9.22.22 – Gordon Feinblatt LLC
Maryland has joined 10 other states and the District of Columbia in passing a paid family leave law.
Under the new Time to Care Act of 2022 (TCA), eligible employees may apply to a state-administered fund that will be used to provide up to 12 weeks of paid family and medical leave, with the possibility of another 12 weeks for parental leave. The benefits will be funded by employee and employer contributions at a rate to be set by the Maryland Department of Labor.
The TCA was initially vetoed by Governor Hogan but was later enacted by a veto override in the Maryland General Assembly.
While the TCA resembles the federal Family and Medical Leave Act (FMLA), there are also important differences. Most significantly, FMLA leave is unpaid, and the FMLA applies only to employers with 50 or more employees.
Regulations implementing the TCA are to be issued by the Maryland Department of Labor by June 1, 2023. Employer and employee contributions to the fund are set to begin on October 1, 2023, and employees may apply for benefits under the TCA starting on January 1, 2025.
During the interim, employers should begin planning for the costs of the program and deciding whether to modify existing paid leave policies and collective bargaining agreements.
Coverage
Which Employers are Covered by the Act? The TCA applies to all Maryland employers, however, only employers of 15 or more employees will have to make contributions to the fund.
An individual who is the sole owner of a sole proprietorship, limited liability company, or C or S corporation and who is the only individual employed by the entity is not a covered employer. (Self-employed individuals may, however, elect to participate in the program).
Which Employees Are Eligible for Benefits? All Maryland employees may be eligible to receive benefits, regardless of the size of their employer. Employees who have worked for at least 680 hours over the 12-month period immediately preceding the date on which leave is to begin are eligible to receive benefits.
Notably, the law does not specify whether the 680 hours must be hours worked for the employee’s current employer. Hopefully, regulations will clarify that issue.
Can Employers “Opt-Out”? An employer may satisfy the TCA by establishing a private plan that provides benefits to all eligible employees and meets or exceeds the rights, protections and benefits required by the TCA. The plan must be filed with the State for approval.
Employers and employees covered by an approved private plan are exempt from making the required contributions. It seems unlikely, however, that many employers will create a plan that provides up to 24 weeks of paid leave, even at the partial pay levels provided by the TCA, as described below.
Types of Leave
What are the Reasons an Employee Can Take Leave Under the TCA? There are five reasons an employee may take leave under the TCA:
- Because the employee has a serious health condition that prevents the employee from performing the functions of his or her job.
- To care for a child during the first year after the child’s birth or after the placement of a child through foster care, kinship care or adoption.
- To care for a family member with a serious health condition.
- To care for a service member who is the employee’s next of kin.
- Because the employee has a qualifying exigency arising out of the deployment of a service member who is a family member of the employee.
Who Qualifies as a “Family Member”? Federal FMLA limits covered family members to only spouses and biological, step and foster parents and children. The TCA more broadly defines “family member” additionally to include biological, step and foster grandparents, grandchildren and siblings.
What Type of Health Conditions Justify Taking TCA Leave? An eligible employee may take leave under the TCA for a “serious health condition,” which is defined as including an illness, injury, impairment or physical or mental condition that involves:
- Inpatient care in a hospital, hospice or residential health care facility;
- Continued treatment by licensed health care provider; or
- Continued treatment or supervision at home by a licensed health care provider or other competent individual under the supervision of a licensed health care provider.
How Much Leave May an Employee Take Under the TCA? Employees may take up to 12 weeks of TCA leave per year. An employee can receive an additional 12 weeks of leave per year (for a total of 24 weeks) if the employee takes leave for the care of a newborn, or placement for adoption or foster care, and for the employee’s own health condition during the same one year period.
Leave may be taken in continuous blocks or intermittently in increments of at least 4 hours.
How does TCA Leave Work in Relation to Employer-Provided Leave? Integrating TCA leave with existing employer-provided paid leave programs promises to be one of the most challenging aspects of the new law. The TCA requires employees to exhaust all employer-provided leave (other than leave required by law), before receiving benefits under the TCA. The availability and use of employer-provided leave will not reduce the amount of available TCA leave.
Benefits
How Much Pay Will Employees Receive? The TCA will initially provide for weekly wage replacement of at least $50 and up to $1,000. The maximum amount is subject to adjustment starting in 2026 to reflect growth in the consumer price index for the region. The payments will replace 90% of weekly wages for low wage earners (those whose average weekly wage is 65% or less than the state average weekly wage, and a decreasing percentage of wages for higher wage earners.
What happens if an application for TCA benefits is denied? The Secretary of Labor is required to establish a board of appeals to hear employee appeals from benefit denials. Once such administrative appeals are exhausted, an employee may challenge a denial of benefits in court.
Contributions
How Will the TCA Benefits be Funded? The TCA establishes a special fund to be held by the state treasurer. Employees, employers and self-employed individuals who elect to participate will contribute to the fund.
Are Any Employers Exempt from Contributing? As noted above, employers with fewer than 15 employees will not have to contribute.
In addition, the TCA states that “it is the intent of the General Assembly” that the State pay the required contributions for employers that are community providers 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 a combination of those disorders or developmental disabilities.
How much will Employees and Employers have to contribute to the TCA fund? The Secretary of Labor is required to set the initial contribution rates for employers and employees by June 1, 2023, and every two years thereafter. The total rate of contribution will apply to all wages up to and including the Social Security wage base.
Employee Rights
What Job Protections Does the TCA Provide Employees? The TCA provides several job protections to employees including the following:
- Employees are entitled to return to “an equivalent position” upon expiration of a TCA leave. Employees may be denied restoration to their positions only if it is necessary to prevent “substantial and grievous economic harm” to the operations of the employer. In such cases, the employer must notify the employee at the time it makes the determination of economic harm. If the leave has already begun, job restoration can only be denied if the employee “elects not to return” to employment.
- An employee who is taking leave under the TCA may be terminated only for “cause” during the period of leave.
- Health benefits must be maintained while an employee is on a TCA leave in the same manner as under the federal FMLA.
What Protections Do Employees Have from Retaliation? The TCA prohibits employers from discharging, demoting or otherwise discriminating against a covered employee for exercising, or expressing an intent to exercise, any right under the TCA, or for testifying, intending to testify or assisting in a proceeding under the TCA.
Can An Employee Agree to Give up Their Rights Under the TCA? No. An agreement to waive an employee’s rights under the TCA is void as a matter of public policy.
Charles R. Bacharach
410-576-4169 • cbacharach@gfrlaw.com