Maryland Healthy Working Families Act - What Maryland Employers Need to Know Now!

Date: February 9, 2018

By: Kevin C. McCormick

As most Maryland employers are aware, on January 12, 2018, the Maryland legislature overrode Governor Hogan's veto of the Maryland Healthy Working Families Act. That legislation was passed by the Maryland Legislature at the end of its 2017 term. For a number of reasons, Governor Larry Hogan vetoed that legislation in May, 2017. Although the supporters of this new legislation had sufficient votes to override the Governor's veto last year, they took no action until the start of the 2018 legislative session, which also happens to be the start of election year for Maryland's next Governor.    

What does the new legislation require?

Covered employers must provide up to 40 hours of paid leave for certain employees who work at least 12 hours per week for that employer.

The employee can use it to care for or treat his/her own mental or physical illness, injury or condition, to obtain preventive medical care for himself/herself or a family member, to care for a family member with a medical or physical illness, injury or condition, for maternity or paternity leave or for absences from work due to domestic violence, sexual assault or stalking committed against the employee or a family member. This “safe” aspect of the new legislation would allow the employee or a family member to obtain medical and/or mental health attention that is related to domestic violence, sexual assault or stalking, receive services from a victim services organization, to obtain legal services and/or attend proceedings related to the domestic violence, sexual assault and/or stalking and time for the employee to relocate as a result of the domestic violence, sexual assault and/or stalking.

Who is required to provide this safe/sick leave?

Under the new legislation, Maryland employers with 15 or more employees must provide the paid leave described above. If the employer has less than 15 employees, unpaid safe/sick leave must be provided in the same amount. In determining whether your company is covered by this legislation, you need to consider the average number of company employees on a monthly basis during the immediately preceding year. In making this analysis, you need to include all full time, part time, temporary or seasonal employees who may have worked during that preceding year.  

Are there any specific exclusions from coverage?

Yes, employees under 18 years of age before the beginning of the year are excluded as are employees of a covered employer who worked less than 12 hours in a week. Employees in the agricultural sector or in agricultural operations. Employees of temporary service agencies who provide temporary staffing to other persons are not covered provided the agency does not have day to day control over the work assignments or supervision of those temporary employees. Also excluded are employees directly employed by an employment agency to provide part time or temporary services.  

Employees in the construction industry covered by a collective bargaining agreement may also be excluded if the collective bargaining agreement expressly waives the benefits of this new legislation.  

Employees in the health and human services industry who work on a “as needed basis”, who can reject or accept a shift and are not guaranteed to be called in for work may also be excluded from the new laws coverage.

Some restaurant employees are also excluded from coverage.

How is the new law to be applied?

The safe/sick leave can be applied in two ways:

Beginning January 1, 2018, the employer may allow the covered employee to earn one hour for every 30 hours of work and use that accrued leave as it is earned. There is no requirement under the new legislation to advance any safe/sick leave and covered employees are able to “roll over” up to 64 hours of any accrued but unused leave at the end of the year.

A second way to implement this new legislation would be to “front load” the full 40 hours of leave at the start of the year and allow the covered employee to use that leave 106 calendar days after the employee's start date. 

If this method is used, the employer is not required to allow the employee to carry over any accrued but unused safe/sick leave at the end of the year.

How should the employer calculate the hours that the covered employee may accrue?

For hourly employees, the safe/sick leave accrues at the rate of one hour for every 30 hours worked. This means that for every 30 hours an employee is working, the employee earns one hour of paid safe/sick leave. Paid, non-work time, like a holiday, probably do not have to be considered in calculating the amount of safe/sick leave a covered employee may accrue.

For employees who are considered exempt under the FLSA, the new legislation assumes that those employees work 40 hours per week for purposes of computing their accrual of safe/sick leave. However, if that employee's normal work week is less than 40 hours, the employer may use the actual hours worked and not the assumed 40 hours per work week.

What is the proper rate of pay for the safe/sick leave?

For hourly employees, covered employers should use the same wage rate the employee normally earns. So if the employee receives an hourly wage of $10.00 per hour, then any safe/sick leave taken would also be paid out at that same rate.

For salaried employees, the new legislation provides little guidance. Hopefully, the DLLR will issue regulations that will fill in the details on this and other unanswered questions in the new legislation. In the meantime, one prudent way to determine the rate of pay for the safe/sick leave for salaried employees would be to divide their annual salary by 2,080 (assuming a 40 hour workweek) yielding an hourly rate to use to pay out any accrued safe/sick leave.

For other employees who are not paid on a fixed salary, such as outside sales persons, commissioned employees and others that receive significant incentives and/or bonuses throughout the year, again, this is an issue that needs to be clarified by the DLLR. In the meantime, however, one reasonable way to address this issue would be to use the employee's annual salary from the preceding year and divide it by 2,080 to determine an hourly wage rate for payment of the accrued safe/sick leave.

What happens if a covered employee with accrued but unused sick leave quits or is fired?

The new legislation is pretty clear that if an employee with accrued but unused sick leave leaves the employer for whatever reason, the employer is not required to “cash out” that accrued but unused safe/sick leave. Keep in mind, however, if that same employee who leaves is rehired within 37 weeks of that termination, an employer is required to reinstate the accrued but unused safe/sick leave that was forfeited upon the termination. Many Maryland employers may “cash out” any accrued but unused leave upon termination. In those situations, if the employee returns within the designated timeframe, the employee would not be required to restore any of the accrued but unused safe/sick leave.  

Another issue to consider is what happens when an employer “advances” safe/sick leave, and the covered employee uses it, and then quits before he or she has earned the safe sick leave that was taken.

Under the new legislation, an employer may deduct the excess leave from the final wages of a covered employee provided that there is a written agreement with the employee permitting such action. For example, if the Maryland employer “front loads” the safe/sick leave in January and the covered employee uses 20 hours of that safe/sick leave in February and then quits in May, that employee would owe the employer approximately 20 hours of advanced safe/sick leave, which could be deducted from the employee's final pay provided there is a written agreement with the employee allowing such action.  

Practice Tip: In the event any Maryland employer decides to “front load” the safe/sick leave and allow covered employees to use it immediately, the employer should have the employee sign a written agreement allowing for such action and further that in the event the employee were to leave before he or she “earned” the safe/sick leave that was taken, the employer is authorized to deduct from the employee's final pay the cash value of that used but unearned safe/sick leave. It would also be prudent to have such an agreement signed, before the employee uses the advanced safe/sick leave.

To determine how a covered employee “earns” safe/sick leave under these circumstances, you should use the same formula that is provided in the legislation that a covered employee “earns” safe/sick leave at the rate of one hour per 30 hours of actual work.  

What if a Maryland employer already has a sick leave policy in place? Does it have to provide additional benefits under this legislation?

No, provided that the employer's existing vacation and/or PTO policy provides for benefits that are at least equal to those required under the new legislation, i.e., 40 hours of paid safe/sick leave, accrued at the same rate, one hour for 30 hours of work, there is probably no need to extensively modify your existing policy. However, it would be prudent to review and revise any current policy to make sure that there is a reference to the new legislation and the various types of safe/sick leave that is provided for in that legislation.

The DLLR is required to create a new poster describing this legislation and develop a policy for employers to use in advising its employees about the benefits of this new legislation. To date, however, the DLLR has issued no such guidance and it is not likely that such guidance will be issued in the very near future.

What are the penalties that may be imposed in the event an employer does not comply with this new legislation?

In addition to requiring covered employers to pay their employees the safe/sick leave of up to 40 hours, the new law also includes various protections for those covered employees. For example, in the event the employer fails to pay out the safe/sick leave as required under the new legislation, terminates an employee because he or she has taken the safe/sick leave or otherwise subjects that employee to any adverse action, that employee may file a complaint with the Commissioner of Labor and Industry. The Commissioner then has 90 days within which to conduct an investigation and resolve the dispute. If unsuccessful, the Commissioner could then issue an Order requiring the employer to pay the full monetary value of the unpaid safe/sick leave that was denied and any actual damages suffered by the employee. The Commissioner may also award up to three times the value of the employee's hourly wage for each violation and assess a civil penalty of up to $1,000 for each violation.

If the employer refuses to comply with the Commissioner's Order within 30 days, the Commissioner can request the Maryland Attorney General to file a civil action to enforce that Order. In addition, an employee may file his or her own civil action to achieve compliance with the Order. If the employee is successful in the litigation, the Court may award the employee three times the value of the unpaid safe/sick leave, punitive damages, attorney's fees and injunctive relief.  

When does the new law take effect?

That is a very interesting question that has no clear answer at this time. As noted above, this legislation was actually passed by the General Assembly last year with an effective date of January 1, 2018.  However, since the Governor's veto was not overridden until January 12, 2018, the “effective date” of the emergency override is February 11, 2018. However, by its terms, the new legislation requires covered Maryland employers to begin accruing leave from January 1, 2018, even before the legislation was enacted.  

Recognizing the hardship and confusion that this new legislation presents for many Maryland employers, the Maryland State Senate has introduced legislation to postpone the effective date from January 1, 2018 until July 1, 2018, SB 0304. Thus far, the Senate Finance Committee has approved this Bill and it is expected that the full Maryland Senate will do likewise. However, passage of a corresponding legislation faces an uncertain future in the Maryland House of Delegates. Even assuming that the full Maryland Senate approves of the delay, the Maryland House of Delegates must also approve the same measure and the final legislation would then be submitted to Governor Hogan for his final approval. Since it is not likely that all of these necessary actions will take place by February 11, 2018, it would be prudent for all Maryland employers to assume that this legislation will become effective on that date and consider what steps they need to take now to attempt to come into compliance as soon as possible.

Hopefully, the Maryland legislature will find a way before the end of this legislative session to delay the effective date until July 1, 2018, to allow covered Maryland employers to fully understand its new obligations and take the steps necessary to come into compliance.

However, to be on the safe side, covered Maryland employers should consider what steps they need to take now to attempt to come into compliance by February 11, 2018.