Mid-Atlantic Health Law TOPICS

*The article covering the initial TCA can be found here.

In 2022, Maryland passed the Time to Care Act (TCA) which affects every Maryland employer and requires contributions from virtually every Maryland employer with 15 or more employees. The TCA will give Maryland workers access to paid family and medical leave through a state-administered fund financed by employee and employer contributions.
 
During the 2023 legislative session, Maryland lawmakers sought to address certain unresolved issues. Although much of the TCA was left untouched, some notable modifications were made.

A. Delayed Start Dates

Employer and employee contributions to the fund were initially scheduled to begin on October 1, 2023. That date has now been pushed back one year, to October 1, 2024. Similarly, the start date for employees to begin receiving benefit payments was pushed back one year from January 1, 2025 to January 1, 2026. Finally, the date by which the Secretary of Labor is required to adopt regulations implementing the TCA has been pushed back six months, from June 1, 2023 to January 1, 2024.

B. “Family Member” Definition

As originally enacted, the TCA had a broader definition of “family member” than the federal Family and Medical Leave Act (FMLA), additionally including biological, step and foster parents-in-law, grandparents, grandchildren and siblings. The 2023 TCA amendments further expanded that definition to include “domestic partners”. The amendments, however, do not specify who will be considered a “domestic partner.” Hopefully, the Maryland Department of Labor (MDOL) will provide clarification when it issues regulations.

C. Rate of Contribution

The TCA requires the Secretary of Labor to set an initial contribution rate that will apply to all “wages” up to and including the Social Security wage base. A definition added by the 2023 amendments specifies that “wages” include hourly wages or salary, commissions, compensatory pay, severance pay, holiday/vacation pay, any other type of employer-paid leave, and tips or gratuities.

The amendments set the cost-sharing ratio that will be applied to the required contributions. For the period starting October 1, 2024, 50% of the contributions must be paid by the employer and 50% by each employee, although employers may elect to cover some or all of their employees’ shares.

The MDOL subsequently set the initial contribution rate at 0.9% of covered wages divided equally (at 0.45% each) between the employer and employees at businesses with 15 or more employees. The designated contribution rate will remain in place from October 1, 2024 through June 30, 2026.

Thereafter, MDOL is required to conduct an annual cost analysis of the program and determine whether there will be any adjustment to the rate of contribution. The contribution rate must be subsequently set by MDOL on or before February 1 each year, starting with 2026, for the 12-month period beginning on the following July 1.
 

D. Benefits Cap

The 2023 amendments prohibit workers from collecting more than 100% of an individual employee’s average weekly wage. This cap applies whether an individual is receiving benefits only under the TCA or a combination of the TCA and employer-provided benefits.

E. Interaction Between TCA and FMLA

In many (but not all) cases, an employee may be eligible for leave under both the TCA and FMLA. The TCA provides that TCA leave will run concurrently with federal FMLA leave. But, what happens if an employee takes FMLA leave and does not apply for TCA benefits? As amended, the MDOL may choose to count an employee’s federal FMLA leave time against an employee’s available benefits under the TCA if:

1. The employee is eligible for benefits under both federal FMLA and the TCA;
    
2. The employer designates the leave period as FMLA leave;
    
3. The employer informs the employee of their eligibility for benefits under the TCA; and
    
4. The employee declines to apply for benefits under the TCA.

F. Exhaustion of Employer Provided Leave

The TCA originally provided that an employee must exhaust all employer-provided leave before receiving benefits under the TCA. The amendments reverse course, and provide that an employer may not require an employee to use or exhaust their paid vacation, paid sick leave, or other paid time off before or while receiving paid leave under the TCA.

The rule against requiring employees to use their employer provided leave comes with two exceptions. First, an employee and an employ-er may agree to allow the employee to use employer-provided leave benefits to supplement the TCA benefits, so that the employee may receive up to 100% of the employee’s average weekly wages while on leave.

Second, an employer can require that TCA benefits be made concurrently with leave under an employer plan if the leave is for: (1) parental care; (2) family care; (3) military leave, or (4) leave under a disability policy. That exception is not applicable when the employee takes leave for their own medical condition.

G. Community Provider Reimbursement

The TCA originally provided that it was “the intent” of the General Assembly that the State pay the required contributions for some community providers serving those with developmental, mental health and substance disorders. The amendments clarify that eligible employers will receive reimbursement from the Department of Health for some or all of their employer contributions on at least a quarterly basis.

The amendments created several categories for reimbursement:

1. Community providers licensed or certified under Title 7 (Developmental Disabilities Law) will be reimbursed for 100% of their contributions for those employees who manage or provide services under Title 7.
    
2. Community providers licensed or certified under Title 7.5 (Behavioral Health Administration) of the Health-General Article will be reimbursed a percentage of the employer contribution for those employees who manage or provide services under Title 7.5 equal to the percentage of revenue that is attributable to federal and state Medicaid funding and other state funding received by the community provider.
    
3. Providers of nursing home services, medical day care services, private duty nursing services, personal care services, home and community-based services, and services provided through the Community First Choice program, will be reimbursed a percentage of the employer contribution equal to the percentage of revenue attributable to federal and state Medicaid and other state funding received by the provider.

The amendments do not define what entities qualify as a “community provider” or what will be included in “revenue” to make these reimbursement determinations. Regulations to be issued by MDOL may address these issues.

H. Conclusion

Although the 2023 TCA amendments resolve some of the issues left open by the original version of the TCA, some questions are still left unanswered and new questions have been created.

In addition, although the start dates for contributions and benefits have been delayed, employers should be consulting with their payroll providers, and considering how their business will incorporate TCA leave into their existing program.

Charles B. Bacharach
410-576-4169 • cbacharach@gfrlaw.com