New Employment Laws in Maryland – Paid Family and Medical Leave, Expanded Definition of Harassment, Disability Accommodations and More (and a Webinar!)
The Maryland General Assembly’s 2022 session ended at midnight on Monday, April 11. There were a number of bills passed of significance to employers, including the creation of a paid family leave program, an expanded definition of illegal harassment, an extension of the statute of limitations for employment discrimination and harassment claims, reasonable accommodations for applicants with disabilities, the possibility of recreational marijuana, revisions to Maryland’s Personal Information Protection law, and Juneteenth as a new State holiday. For more details about each of these bills and information about our upcoming webinar on April 28, 2022 to provide guidance on compliance, click here.
The paid family and medical leave bill was vetoed by Governor Hogan, but his veto was overridden by the General Assembly. As to the remaining bills, the Governor could sign them into law, veto them, or allow them to become law without his signature. Assuming that they become law, most of these bills will take effect on October 1, 2021. The paid family and medical leave bill, the marijuana bills, and Juneteenth (which has already been signed by the Governor) have other effective dates, as noted below.
1. Time to Care Act of 2022 – Family and Medical Leave Insurance Program (SB275)
Overview. This bill applies to all employers with employees in Maryland. It provides eligible employees with 12 weeks of paid family and medical leave, with the possibility of an additional 12 weeks of paid parental leave (for a possible total of 24 weeks of paid leave). This $1.6 billion program will be administered by the State and funded by contributions from employers and employees, the amount of which will be determined by the Secretary of Labor. Contributions begin October 1, 2023, and benefits will be paid starting January 1, 2025. The Maryland Department of Labor will issue regulations to implement the provisions of the law. Note, however, that there is the possibility of a constitutional challenge to this bill.
Who Is Eligible for the Paid Leave Benefit? Employees who have worked 680 hours in the 12 months prior to the date leave is to begin. The law does not state that the 680 hours must be worked for the current employer, which suggests that many employees may be eligible for the benefit starting on their first day of work. Self-employed individuals may opt into the program.
Which Employers Are Covered by the Program? All employers with Maryland employees are covered, including state/governmental entities. However, those with 15 or fewer employees are not required to make contributions to the fund, although their employees are required to pay their portion of the contribution and are entitled to take leave under the program.
What Is The Required Contribution from Employers and Employees? By June 1, 2023, the Secretary of Labor is to determine the overall contribution rate, which will be a percentage of employees’ Social Security wage base. The Secretary will also determine how that contribution will be split between employers and employees. The split will range between 25% and 75% for each. Then every two years afterwards, the Secretary will study and recommend any changes to the overall contribution rate and the employer-employee split.
As noted above, those employers with 15 or fewer employees are not required to contribute. In addition, there is a special provision for employers that are community-based agencies or programs funded by the Behavioral Health Administration, the Developmental Disabilities Administration, or the Medical Care Programs Administration to serve individuals with mental disorders, substance-related disorders, or developmental disabilities. The State will pay the employer’s contribution.
The State will also pay the employee’s portion of the contribution for those making less than $15.00 per hour, through June 30, 2026.
What Are the Reasons Employees May Receive Paid Leave Benefits? The reasons generally mimic the reasons for the federal Family and Medical Leave Act, with some expansions:
- To care for a child during the first year following birth, adoption, foster placement, or kinship care (this last is not covered by FMLA).
- To care for a family member with a serious health condition (as discussed below, the definition of family member is greatly expanded from the FMLA).
- For the employee’s own serious health condition.
- To care for a service member who is the employee’s next of kin.
- Due to a qualifying exigency arising out of a family member’s military deployment.
Who Is a “Family Member” for Purposes of the Program? The bill defines family member to include biological, adopted, foster and step relationships for the following:
- A child, as well as one for whom the employee has legal or physical custody or guardianship, or for whom the employee stands “in loco parentis” (meaning they act as a parent). It also includes the ward of the employee or the employee’s spouse. Note that, unlike FMLA, the child does not have to be under the age of 18.
- A parent, as well as the legal guardian of the employee or the employee’s spouse, or who acted “in loco parentis” to the employee or the employee’s spouse when they were a minor. Note that the FMLA does not cover the parents/guardians/in loco parentis individuals of the employee’s spouse.
- A spouse.
The bill also identifies the following as family members, which is beyond what is covered by the FMLA:
- A grandparent.
- A grandchild.
- A sibling.
How Much Leave May Employees Take? Employees may take up to 12 weeks per 12-month period for a covered reason. If the reason is the employee’s own serious health condition, they may receive an additional 12 weeks for birth/adoption/foster placement/kinship care reasons, for a total of 24 weeks.
What Benefits Will Employees Get? There is a formula for calculating pay benefits, subject to a minimum weekly amount of $50 and maximum of $1,000 (the latter of which will be subject to increases tied to the Consumer Price Index).
- If the employee’s average weekly wage is 65% or less of the State average weekly wage, they receive 90% of their wage.
- If the employee’s average weekly wage is greater than 65% of the State rate, they receive 90% of their wage up to 65% of the State rate, then 50% of anything in excess of that.
- If employees are taking partially paid leave, they may still get a benefit from the program.
In addition, employers must maintain health benefits for employees on leave in the same manner as is required under the FMLA. (Generally speaking, the FMLA requires continuation of group health insurance coverage during the period of leave, as long as the employee continues to pay their portion of the premium.)
How Does an Employee Certify a Claim for Benefits? The employee will be required to submit a certification that includes:
- The date on which the serious health condition commenced.
- The probable duration of the condition.
- Appropriate facts related to the serious health condition known by the health care provider.
- If the claim involves the care of a family member, an estimate of the amount of time required.
- If the claim involves the employee’s own serious health condition, a statement that they are unable to perform their job functions.
- If the claim involves intermittent leave, the expected duration of such leave.
Employees may appeal a denial of benefits, and seek judicial review after exhausting any administrative appeals.
What Notice Are Employees Entitled To? Employers must provide notice of employees’ rights under this bill at the time of hire and then annually. They must also provide notice within 5 business days when an employee requests paid family and medical leave or when the employer knows that their leave is for a covered reason under the program. There are specific requirements that must be contained in the notice, and the Department of Labor will develop standard notices that can be used by employers.
What Notice and Information Are Employers Entitled to? The program will notify employers that a claim has been filed within 5 business days, and within 10 business days whether the claim has been approved or denied.
In addition, if the need for leave is foreseeable, the employer can require the employee to provide at least 30 days’ written notice. If the need is unforeseeable, the employee must provide notice as soon as practicable and, like FMLA, generally comply with an employer’s notice requirements for other leave, as long as those requirements do not interfere with the employee’s ability to use paid family and medical leave.
Notably, as relevant to employers, the bill provides that the program will not disclose any information relating to a claimant/employee except to an authorized representative with a signed authorization from the employee. Thus, it appears that an employer will not be able to obtain any information from the program regarding an employee’s leave as a matter of right. As a practical matter, employers may need to obtain verification of the need for leave directly from the employee, whether through their FMLA or Americans with Disabilities Act process or otherwise.
What If the Employer Thinks the Employee Is Lying? The Secretary is directed to establish procedures for employers to report suspected fraud. Employees who are found to have willfully made false statements or failed to disclose material facts will be disqualified from receiving benefits for a year. Although the bill does not address it, employers should be able to apply their normal disciplinary process to such employees as well.
What About Intermittent Leave? If intermittent leave is required, the employee must make a reasonable effort to schedule the leave so as to not unduly disrupt the employer’s operations. The employee must also provide reasonable and practicable prior notice of the reason for the need for intermittent leave. The employee must take intermittent leave in increments of at least four hours (note that the FMLA only permits 1-hour increments).
What Is the Employee’s Right to Reinstatement? The leave under this bill is job-protected, meaning that the employee generally must be reinstated to their position at the end of the leave. The two exceptions are: (1) if the employee is terminated for cause, or (2) if restoring the employee to their position would result in “substantial and grievous economic injury to the operations of the employer.” This second exception sets an undoubtedly high standard, but would likely apply in the situation of a reduction in force, for example. The employer would have to notify the employee of the denial of restoration at the time the determination of economic injury is made.
Can Employees Waive Their Rights Under This Program? The bill prohibits any waiver of employees’ rights to benefits under this bill, by collective bargaining or otherwise.
What If There’s a Collective Bargaining Agreement? If the CBA provides for more leave than this bill, the employer must comply with the CBA.
What About Existing Employer Policies? Leave under this bill will run concurrently with FMLA leave, if applicable. If an employer policy provides for more leave than this bill, the policy applies. Employees must exhaust any employer-provided leave that is not required to be provided before receiving benefits under this program. The proponents of the bill take the position that this means the 12/24 week benefit does not start until after employer-provided leave has been exhausted. The bill also provides that employer-provided leave shall be treated the same as paid family and medical leave – meaning that it is subject to the same protections regarding things such as insurance coverage and job reinstatement.
An Impossible Exemption? The bill contains an exemption for employers with a “private employer plan” consisting of benefits and/or insurance that is available to all eligible employees and that meets or exceeds all of the rights, protections and benefits under this program. The plan must be filed with and approved by the State.
We note that it is extremely unlikely that any employer provides up to 24 weeks of paid leave for all of the reasons identified in the bill – particularly with the expanded definition of family members for whom employees may provide care.
What If the Employer Violates the Requirements? Employers are prohibited from discharging, demoting, discriminating against, or taking adverse action against an employee who has filed for or received benefits or leave under this bill, asked about rights and responsibilities under this bill, stated that they intend to file a claim/complaint/appeal, or testified/assisted in a proceeding.
An employee can file a complaint and, within 90 days, the Secretary will conduct an investigation and attempt to resolve the issue through mediation. If there has been a violation and mediation is unsuccessful, the Secretary may issue an order directing the recovery of economic damages and seeking reinstatement (if applicable). The Secretary may also impose a civil penalty of up to $1000 for each employee for whom the employer is not in compliance. If the employer fails to comply with the order within 30 days, the Secretary or the employee may bring suit. A court may award treble damages, punitive damages, attorneys’ fees and costs, injunctive relief and any other relief it deems appropriate.
If an employer willfully makes a false statement or fails to report a material fact in connection with an employee’s claim for benefits, a civil penalty of up to $1000 per occurrence may be imposed.
If an employer fails to pay the contributions, the Secretary may assess the amount of the contributions owed, plus a penalty in the amount of two times the missing contributions. The Secretary can also order an audit.
What Are the Required Reports and Studies? On or before December 1, 2022, the Secretary must conduct a cost analysis of the program that is focused on the cost of maintaining solvency and paying benefits. They must also conduct a study and make recommendations regarding the appropriate total rate of contribution and the employer-employee split. The result of the cost analysis and study must be reported to certain General Assembly committees.
Putting the cart before the horse, the Department of Legislative Services will conduct a study and make recommendations regarding the capability and capacity of the Department of Labor to implement and administer this program. The study results must be reported to the Governor and General Assembly on or before October 1, 2022.
The Secretary must also submit an annual report to the Governor and General Assembly that includes the participation rates, contribution rates, fund balance, enforcement efforts, complaints of violations, costs of administration, and the Department of Labor’s “capability and capacity to administer the Program” as compared with the study.
When Does This Law Take Effect? Although the contributions do not begin until October 1, 2023 and the benefits do not begin until January 1, 2025, provisions regarding the required actions by the Secretary of Labor as to studies, cost analysis, setting rates, and reporting take effect as of June 1, 2022.
But Wait? There is some question as to the constitutionality of this bill. The State constitution gives the General Assembly the power of taxation, which it arguably may have improperly delegated to the Secretary of Labor, as the Secretary has been directed to determine the contribution rate. We understand that a senator has asked the State Attorney General for an opinion on this issue, and will keep you posted.
2. Expanded Definition of “Harassment” and “Sexual Harassment” (SB450)
This bill drastically expands the definition of “harassment” under State anti-discrimination law. Until now, State law was consistent with federal law in requiring conduct to be “severe or pervasive,” among other things, in order to constitute unlawful harassment. This bill specifically removes that requirement in the following three situations involving “unwelcome and offensive conduct”:
- Submission to the conduct is made a term or condition of an individual’s employment, whether explicitly or implicitly.
- Submission to or rejection of the conduct is used as the basis for employment decisions about the individual.
- Based on the totality of the circumstances, the conduct unreasonably creates a working environment that a reasonable person would perceive to be abusive or hostile.
The bill also adds a new definition of “sexual harassment” as conduct “that consists of unwelcome sexual advances, requests for sexual favors, or other conduct of a sexual nature.” Again, such conduct need not be severe or pervasive under the same three situations set forth above.
Unfortunately for Maryland employers, this significantly lowers the well-established standard for illegal harassment. Maryland employers can expect to see more employees bringing harassment claims before the Maryland Commission on Civil Rights and in state court – and likely winning those claims.
This bill takes effect on October 1, 2022.
3. Tolling of the Statute of Limitations for Employment Discrimination and Harassment Claims (SB451)
This bill contains another expansion of the State anti-discrimination law. Under current law, employees must file a charge of discrimination with the Maryland Commission on Civil Rights or the federal Equal Employment Opportunity Commission before they can file suit in court (typically, a charge filed with one agency is considered co-filed with the other). In addition, employees must file suit in State court within 2 years of the alleged discriminatory action and within 3 years of the alleged harassment. The bill tolls (e.g. puts on hold) that suit-filing period while an administrative charge is pending.
Unfortunately, the MCCR and EEOC are not always prompt in conducting their investigations. Some companies have had charges pending before an agency for years. A delay – particularly a significant one – can have a serious impact on an employer’s ability to defend against a claim. The passage of time can result in faulty memories, lost documents, and unavailable witnesses.
This bill takes effect on October 1, 2022.
4. Reasonable Accommodations for Applicants with Disabilities (HB78)
Under the State’s existing anti-discrimination law, employers were required to reasonably accommodate an employee’s disability, and this bill expands that obligation to applicants. Notably, the obligation to provide reasonable accommodations to applicants in the context of the application process already exists under the federal Americans with Disabilities Act. Under both State and federal law, employers need not provide an accommodation that poses an undue hardship.
This law will take effect on October 1, 2022.
5. Recreational Cannabis/Marijuana (HB1 and HB837)
HB1 provides for a voter referendum on a proposed constitutional amendment to legalize recreational cannabis or marijuana for those over the age of 21. At this time, while the use of medical cannabis is legal in Maryland, there is no law that protects medical cannabis users in the workplace, and whether off-duty use must be permitted as a reasonable accommodation under the Americans with Disabilities Act and state anti-discrimination law has not yet been litigated. If recreational use is legalized, this would undoubtedly have a significant workplace impact, and we can expect to see legislation in the future that addresses this issue.
HB837 is a general cannabis reform bill that touches on many different areas. With specific regard to the workplace, one provision would become effective if HB1 is approved by the voters. This provision amends the Clean Indoor Air Act, which prohibits smoking of tobacco products in various locations specifically including “an indoor place of employment” and protects employees who make complaints to or participate in proceedings before the State. Cannabis and hemp products would be added to tobacco.
If HB1 passes this November, this provision would take effect January 1, 2023.
6. Revisions to Maryland Personal Information Protection Law (HB962/SB643)
Genetic information has been added to the list of personal information subject to already existing law requiring certain security procedures and practices, protecting the disposal of employee personal information and providing for notification of the breach of electronically-maintained personal information. There were also other revisions to the law to clarify that it applies to entities that maintain personal information, in addition to owning or licensing such information. It also revises some of the applicable timelines for actions following a breach.
This law will take effect on October 1, 2022.
7. New State Holiday – Juneteenth (HB227)
Juneteenth National Independence Day, which celebrates the notification to the last slaves of the Emancipation Proclamation, has been added to the list of State legal holidays. It is observed on June 19. While State employees will generally be entitled to the day off, private employers may choose whether to recognize it or not.
This law will take effect on June 1, 2022.
8. Webinar: Complying with Maryland’s New Employment Laws
We will be holding a complimentary webinar on Thursday, April 28, 2022 at noon Eastern to explain further the obligations and requirements of these new laws, and to provide guidance on compliance. You may register for the webinar here.