) will develop and publish a form employers can use to comply with the law. Employers must retain records of compliance for at least three years after the position is filled or initially posted.

“Wage range” means the minimum and maximum rate or salary for a position. The rate must be set in good faith by reference to one of the following: any applicable pay scale, any previously determined minimum and maximum hourly rate or salary for the position, the minimum and maximum hourly rate or salary of an individual in a comparable position at the time of the posting, or the budgeted amount for the position.

The legislation does not authorize employees to bring their own lawsuits against employers for violations of the law. Employees and applicants may file complaints with the commissioner, who is empowered to issue an order compelling compliance and to impose civil penalties.

New Pay Stub Requirements

Maryland requires employers to provide written notices of pay rate, regular paydays, and leave benefits at the time of hiring. Pay stubs or online pay statements must include detailed earnings information, including the following:

• The employer’s name registered with the state, address and telephone number;
• The date of payment and the beginning and ending dates of the pay period;
• The number of hours worked during the pay period (unless the employee is exempt from overtime requirements under federal and state law);
• The pay rate;
• The gross and net pay earning during the pay period;
• The amount and name of all deductions;
• A list of additional bases of pay, including bonuses, sales commissions, or other bases; and
• For piece-rate employees, the applicable piece rates of pay and number of pieces completed at each piece rate.

The Maryland Department of Labor will create a pay stub template, available at no charge, which may be used by employers to comply with the new requirements.

If an employer fails to comply with the law’s requirements, the commissioner can direct the employer to provide the required information and can impose an administrative penalty of up to $500 per employee who did not receive the required notice. Employers can appeal an order issued by the commissioner by requesting an administrative hearing within 15 days after receiving the order. If an employer fails to comply with the order within 30 days after it is issued, the commissioner can sue the employer for enforcement.

Non-Compete Provisions for Veterinary and Health Care Professionals

Effective January 1, 2024, Maryland law banned non-compete agreements for certain veterinary and health care employees in the state who make less annualized compensation than 150% of the current minimum wage. We discussed the recent legislation expanding Maryland’s ban on non-competes in our April 2024 ASAP. The new legislation takes effect on June 1, 2024.

Recommendations

Employers should carefully review Maryland’s FAMLI program regulations, once released, with experienced employment counsel before applying for a private employer plan to satisfy the program’s requirements. Employers should review their hiring and pay practices in light of the new requirements to provide wage ranges for positions and to provide additional information on pay stubs. Maryland employers with veterinary and healthcare employees should review employment agreements with counsel to ensure compliance with the new law.

Footnotes

^​1 The law also specifies that if a public or internal posting for a position was not made available to an applicant, employers must disclose the required information (wage or salary range) before discussing compensation with the applicant and at any other time upon request by an applicant.