Maryland’s Family and Medical Leave Insurance (FAMLI) program is quickly approaching, bringing significant new obligations for employers of all sizes. Preparing for FAMLI will require coordination across human resources, payroll, benefits, and legal teams. Employers that plan now will be better positioned to meet the program’s requirements.

On July 29, Ballard Spahr’s Labor and Employment Group hosted a webinar on FAMLI, to provide practical guidance on implementation strategies for employers. If you are interested in obtaining the materials or a recording of the webinar, please visit this link.

What is FAMLI?

Key aspects of the program:

  • Funded through a combination of employer and employee contributions
  • Up to 12 weeks of paid leave
    • Employees may be eligible for 24 weeks of leave if the employee experiences their own serious health condition and welcomes a child in the same year.
  • Salary replacement up to $1,000 per week

Which Employers are Subject to FAMLI?

  • The law applies broadly – it will reach nearly every employer with at least one employee working in Maryland.
  • An employer does not have to have an office in Maryland to be covered.
  • The law includes state and local government employers, but excludes the federal government.

Which Employees are Eligible?

  • Any employee who works at least 680 hours in “qualified employment” in Maryland over the previous four calendar quarters will be eligible.
  • Qualified employment means the work is “localized” in Maryland.
    • General Localization Rule: If an employer contributes to Maryland’s Unemployment Insurance program on an employee’s behalf, that employee will be covered by FAMLI.
  • The 680 hours of work includes hours worked for multiple employers in Maryland.
    • This means that a new hire could be eligible to take leave on their first day of employment.
    • This differs from FMLA, which requires that an employee have worked a certain minimum number of hours with a particular employer before becoming eligible for FMLA leave.
  • Union-represented employees are eligible for FAMLI.
  • Employees cannot opt out of FAMLI contributions.

How is FAMLI Funded and What is the Maximum Benefit?

  • Each November, the Maryland Department of Labor will announce the contribution rate for the following year.
    • The DOL has already set the 2027 rate at 0.9%
    • Employers may withhold up to 50% of the contribution rate from employees’ pay (in 2027, that is 0.45%)
  • Whether an employer must contribute depends on payroll size.
    • “Small employers” under FAMLI – defined as those with less than 15 employees (inside and outside of Maryland) – are exempt from contributing the employer share
    • Small employers must still deduct and remit the employee’s contribution
    • For the first year, employer size is determined on a quarterly basis, and thereafter, on an annual basis
  • Private plans will have their own contribution rates, but employers cannot charge employees more than they would pay if enrolled in the State Plan.
  • Regulations took effect March 30, 2026
  • Employer registration begins Fall 2026
    • September – November 15, 2026: Employers must file a declaration of intent about whether they will participate in the State Plan or obtain a private plan
  • State Plan contributions begin January 1, 2027
  • Benefits become available January 2028

Should I Choose the State Plan or a Private Plan?

One of the first decisions employers must make is whether to participate in Maryland’s State Plan or apply for an Equivalent Private Insurance Plan (EPIP), which may be an insured arrangement or a self-insured plan. Employers wishing to offer a private plan must obtain approval from the Maryland Department of Labor and demonstrate that the plan meets or exceeds the benefits and protections provided under the State Plan. There are fees associated with applying for a private plan.

There is no one-size-fits-all answer. For some employers, the State Plan may offer the simplest path to compliance. Others may find that an EPIP better aligns with their existing leave programs or provides greater flexibility in administering benefits. Employers considering a private plan should also keep in mind that employees cannot be required to contribute more than they would under the State Plan, even if the private plan costs more to administer, in which case the employer must absorb the added cost.

What Notices Must Employers Give Employees?

Employers must notify employees about FAMLI at the following times:

  • One pay period before payroll deductions begin;
  • 6 months prior to the commencement of benefits, either through an EPIP or with the State Plan;
  • At hire;
  • Annually;
  • 30 days before any changes to the employer’s FAMLI procedures or plan go into effect; and
  • When the employer knows that an employee’s leave or leave request may be eligible for FAMLI.

How Will FAMLI Work with FMLA?

  • Ordinarily, FMLA and FAMLI will run concurrently. An employee’s annual maximum FAMLI leave may be reduced by the employee’s use of FMLA if:
    • Employee’s FMLA leave was also eligible for FAMLI leave;
    • Employer notified the employee of their potential eligibility for FAMLI when the employee took FMLA; and

How Will FAMLI Work with Existing Leave Policies?

The FAMLI regulations permit employers to coordinate certain employer-provided leave benefits with FAMLI, but the rules differ depending on the type of leave. For example, employers that offer “Alternative FAMLI Purpose Leave” (AFPL) may be able to require that leave to run concurrently with FAMLI. Common examples of AFPL are parental leave and short-term disability. However, in order to run AFPL concurrently or in coordination with FAMLI, the AFPL must meet certain statutory criteria:

(i) Specifically designed to fulfill a purpose of FAMLI;

(ii) Paid;

(iii) Not accrued;

(iv) Not subject to repayment if the employee leaves their position;

(v) Not available for general purposes; and

(vi) Available without a requirement to exhaust another form of leave.

For example, a policy that requires employees to exhaust PTO or sick leave during parental leave would not qualify as AFPL, and may cause the leaves to run consecutively rather than concurrently. Thus, employers should carefully examine their existing leave policies and evaluate whether they satisfy the definition of AFPL.

Additionally, employers may not require the substitution of “general purpose leave” – i.e., PTO, personal leave, vacation leave, sick leave that is not AFPL – for FAMLI leave. However, employers and employees may mutually agree in writing to supplement the FAMLI benefit up to 100% of the employee’s wage using the employee’s general purpose leave.

Additional information is available on the Maryland FAMLI’s website.