Maryland’s FAMLI paid leave program is taking shape

Maryland employers must begin preparing now for one of the most significant changes to the state’s workplace law in recent years. Maryland, joining a host of other states, will provide a paid leave program to its eligible employees.

Beginning in 2027, both employers and employees will be required to make contributions to Maryland’s new Family and Medical Leave Insurance program, known as “FAMLI.” The statute is here, the regulations are here, and “Frequently Asked Questions” are here.

Then, beginning January 1, 2028, eligible employees will be able to take paid leave for certain family and medical reasons, receiving wage replacement benefits while away from work.

Unlike the federal Family and Medical Leave Act, Maryland’s FAMLI program provides a statewide paid leave benefit. Eligible employees may receive up to 12 weeks of paid leave and benefits of up to $1,000 per week.

All employers must register before January 1, 2027, through the Department of FAMLI portal. After registering, employers should use the remainder of 2026 to prepare for compliance. This includes ensuring that payroll systems can accommodate required contributions, learning the law's requirements, and reviewing leave and payroll policies. Employers may also want to evaluate whether other funding options are appropriate for their business, as discussed below.

Coverage

If an employer has at least one employee working in Maryland, FAMLI probably applies.

Employees become eligible for benefits after working at least 680 hours -- whether full time, part time, or seasonally -- within the state of Maryland during the four quarters immediately preceding the start of leave. Those hours do not have to be for a single employer.

Coverage depends primarily on where the work is performed, not where the employee resides. If the employee is reported under Maryland Unemployment Insurance and the employer contributes to Maryland’s Unemployment Fund, FAMLI probably applies. If unemployment contributions are made to a different state, then FAMLI will probably not apply.

Qualifying reasons for leave

Eligible employees may use FAMLI leave immediately when they experience a qualifying event. There is no additional waiting period associated with the eligibility requirements. Leave may also be taken intermittently in increments of at least four hours.

Eligible employees can take FAMLI for their own serious medical condition, to bond with a new child, when there is a military qualifying exigency, and to care for a family member with a serious medical condition. This is similar to the FMLA, but FAMLI's definition of "family member" is broader than the FMLA definition. Covered family members under FAMLI include the employee’s spouse, child, parents (including in-laws), siblings or step-siblings, grandparents (including in-laws), grandchildren, and domestic partners.

This means that employers may receive valid FAMLI requests that would not qualify under the FMLA. Employees will generally be required to provide documentation supporting their need for leave. 

Notice requirements

Beginning July 1, 2027, employers must notify employees of the availability of FAMLI benefits. But the obligation does not stop there. Employers must also provide notice

• At the time of hire.
• On an annual basis.
• Before material changes to a FAMLI plan (such as a change in funding) take effect.
• When the employer becomes aware that an employee’s leave may qualify for FAMLI protection.

Employees seeking FAMLI leave must provide notice to the employer and, when possible, share some information about why leave is needed, when it will begin, and how long it is expected to last. For intermittent leave, employees are required to make reasonable efforts to schedule their leave in a way that avoids significant disruption or expense to the employer.

If the need for leave is known ahead of time, employees generally must provide at least 30 days' notice before the leave begins. If the need for leave arises unexpectedly, employees must notify their employer as soon as practicable. These notice requirements can help employers plan for staffing needs while ensuring employees can access the benefits available under the FAMLI program.

Employer, employee costs

Many employers are already asking the same question: How much will this cost?

Under the State Plan, contributions will equal 0.90 percent of covered payroll up to the Social Security wage cap. The cost is generally split equally between employers and employees. In other words, the employer and the employee will generally contribute 0.45 percent.

For employers with fewer than 15 employees, the employer share is waived, although employee contributions still must be collected.

Even though benefits will not be available until 2028, funding obligations begin on January 1, 2027. Thus, employers should spend the coming months preparing their policies, procedures, and practices to position themselves for full compliance with their new requirements in the coming year.

State Plan, private plan, or self-insurance

Depending on the size of an employer’s workforce and existing leave benefits, private plan or self-insured options are available in addition to the State Plan, and may offer greater flexibility.

One significant difference is timing. Employers who remain in the State Plan will begin making contributions on January 1, 2027. By contrast, employers pursuing approved private plans are not required to pre-fund the state program while their private plans are being established.

Employers should carefully evaluate the advantages and disadvantages of each option and consult with employment counsel before making a decision.

“Declaration of Intent” requirement for private or self-insured plans

Employers will automatically be enrolled in the State Plan unless they take affirmative steps to pursue a private or self-insured alternative.

Employers who wish to pursue an Equivalent Private Insurance Plan or self-funded option must submit a Declaration of Intent by November 15, 2026.

Once a DOI is approved, starting on January 1, 2027, the employer must begin setting aside, or "escrowing," the contribution amounts that otherwise would have been paid into the State Plan. This escrow requirement continues until the employer's private plan application is approved, which is currently projected to occur in the summer of 2027.

If the private plan is approved, but an employer ultimately opts for the State Plan, employment counsel should be consulted to ensure full compliance with any requirements.

Failure to properly escrow the required funds can result in revocation of the DOI, automatic placement into the State Plan, and liability for any missed contributions.

Employers may either (1) escrow the full contribution amount on behalf of employees or (2) collect the employee portion and escrow both shares separately. Employers may find it simpler to escrow the full amount during the approval process rather than risk having to reimburse employee contributions to workers who later leave the company.

To-do for employers

Employers with employees in Maryland should consider taking the following steps to be ready for the FAMLI program:

• Coordinate with payroll providers regarding contribution requirements.
• Review and update employee handbook and leave policies.
• Evaluate whether a private plan or self-funded option may be advantageous.
• Develop procedures for handling FAMLI notices and leave requests.
• Train HR professionals and managers before payroll contributions begin.