Maryland Legislature Considering New Payroll Tax To Fund Family and Medical Leave

We wrote earlier this week about some of the bills working their way through the legislative process in Annapolis.  An item worthy of its own post is legislation that would create a Family and Medical Leave Insurance Program to provide wage replacement for employees taking leave from work:

  • to care for a child during the first year after the child’s birth or after the placement of the child through foster care, kinship care, or adoption;
  • to care for a family member with a serious health condition;
  • because the covered individual has a serious health condition that results in the covered individual being unable to perform the functions of the covered individual’s position;
  • to care for a service member who is the covered individual’s next of kin (nearest blood relative); and
  • because the covered individual has a qualifying exigency arising out of the deployment of a service member who is a family member of the covered individual

The legislation sets forth when employers can require certification from employees, the amount of benefits employees may receive, penalties, and enforcement mechanisms, among other details.  Benefits would be capped at 12 weeks per application year, however, an individual may receive a second 12 weeks of benefits if the first leave was for the individual’s own serious health condition and the second reason is for one of the other reasons permitted under the proposed statute.

The Program would be funded primarily by employee contributions, self-employed individual contributions, and employer contributions.

The new payroll tax would begin effective January 1, 2021, may not exceed 0.5% of an employee’s wages, would apply to all wages up to and including the Social Security wage base, and would be shared equally by employers and employees.  Claims for benefits from the Fund could be made beginning on July 1, 2022.

Additional aspects of the legislation include:

  • leave would run concurrently with FMLA leave;
  • an individual receiving benefits under the workers’ comp or unemployment insurance statutes would not be eligible to receive benefits form the Fund, however, an individual receiving compensation for permanent partial disability under the workers’ comp statute may be eligible for benefits;
  • employers could allow individuals to use paid time off in addition to the benefits available under the Fund to replace wages up to 100% of the covered individual’s weekly wage during the period of leave for which benefits are received;
  • eligible employees are those who have worked at least 680 hours over the 12-month period immediately preceding the date on which leave is to begin; and
  • all Maryland employers would be subject to the law

In addition to the new payroll tax, the legislature is also considering an expansion of the sales tax.

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