New mandatory paid leave requirements are expected to take effect in early 2018

On March 15, 2017, the Maryland Senate passed the Maryland Healthy Working Families Act (S.B. 230) (often referred to as the “Paid Leave Act”).  The Act was previously passed by the House of Delegates as H.B. 1.  Time ran out on the annual legislative session before the governor acted on the bill, but Governor Hogan is expected to veto the Act prior to the beginning of the 2018 legislative session, setting up an override vote at the beginning of that session.  The Act appears to have veto-proof support in the Legislature, however.  Therefore, it is likely that the Act will take effect in early 2018.

If the Act becomes law, Maryland employers will need to update their employee handbooks and policies to reflect these new leave mandates.  The Act would require all Maryland employers with 15 or more employees to provide paid leave to their employees, up to 40 hours per year.  Maryland employers with 14 or fewer employees will be required to provide unpaid leave to their employees, up to 40 hours per year.  Employees that work more than 12 hours per week will be entitled to leave. Leave may be used by an employee to care for or treat his or her physical or mental illness or injury, to obtain preventative medical care for the employee or for a member of the employee’s family, to care for a family, or for maternity or paternity leave.

The Act will not apply to employees that work fewer than 12 hours per week, to some on-call employees in the health or human services industries, to temporary workers, or to construction workers that are covered by a collective bargaining agreement in which the requirements of the Act are expressly waived.

If an employer grants leave on an accrual basis throughout the year, it must allow employees to carry over up to forty hours of their accrued but unused leave into the following year.  If leave is granted in a lump sum at the beginning of the year, however, the employer need not allow carry-over of accrued but unused leave at the end of the year.  Employers are not required to pay employees for unused leave upon termination.

The Act carries significant penalties for those employers that fail to comply.  Available penalties include awards equal to three times the value of unpaid earned leave, punitive damages, reimbursement of attorneys’ fees, and injunctive relief.  Before filing suit, however, an employee must file a written complaint with the Maryland Department of Labor, Licensing and Regulation, which may issue an order directing payment of the monetary value of the unpaid earned leave, and potentially other penalties.  Only if the employer fails to comply with the Department’s order may the employee then file suit in court.

While advocates believe that provision of family leave will be beneficial to workers and their families, many business groups fear that extending required paid leave to businesses with as few as 15 employees may have a substantial adverse effect on the economy. Regardless of the law’s economic impact, it is important that all Maryland employees be aware of these likely changes to leave requirements, beginning in early 2018, and adjust their policies and employee manuals to reflect these anticipated changes.