Employment Law Update

*The original version of this article can be found here.

Maryland has joined 10 other states and the District of Columbia in passing a paid family leave law.  Under the new Time to Care Act of 2022 (TCA), eligible employees may apply to a state-administered fund that will be used to provide up to 12 weeks of paid family and medical leave, with the possibility of another 12 weeks for parental leave.  The benefits will be funded by employee and employer contributions at a rate to be set by Maryland’s Department of Labor.

The TCA was initially vetoed by Governor Hogan but was later enacted by a veto override in the General Assembly.

While the TCA resembles the federal Family and Medical Leave Act (FMLA) in many respects, there are also important differences.  Most significantly, the employees of all Maryland employers, regardless of size, may be entitled to TCA benefits, while the FMLA applies only to employers of 50 or more employees. As a result, thousands of small Maryland employers that have never dealt with the complexities of administering a FMLA program will be covered by the new law.

Regulations implementing the TCA are to be issued by the Department of Labor by June 1, 2023.  Employer and employee contributions to the fund are set to begin on October 1, 2023, and employees may apply for benefits under the TCA starting on January 1, 2025.   During the interim, employers should begin planning for the costs of the program and deciding whether to modify existing paid leave policies and collective bargaining.

Employer/Employee Coverage

Which Employers are Covered by the Act? The TCA applies to all Maryland employers, however, only employers of 15 or more employees will have to make contributions to the fund established by the TCA.  An individual who is the sole owner of a sole proprietorship, limited liability company, or C or S corporation and who is the only individual employed by the entity is not a covered employer.

Which Employees Are Eligible for Benefits? All Maryland employees may be eligible to receive benefits, regardless of the size of their employer.  Employees who have worked for at least 680 hours over the 12-month period immediately preceding the date on which leave is to begin are eligible the receive benefits. Notably, the law does not specify whether the 680 hours must be hours worked for the employee’s current employer.  Hopefully, regulations will clarify that issue.  By contrast, to be eligible for leave under the FMLA, an employee must have worked for the employer for at least 12 months and for at least 1,250 hours during the 12 months preceding the leave. Self-employed individuals may also elect to participate in the program.
 
Can Employers “Opt-Out”? An employer may satisfy the TCA by establishing a private plan that provides benefits to all eligible employees and meets or exceeds the rights, protections and benefits required by the TCA.  The plan must be filed with the state for approval.  Employers and employees covered by an approved private plan are exempt from making the contributions required under the TCA.

Leave Basics

What are the Reasons an Employee Can Take Leave Under the TCA? There are five reasons an employee may take leave under the TCA:

•    The employee has a serious health condition preventing them from performing the functions of their job.
•    To care for a child during the first year after the child’s birth or after the placement of a child through foster care, kinship care or adoption.
•    To care for a family member with a serious health condition.
•    To care for a service member who is the employee’s next of kin.
•    The employee has a qualifying exigency arising out of the deployment of a service member who is a family member of the employee.

Who Qualifies as a “Family Member?” Federal FMLA limits covered family members to spouses and biological, step and foster parents and children. The TCA more broadly defines “family member” to additionally include an employee’s biological, step and foster grandparents, grandchildren, and siblings, as well as the parents of the employee’s spouse.
 
What Type of Health Conditions Justify Taking TCA Leave? An eligible employee may take leave under the TCA for a “serious health condition,” which is defined as including an illness, injury, impairment or physical or mental condition that involves:

•    Inpatient care in a hospital, hospice, or residential healthcare facility;
•    Continued treatment by licensed healthcare provider, or;
•    Continued treatment or supervision at home by a licensed healthcare provider or other competent individual under the supervision of a licensed healthcare provider.

A serious health condition may also include one of the above circumstances continuing over an extended period of time and requiring intermittent treatment.

Can Employers Require Employees to Obtain a Certification to Support the Leave Request? Employers may require employees to obtain certification from a health care provider to support leave taken because of the health of the employee or a family member. The Department of Labor is required to establish standards for the certification of exigency leaves and for identifying who will count as a “family member.”

What is Military Exigency Leave? Like federal FMLA, the TCA permits eligible employees to take leave when a family member in the military experiences a “qualifying exigency.” Exigencies include:

•    When the service member has received notice of deployment within seven days before the deployment begins.
•    To attend military events (including family support programs.)
•    To arrange, provide or attend childcare or school activities when the service member is on active duty or active call.
•    To make financial or legal arrangements because of the service member’s absence.
•    To attend counseling which is not provided by a licensed healthcare provider and is needed due to the service member’s call to active duty.
•    To spend up to 15 calendar days with a service member who is on short-term temporary rest and recuperation leave.
•    To attend post deployment activities including re-integration services for period of 90 days immediately following the termination of active status.
•    To attend matters related to the death of the service member while on active duty
•    To arrange for or provide alternative care for a parent of a service member if the parent is incapable of self-care and the call to duty necessitates a change.
•    Because of any other issue that arises out of active duty or a call to duty that the employer and covered employee agree should be covered.

How Much Leave May an Employee Take Under the TCA? Employees may take up to 12 weeks of TCA leave per year. An employee can receive an additional 12 weeks of leave per year (for a total of 24 weeks) if the employee takes leave for the care of a newborn, or placement for adoption or foster care, and for the employee’s own health condition during the same one-year period.

Can Leave be Taken on an Intermittent Basis? Yes. TCA leave may be taken intermittently in increments of at least 4 hours.  The employee is required to make a reasonable effort to schedule the leave in a manner that does not unduly disrupt employer operations, and to provide “reasonable and practical” prior notice of the reason for which the intermittent leave is necessary. Note: federal FMLA differs from the TCA. The federal law provides that an employer must allow employees to use FMLA leave in the smallest increment of time the employer allows for the use of other forms of leave, as long as it is no more than one hour.

How Much Pay Will Employees Receive? The TCA provides for weekly wage replacement of at least $50 and up to $1,000.  After January 1, 2026, the maximum amount will be subject to adjustment reflecting growth in the consumer price index for the region. The payments will be based upon the state average weekly wage (currently $1,338) and will be calculated as follows:

•    If the employee’s average weekly wage is 65% or less than the state average weekly wage, the employee will receive 90% of the employee’s average weekly wage.  
•    If the employees average weekly wage is greater than 65% of the state average wage, the employee will receive 90% of the employee’s average wages up to 65% of the state rate, and 50% of the state rate of any part of the employee’s wage that exceeds 65% of the state rate.

How Will Benefit Applications Work? The Department of Labor will notify an employer within five business days after the employee applies for benefits and approve or deny the application within ten business days. Benefit payments will commence within five business days after a claim is approved and subsequent payments will be made every two weeks until the benefit period ends.

The Secretary of Labor is required to establish a board of appeals to hear employee appeals from benefit denials. Once such administrative appeals are exhausted, an employee may challenge a denial of benefits in court.

Interaction with Employer Leave Policies, CBAs, and Other Laws

How does TCA Leave Work in Relation to Employer-Provided Paid Leave? Integrating TCA leave with existing employer-provided paid leave programs promises to be one of the most challenging aspects of the new law. The TCA requires employees to exhaust all employer-provided leave (other than leave required by law), before receiving benefits under the TCA.  The availability and use of employer-provided leave cannot be used to reduce the amount of available TCA leave. Moreover, any employer-provided leave used by an employee as required by the TCA is subject to the same protections with respect to job restoration rights, benefits continuation, complaints by employees to the Department or Labor, and non-discrimination, as is TCA leave.

How Does the TCA Mesh with Existing Collective Bargaining Agreements? The TCA has no effect upon an employer’s obligations under any collective bargaining agreement that provides greater leave benefits.  By the same token, a collective bargaining agreement may not diminish the rights provided to an employee under the TCA.
 
How does TCA Leave Work in Relation to FMLA? To the extent an employee takes leave that is covered by both statutes, TCA leave will run concurrently with FMLA leave.

Can an Employee Receive TCA Leave and Collect Unemployment or Workers’ Compensation Insurance? Employees cannot receive TCA benefits while receiving worker’s compensation benefits, except for an employee who is receiving compensation for a permanent partial disability. The Department of Labor is required to report to the legislature by January 1, 2023, on whether an employee can collect unemployment while receiving TCA leave benefits.

Will There Also Be Local Laws Requiring Paid Leave? No. The TCA prohibits Maryland counties and local jurisdictions from enacting laws after June 1, 2022, that establish a paid family and medical leave insurance program for employers, other than for the benefit of the county or local government’s own employees.

Funding/Contributions

How will the TCA Leave Benefits be Funded? The TCA establishes a special fund to be held by the state treasurer.  Employees, employers, and self-employed individuals who elect to participate will contribute to the fund. The fund will be managed in accordance with regulations to be adopted by the Secretary of Labor.

Are Any Employers Exempt from Contributing? As noted above, employers with fewer than 15 employees will not have to contribute.  In addition, the TCA states that “it is the intent of the General Assembly” that the State pay the required contributions for employers that are community providers, community–based agencies or programs funded by the Behavioral Health Administration, the Developmental Disabilities Administration, or the Medical Care Programs Administration to serve individuals with mental disorders, substance–related disorders, or a combination of those disorders or developmental disabilities.

When will Contributions to the Fund Begin? Beginning on October 1, 2023, the following must begin contributing to the TCA fund: (1) all employees (regardless of the size of their employer), (2) employers with 15 or more employees, and (3) self-employed individuals who elect to participate.  The Secretary of Labor is required to set the initial contribution rates by June 1, 2023, and every two years thereafter. The total rate of contribution will apply to all wages up to and including the Social Security wage base.
 
Employers are required to deduct employee contributions from employee wages, but are prohibited from deducting the employer portion of contributions from employee compensation. The TCA provides that it is the legislature’s “intent” to pay the required contributions for employees making an hourly wage that is less than $15.00 per hour. That provision, however, currently sunsets on June 30, 2026, unless extended by the legislature.
 
When Will TCA Leave Benefits be Available? Employees may submit claims for benefits under the TCA starting January 1, 2025.

Employee Protections and Rights

What Job Protections Does the TCA Provide Employees? The TCA provides several job protections to employees:

•    Employees are entitled to return to “an equivalent position” upon expiration of a TCA leave. An employee may be denied restoration to their position only if it is necessary to prevent “substantial and grievous economic harm” to the operations of the employer.  In such cases, the employer must notify the employee at the time it makes the determination of economic harm.  If the leave has already begun, job restoration can only be denied if the employee “elects not to return” to employment.
•    An employee who is taking leave under the TCA (or using employer-provided leave that is being exhausted pursuant to the TCA) may be terminated only for “cause” during the period of leave.
•    Health benefits must be maintained while an employee is on a TCA leave in the same manner as under the federal FMLA.

What Protections Do Employees Have from Retaliation? The TCA prohibits employers from discharging, demoting or otherwise discriminating against a covered employee for:

•    Applying for or receiving benefits or taking leave;
•    Inquiring about their rights and responsibilities under the TCA;
•    Communicating an intent to take TCA leave, or filing a complaint or appeal under the TCA;
•    Testifying or intending to testify in a proceeding under the TCA.

Can An Employee Agree to Give up Their Rights Under the TCA? No. An agreement to waive an employee’s rights under the TCA is void as a matter of public policy.

Enforcement and Penalties

Regulations are Expected. The Maryland Department of Labor is required to adopt regulations to implement the TCA by June 1, 2023.  The regulations adopted by the Department are required to be “consistent with” regulations adopted by the federal government under the FMLA. The Department is also charged with creating forms for filing benefit claims.

Feasibility Studies to be Done? The Department of Legislative Services is required to contract with a consultant who will study and make recommendations regarding the capability of the Department of Labor to administrator the TCA insurance program.  The report is to be sent to the Governor and legislature by October 1, 2022. (Note: this report has been delayed.)

What Notices Must Employers Provide? Employers must provide written notice to each employee of the rights and duties of an employee under the TCA at the time of hire and annually thereafter. In addition, when an employee requests TCA leave, or an employer knows that an employee’s leave may be covered by the TCA, the employer must notify the employee about the employee’s eligibility under the TCA within five business days. That notice must include information about the:

•    Employee’s right to receive TCA benefits;
•    Procedures for filing a claim for benefits;
•    Employee’s responsibilities with respect to providing notification prior to commencement of the leave and any penalties for failing to do so;
•    Right of the employee to file a complaint for violation of the TCA;
•    Right of the employee to job protection, and;
•    A description of the prohibited acts, penalties, and complaint procedures under the TCA.  

What Type of Notice Will be Required of Employees? Employers may require employees to provide 30 days’ notice of the need to take foreseeable leave. If the need for leave is not foreseeable, the employee must give notice of the need for leave as soon as practicable.  Employees may also be required to comply with employer leave policies if the policies do not interfere with the employee’s ability to use leave under the TCA.
    
Are There Penalties for Failing to Make Required Contributions? The state Secretary of Labor may assess an employer that fails to make required contributions for the amount of the contributions due, interest, and an additional amount not to exceed two times the missed contributions.  The Secretary may also subject the employer to an audit to determine compliance with the TCA.

Can Employees File Complaints Against Employers? Employees may file a written complaint with the Secretary of Labor. The Secretary must conduct an investigation within 90 days of receiving the complaint and attempt to resolve the dispute through mediation. If the dispute is not resolved and the Secretary determines the employer violated the TCA, the Secretary must issue an order that:

•    Directs relief, including lost wages and liquidated damages equal to the lost wages, as well as any other actual damages suffered by the employee;
•    Seeks reinstatement of the employee with or without back pay;
•    Assesses a civil penalty of up to $1,000 for each employee for whom the employer is not in compliance with the TCA.

Enforcement actions by the Secretary are subject to the state Administrative Procedures Act. If the employer does not comply with the Secretary’s order within 30 days, the Secretary, with the employee’s consent, may ask the Attorney General to bring an action on the employee’s behalf and/or bring an action to enforce the civil penalty.
 
Do Employees Have Private Cause of Action Under the TCA? In addition to filing an administrative complaint with the Department of Labor, employees also have the right to bring a civil action in state court within three years of the alleged violation.  The court may award a prevailing employee:

•    Three times the value of the employee’s lost wages
•    Punitive damages
•    Attorney’s fees
•    Injunctive relief
•    Any other relief the court deems appropriate

What Are the Penalties for Making False Statements in Connection with The TCA? Employees who willfully make a false statement or misrepresentation regarding a material fact, or who fail to report a material fact, to obtain benefits under the TCA, may be disqualified from receiving benefits for 1 year.  In addition, the Secretary is required to establish procedures for employers to submit evidence of suspected employee fraud.
   
An employer that willfully makes a false statement or fails to report a material fact regarding a claim for benefits is subject to a civil money penalty of up to $1,000 per occurrence.

Important Dates and Next Steps

•    June 1, 2022 - Effective date
•    October 1, 2022* - Consultant’s report to the Governor and legislature regarding the capability of the Department of Labor to administer the TCA insurance program. (*Delayed at least 3 months.)
•    January 1, 2023 - Department of Labor to Report to the legislature regarding whether employees can collect TCA benefits while on unemployment.
•    June 1, 2023 - Department of Labor to adopt regulations and set initial contribution rates.
•    October 1, 2023 - All employees, employers with 15 or more employees, and self-employed individuals who elect to participate, must begin contributing to the fund.
•    January 1, 2025 - Employees may start applying for leave benefits.

In the interim, employers should be consulting with their payroll providers concerning implementation of the contribution requirements and considering how their business will incorporate TCA leave into their existing leave program.

If you have questions about the Time to Care Act, or other employment law issues, contact Chuck Bacharach.

Chuck R. Bacharach
410-576-4169 • cbacharach@gfrlaw.com