9.24.24 – Quarles

Maryland’s General Assembly passed several employment laws that are scheduled to take effect on October 1, 2024. Areas of change include paid family leave, posting salary ranges and pay rate notifications, and an expansion of the anti-discrimination law. Additionally, new limitations on noncompete agreements for healthcare providers take effect on July 1, 2025. Below are key provisions, dates, and takeaways to ensure employers comply with the new mandates.

The Essentials

Paid Family Leave Insurance Program

Maryland legislators passed SB0485, a law modifying the timeline and deadlines for the Family and Medical Leave Insurance Program (“FAMLI”), a program first established in a 2022 bill. FAMLI is an insurance program where employers and workers make contributions into a fund administered by the State. Alternatively, an employer may apply to use a commercial or self-insured plan. The FAMLI program will cover all Maryland employers with at least one employee and is funded by contributions from employers and employees. SB0485 becomes effective October 1, 2024.

Who is Impacted?

• Employers: Two classes of Maryland employers exist for the purposes of FAMLI. Employers with less than 15 employees are not required to make contributions, but their employees will be required to contribute, as explained below. Employers with at least 15 employees requires contributions from both employers and employees.
• Employees: All Maryland employees are required to contribute to FAMLI and are entitled to FAMLI benefits as a result. An employee is defined in the bill as someone who has worked at least 680 hours in Maryland in the 12 months immediately preceding the date on which leave will begin.

What’s New?

• Eligible Employees: The 2022 law defined an eligible employee as someone who worked at least 680 hours in the 12 months immediately preceding the date on which leave will begin. The new law now specifies that this work must have been performed in Maryland (addressing issues created by working remotely).
• Acceptable Plans: The 2022 law allowed an employer to satisfy the requirements through three means: a private employer plan consisting of employer–provided benefits, insurance, or a combination of both. The new law eliminates a combination of both employer–provided benefits and insurance as an option. Employers who opt for a private plan must obtain approval from the Maryland Department of Labor and may be required to pay both application and renewal fees. The Maryland Secretary of Labor will establish criteria for any private employer plans.
• Required Contributions: The Maryland Department of Labor initially announced a contribution rate of 0.90% of covered wages (meaning wages up to the Social Security wage base) for those employing 15+ employees and a rate of 0.45% of covered wages for those employing under 15 employees. SB0485 now orders the Secretary of Labor to announce new contribution rates by February 1, 2025.
• Contribution Date: The start date for required contributions changed from October 1, 2024 to July 1, 2025. This means payroll deductions will begin on July 1, 2025, and employers will remit the first payment in October 2025
• Benefit Date: The start date for benefit payments changed from January 1, 2026 to July 1, 2026. The contributions employers remit to the State will create a trust fund. The fund will grow and begin paying out benefits to Maryland workers.

New Noncomplete Prohibitions and Wage Thresholds

The new law bans non-compete provisions for employees who are (1) required to be licensed under Maryland’s Health Occupations Article and earn less than $350,000/year; or (2) licensed as a veterinary practitioner or veterinary technician. For these healthcare workers, noncompete agreements are limited to one year, and geographic limitations cannot exceed 10 miles from an employee’s primary place of employment. The law became effective for covered veterinary practitioners and technicians on June 1, 2024, and will take effect for covered healthcare providers on July 1, 2025. These prohibitions are not retroactive and will apply only to agreements entered into on or after the respective effective dates.

Posted Salary Ranges and Benefits Descriptions on Job Postings

Maryland legislators passed SB0525, a bill requiring employers to disclose the specific wage range or salary, benefits, and any other compensation information for a posted position. A non-exhaustive list of applicable compensation is provided by the Maryland Department of Labor here. SB0525 becomes effective October 1, 2024.

Wage range is defined in the law as the minimum and maximum rate or salary for a position, set in good faith by reference to any of the following: (1) any applicable pay scale; (2) any previously set minimum and maximum salary or hourly rate for the position; (3) the minimum and maximum salary or hourly rate of any individual holding a comparable position at the time of the posting; (4) the budgeted amount for the position. The law applies to both internal and public postings.

A “posting,” is defined as “a solicitation intended to recruit applicants for a specific available position.” Third-party solicitations (i.e., through recruiters and job-posting websites) must follow the disclosure requirements. Additionally, employers must disclose the required information upon an applicant’s request and prior to having any discussions on compensation with an applicant.

Employers are also prohibited from refusing to interview, hire, or employ an applicant who does not provide their wage history or who requests the wage range for a position from the employer. Current employees applying for a job internally are afforded the same protections. Employers cannot retaliate against, refuse to promote, or transfer employees who refuse to disclose their wage history or who request the wage range for a position. Employers may, however, rely on the wage history voluntarily provided by an applicant so long as the reliance serves to support a higher wage offer than the one initially offered by the employer and does not create an unlawful pay differential based on protected characteristics such as race, religious beliefs, sex, gender identity, or sexual orientation.

In addition, the Commissioner of Labor and Industry will develop and make available to employers a form that an employer may use to comply with wage disclosure requirements. A position must be at least partially in-person in Maryland for SB0525 to apply.

What It Does

• Require employers to archive job postings proving compliance: The law states that employers must keep a record of compliance for each job posting for at least 3 years after the position is filled (or, if the position is not filled, 3 years after the position was initially posted). An employer must also, should the Commissioner of Labor and Industry request so, make a report demonstrating compliance. Information on a report made to the Commissioner must include the wages of employees, job classifications of employees, and other conditions of employment.
• Allow for imposition of civil penalties on violating employers: The Commissioner of Labor and Industry is authorized to civil penalties onto violating employers. The Commissioner may consider factors such as the employer’s size and history of related violations, the gravity of the offense, and the employer’s good faith when issuing a penalty.

What It Doesn’t Do

• Create a private right of action for aggrieved individuals: Individuals seeking a remedy for a potential violation of SB0525 cannot file a complaint in state or federal court. Rather, an applicant or employee may file complaints with the Commissioner of Labor and Industry. The Commissioner can then issue an order compelling compliance and to impose the civil penalties listed above.

Pay Stub Information and Written Notice at the Time of Hiring

Maryland legislators also passed SB0038, a law requiring written notice of the pay rate, regular paydays, and leave benefits provided to an employee at the time of hiring. This information must also be included on the physical or online pay stub. SB0485 becomes effective October 1, 2024.

The Commissioner of Labor and Industry may impose an administrative penalty of up to $500 for each employee who is not provided a pay statement or was not provided a pay statement that complies with the law.

The Commissioner of Labor and Industry has created a template that complies with the law, but employers need not use the template so long as the employer’s preferred model includes the required information.

Required Information

• Employer’s name, address, and telephone number; date of payment; beginning and ending dates of the pay period;
• Number of hours worked during the pay period (unless the employee is exempt from federal and state overtime requirements);
• All rates of pay;
• Additional bases and amounts of pay, including bonuses, commissions on sales or other bases;
• Applicable piece rates of pay and the number of pieces completed at each piece rate for each employee paid at a piece rate;
• Gross and net pay earned during the pay period;
• Amount and description of each deduction made from pay.

Expansion of Antidiscrimination Law – Military Status

“Military status” is now a protected characteristic under Maryland’s anti-discrimination law barring discrimination in employment and housing. Under the new provision, “military status” includes a member of the uniformed services, a member of a reserve component of the armed forces, or a dependent of the member, including a spouse and child. This expansion takes effect on October 1, 2024.

Expansion of Antidiscrimination Law – Sexual Orientation

Maryland legislators amended the Equal Pay for Equal Work Law, HB0602, to prohibit employment discrimination in compensation based on sexual orientation, in addition to the existing protections for sex and gender identity. These changes become effective October 1, 2024.

List of Barred Actions Under the Amendments to the Equal Pay for Equal Work Law

• Limiting or depriving an employee of employment opportunities that would otherwise be available
• Paying a wage to employees of one sexual orientation at a rate less than the rate paid to employees of another sexual orientation if both employees work in the same establishment and perform work of comparable character or work on the same operation, in the same business, or of the same type
• Providing less favorable employment opportunities based on sexual orientation

The law notes that wage differences may be based on a seniority system, a merit increase system, or another bona fide factor, so long as these systems do not also include discrimination based on sexual orientation. An employee may, however, demonstrate that an articulated bona fide factor serves as pretext for discrimination based on sexual orientation.

Bottom Line and Next Steps

With the quickly approaching effective date of October 1, employers should internally review the laws discussed and their internal policies and practices. If deemed necessary upon review, employers should update their policies and procedures to ensure compliance with Maryland law. Any questions regarding Maryland’s new labor and employment laws can be directed to the authors of this article:

• Sarah Belger: (202) 372-9511 / sarah.belger@quarles.com

Senior Law Clerk Mathew Barrett contributed to this article.