Family Leave – What’s in the Proposed Regulations?

The Maryland Department of Labor has published the proposed regulations for Maryland’s paid leave system. Comments are due by November 18, 2024.

Recently, the Maryland Department of Labor published the proposed regulations for Maryland’s Family and Medical Leave Insurance (FAMLI) system. During the 2022 legislative session, the General Assembly established FAMLI, known as “The Time to Care Act of 2022.” That law provides up to 12 weeks of paid leave and benefits to an employee in Maryland who takes leave from employment for certain eligible medical and family care reasons. Regulations set the rules for the program.

The FAMLI Division of the Maryland Department of Labor proposes to adopt new regulations by creating four new chapters under Subtitle 42 in Maryland law:

09.42.01 General Provisions

09.42.02 Contributions

09.42.03 Equivalent Private Insurance Plans (EPIP)

09.42.04 Claims

General Provisions

The General Provisions chapter defines terms for use, establishes the Division, and outlines required templates and forms. Relevant terms defined:

(9) “Commercially insured EPIP” means an EPIP in which the employer purchases an insurance policy from an insurance company approved to sell paid FAMLI products by the Administration and the benefits related to the plan are administered through the insurance policy.

(20) Employer.
(a) “Employer” means a person or governmental entity that employs at least one individual who performs qualified employment.

(22) “Equivalent-private insurance plan (EPIP)” means a Division approved commercially insured or self-insured insurance plan provided by an employer to employees that meets or exceeds the State plan, whether it is administered by the employer, a third-party administrator, or a carrier.

The FAMLI Division may mandate the use of approved templates and forms (e.g., claim applications, certification forms, proof of relationship) by Equivalent Private Insurance Plans (EPIPs), employers, and claimants. The Division must make all mandated templates and forms available for download from its website.

Contributions

The Contributions chapter outlines contribution requirements, due dates, and related filings of employers and employees. An online account must be created and maintained to report wage information, remit contributions, and communicate with the Division.

Employers must remit 100% of required contributions each quarter but may withhold up to 50% from employee wages. Employers can choose to cover employees’ contributions but must notify employees in advance. Contributions begin after notice, and employers must inform employees of any changes. Employers failing to deduct contributions are responsible for paying the employee’s share and cannot recoup it retroactively. Key provisions on contribution delinquencies:

A. If an employer fails to pay the required contributions in the prescribed manner, the employer shall be given 30 days to cure any deficiencies and may be required to pay interest, in the amount of 1.5 percent per month or part of a month from the date on which it is due to the Division, on unpaid contributions.

B. If deficiencies are not cured, penalties, under Labor and Employment Article, §8.3-903, Annotated Code of Maryland, may be imposed as follows:

(1) Assess the amount of contributions and interest, in the amount of 1.5 percent per month or part of a month from the date on which it is due to the Division, due;
(2) Make an additional assessment in an amount not to exceed two times the contributions withheld, as a penalty for failure to pay the contributions due; and
(3) Order an audit of the employer for the immediately following fiscal year to investigate and determine compliance with Labor and Employment Article, §8.3-101, et seq., Annotated Code of Maryland.

Employers may request reimbursement of overpayments, with employee refunds required within 90 days. Unclaimed contributions must be remitted to the State.

Equivalent Private Insurance Plans (EPIP)

The Equivalent Private Insurance Plans chapter outlines the requirements and procedures for employers who elect private commercial and self-insured insurance plans (EPIP) that provide benefits equal to or better than the State’s FAMLI program. Key points:

  • Employers must participate in the State plan until their private plan (EPIP) is approved. Private plans must cover all eligible employees and offer benefits and protections equivalent to or better than the State plan without imposing additional restrictions.
  • The benefit calculation, leave duration, and increments for taking leave under a private plan must align with or exceed those under the State plan. Employee contributions to an EPIP cannot exceed the contributions they would make under the State plan.
  • Employers can opt for commercially insured or self-insured private plans (EPIPs). Application fees vary based on the number of employees, and self-insured plans require proof of solvency through a surety bond.
  • EPIPs must comply with all accessibility, confidentiality, and anti-retaliation regulations, as well as provide procedures for claims processing, appeals, and reconsiderations as outlined in other COMAR sections.
  • Employers must renew EPIP applications annually and are subject to regular audits and financial reviews to ensure compliance with the program’s solvency and contribution rules.

Employer Equivalent Private Insurance Plans EPIP Application Process:

A. To obtain approval of an EPIP, an employer shall first submit a completed EPIP application to the Division.
B. The Division shall mandate the EPIP application form.
C. An EPIP application may be submitted at any time.
D. EPIP Application Review Process.

(1) The Division will review complete EPIP applications as they are received.
(2) Employers will be notified of deficiencies in EPIP applications.
(3) Deficiencies must be cured within 90 days of the date of the notification.
(4) If deficiencies are not cured within 90 days, the EPIP application will be denied.

E. EPIP Application Fees.

(1) For a commercially insured EPIP the application fees shall be as follows:

(a) $100 for an employer with 1—14 employees performing qualified employment at the time the EPIP application is submitted.
(b) $250 for an employer with 15—49 employees performing qualified employment at the time the EPIP application is submitted.
(c) $500 for an employer with 50—199 employees performing qualified employment at the time the EPIP application is submitted.
(d) $600 for an employer with 200—499 employees performing qualified employment at the time the EPIP application is submitted.
(e) $750 for an employer with 500—999 employees performing qualified employment at the time the EPIP application is submitted.
(f) $1,000 for an employer with 1000 or more employees performing qualified employment at the time the EPIP application is submitted.

Claims

The Claims chapter addresses the claims process for FAMLI benefits. The proposed regulations aim to outline procedures for submitting, reviewing, and deciding claims under both the State and private insurance plans.

Employers must respond to claims within five days, after which an incomplete claim may become complete by default. Applications can also be updated or canceled by the claimant, and any changes in leave details must be reported promptly.

For employed claimants, the average weekly wage is determined by dividing wages from the highest of the last four completed quarters by 13.

B. Continuous FAMLI Leave Benefit Calculation.

(1) If the claimant’s average weekly wage is 65 percent or less of the State average weekly wage, benefits will be 90 percent of the claimant’s average weekly wage; or, if the claimant’s average weekly wage is greater than 65 percent of the State average weekly wage, benefits will be the sum of:

(a) 90 percent of the claimant’s average weekly wage up to 65 percent of the State average weekly wage; and
(b) 50 percent of the claimant’s average weekly wage that is greater than 65 percent of the State average weekly wage up to the maximum weekly benefit amount. 

Employers have certain notice requirements. One in particular that needs clarification is the requirement for an employer to provide notice to an employee “when the employer knows that an employee’s leave or leave request may be eligible for FAMLI.” “Knows” is not defined in the regulations and may expose employers to litigation based on its vagueness.

The formal comment period is open until November 18, 2024. Please send any comments to Karrington Anderson at kanderson@mdcounties.org.

Read the complete Proposed Regulations.

Stay tuned to Conduit Street for more information.