Hello, I am Sarah Hipp and welcome to our mini session on Paid Family and Medical Leave. This is one in our series of state overviews, and today we will be focusing on Maryland.

If you are familiar with the state mandated paid leave landscape, then you know this is a rapidly growing space. Paid family and medical leave programs allow employees to take time off from work to tend to certain life circumstances. In many of the states, as is the case with Maryland, this leave time is job protected.

Maryland is one of a rising number of states that has passed paid leave legislation. Many states do collect contributions in advance of benefits in order to build up a fund to be able to pay claims. Maryland is doing one year of the pre-funding, so contributions begin on July 1, 2025, and then workers will be able to begin receiving benefits on July 1, 2026.

The paid family and medical leave program will apply to all employees and employees in the state of Maryland, even if the business only employs one employee in the state. This means that even if an employer is located in a different state, if they employ even just one person who works in the state of Maryland, then they are subject to the PFML law. The exemption would be Federal government employees, which are exempted from the law. Owners and sole proprietors are also not required to participate.

Now that we’ve established the basis for covered employers and employees, there is another element when it comes to the eligibility for benefits when filing a claim. Maryland looks at an hours worked threshold, which is set at 680 over the past 4 calendar quarters prior to the employee’s leave. I often get asked about part-time or seasonal employees and how PFML applies to those workers, and with this lower hours worked threshold many workers could be eligible for the paid leave benefits, even if they are not full-time.

Earlier I mentioned that paid family and medical leave programs allow employees to take time off from work during certain life circumstances, so let’s take a look at what those reasons may be.

For the most part, employees can receive up to 12 weeks of paid leave if they experience a qualifying event. These 12 weeks would be limited to the employee’s application year, which begins the Sunday prior to their first week of leave.

There is one unique scenario in which an employee may receive additional time, and that is if the employee has a leave for their own serious health condition as well as a leave for child bonding in the same benefit year. In this scenario, the employee can receive 12 weeks for each event, but not more than 24 weeks total.

So now let’s look at all the different qualifying events under Maryland’s program.

• First, we have the employee’s own serious health condition. To qualify for medical leave, the employee must provide a medical certification completed by a treating physician.
• In addition to medical leave, Maryland allows employees to take family leave for 3 different types of situations.
• First, there is bonding leave that is available to new parents. Bonding leave would be available to both birth and non-birth parents, as well as parents who are welcoming a new child through adoption of foster care placement. With bonding leave, all time must be taken within the first 12 months following birth or placement.
• Next, we have care for a family member. This type of leave follows the same requirements as medical leave, but it is for the employee’s covered family member rather than the employee themselves.
• The 3rd type of family leave is for a qualifying military exigency. These would be situations in which the employee has a family member that is called to active duty and the employee needs leave to take care of things like:
• addressing needs that arise for short notice deployment
• attending military events, like programs or ceremonies
• certain childcare activities like appointments or arranging transportation – but not necessarily daily, routine childcare
•  making legal arrangements or attending counseling
• and finally, the employee could take up to 15 calendar days of leave to spend with the military member during a temporary rest and recuperation leave

In regard to the family care leave I mentioned, the Maryland law has a broader definition of family member than what we see under the federal unpaid FMLA. We see many variations of covered relationships in PFML states, and Maryland includes the employee’s spouse, child and parent, parent-in-law, grandparent, grandchild, and sibling. For the child and parent relationships, this includes any in loco parentis affiliation, similar to FMLA.

Now we will get into the financials piece of PFML. The Maryland Paid Family & Medical leave program will be funded through contributions that will be calculated and remitted by employers on a quarterly basis. This would work very similarly to what most employers are already doing for unemployment.

Maryland has set the initial rate at 0.9% of the employee’s covered wages. This rate is split 50/50 between employers and employees, with each party responsible for 0.45%; however, employers can cover the employee portion of contributions if they choose to do so.

Premiums will also be capped at the social security wage limit, so once an employee has paid into the program on earnings up to that amount, there are no longer contributions due for that calendar year. This applies to both the employee and employer portion.

Maryland does allow for a lower contribution for smaller employers, which would be those groups that are under 15 total employees. This count would include the employer’s total workforce, not just employees in the state of Maryland. For these small employees, only half the rate would be due and employers can charge that full 0.45% to the employee.

Here on the slide we have a few examples of what this might look like for an employer. For easy math, let’s say the employer has 1 million dollars in payroll. If the employer has 15 or more employees, with a 0.9% contribution rate the Maryland PFML premiums would amount to $9,000. That could then be split evenly between the employer and employee. If the employer has fewer than 15 employees, then it would only be the employee’s portion of the contributions due at $4,500.

Maryland, like many states, is using a tiered benefit calculation. There is a maximum benefit of $1,000 so higher earners would be capped at that amount, and there is also a minimum of $50. The first tier providing 90% wage replacement for earnings up to 65% of the state average weekly wage. So, if employees earn less than that threshold, they will see a full 90% replacement for their wages. As we get into higher earners whose weekly income is greater than that 65% of the state average weekly wage, the remaining wages are replaced at a 50% rate.

There are so many different percentages referenced in the calculation that we wanted to break down the math to see what a real employee example might look like. Here we have Frank with an annual salary of $75,000. Using the current state average weekly wage, which will change each year, 65% would be $946.40. This is what sets the benefit tiers. Frank will receive 90% replacement for the first $946.40 of her wages. Since his regular earnings of $1,442.31 is above the state average weekly wage, any additional earnings above the $946.40 amount will be replaced at a 50% rate. Combining the two tiers, Frank’s benefit amount will be the maximum of $1,000.

When new state PFML programs are implemented, there are several considerations for employers to keep in mind.

• In Maryland, employers can opt out of participating in the state program for administration if they decide to offer a private plan option. This can be either self-administered or by purchasing a plan through an approved insurance carrier. As employers prepare for Maryland PFML, they should make the decision as to which plan option is best for their workforce.
• Many employers already offer benefit packages that could be used in coordination with the Maryland PFML benefits. Examples might be an existing short-term disability or parental leave policy. It is important to understand how these benefits will be impacted and integrate with the Maryland PFML program in cases where employees are eligible for multiple types of benefits. Keep in mind, short-term disability policies are not a replacement for a state PFML program. In many cases the state benefits are also primary, so there would be an element of offsetting on other types of benefits.
• Finally, with employers who have workers in multiple states, changing PFML laws and compliance can be a lot to manage. Employers who do have Maryland workers need to identify those individuals and start planning communication strategies to keep their workers informed of the Maryland PFML program and potential impacts. These employers should also stay up to date with the rule making process prior to 2026. I personally sign up for the state newsletters and regularly visit the Maryland PFML website as these are great resources for information and updates.

Thank you all for taking the time to join me today to discuss Maryland paid family and medical leave. We hope this session was helpful and Mutual of Omaha will continue to monitor the Maryland program as additional information is released.