On January 12, the Maryland General Assembly overrode Governor Larry Hogan’s veto and passed the Healthy Working Families Act. The Act will go into effect on February 11, 2018, unless the General Assembly passes legislation delaying its implementation.  Yesterday, one of the principal sponsors of the law did introduce legislation that would delay enforcement of the law until April 2018.  We will keep you posted on whether the implementation of the Act is delayed.

In the meantime, the Act requires Maryland businesses with at least 15 employees to offer paid sick and safe leave as well as requiring smaller businesses to provide unpaid sick and safe leave.

More specifically, the Act requires employers with at least 15 employees, regardless of whether those employees are seasonal, temporary, part-time, or full-time, to offer eligible employees the ability to earn up to 40 hours of paid leave a year.  The 40 hours can be awarded at the beginning of each year or accrued at a rate of one hour for every 30 hours worked.  Moreover, employees can carry over up to 40 hours of paid leave a year.  Employers can cap use of paid leave at 64 hours per year and are not required to pay out unused, accrued sick leave when an employee is terminated.  Employers with up to 14 employees must provide unpaid earned sick and safe leave under the same terms.

The paid leave can be used to: 1) care for the physical or mental health of the employee or a family member, including obtaining preventative care; 2) take maternity or paternity leave; or 3) obtain relief in response to domestic violence, stalking, or sexual assault of the employee or a family member.

There are some exceptions.  For example, the Act does not apply to workers who 1) regularly work less than 12 hours a week; 2) are under the age of 18; 3) are certain independent contractors; 4) are certain agricultural workers; or 5) work on an as-needed basis in the health and human services industry.  Additionally, there are exceptions for employers in the construction industry that are parties to collective bargaining agreements.

Additionally, employers may set some restrictions on the use of paid leave such as 1) only allowing the use of paid leave after an employee has worked 106 calendar days from the date of hire; 2) require up to seven days’ notice for foreseeable leave; and 3) implementing policies to prevent improper use.  Employers can also obtain verification regarding appropriate use of paid leave if it is used for more than two consecutive scheduled shifts or between the 107th and 120th calendar days of employment and the employee agreed to provide verification at the time of hire.

Employers are required to notify employees of their rights under the Act and to provide a written statement each pay period detailing the amount of earned leave available for use.  The Department of Labor, Licensing, and Regulation (DLLR) has been directed to create a model notice, but it is not clear when such notice will be available.

Next Steps for Employers

Employers should immediately review and revise their paid time off (PTO), sick, and other leave policies to ensure compliance with the Act.  At the same time, employers should monitor any action the General Assembly takes to delay implementation.  In the review and revision process, particular care should be given to:

  • Recordkeeping: employers must keep records regarding leave accrual and use for three years;
  • Notice: if DLLR does not issue a model notice before the implementation date, employers must create their own;
  • Payroll systems: employers must update payroll systems to report leave balances on pay stubs and meet the Act’s requirements;
  • Applicability: the Act applies to all part-time employees who do not fall into one of the exempt categories; and
  • Carryover: employers must allow employees to carry up to 40 hours of paid leave time over per year (subject to the 64 hour use limitation)

UPDATE (February 2, 2018): Today, the bill to delay the Act’s implementation received a favorable vote from the Maryland Senate Finance Committee and will move to the full Senate for a vote. The bill passed out of Committee with two important amendments that will benefit employers.

  • First, the Act would not take effect until July 1, 2018, rather than April 11, 2018, giving employers additional time to implement policies and procedures in compliance with the Act.
  • Second, leave accrual – currently slated to begin on February 11, 2018 – would also not begin until July 1. This should eliminate issues that would have arisen as leave accrued prior to employers being required to track it and in the absence of any regulations from the Department of Labor, Licensing, and Regulation.

The bill still has to pass both the Senate and the House of Delegates with a 3/5 vote if the Act’s implementation is to be delayed due to the bill’s designation as emergency legislation. The full Senate is expected to vote on the bill as early as Monday, February 5th.

UPDATE (February 8, 2018): The Senate passed the bill delaying the Act’s implementation, as amended, by a vote of 29-17.  The bill will now move to the House of Delegates for consideration where it will face an uphill battle due to the short time frame until the Act’s effective date.  Additionally, key legislators in the House have expressed opposition to delaying the Act’s implementation.

UPDATE (February 12, 2018): The Act is now in effect as the House of Delegates chose not to delay implementation.  A sample employee notice poster created by DLLR is here: http://www.dllr.maryland.gov/paidleave/paidleaveposter.pdf

Rachel Severance is an associate in the firm’s Labor and Employment Department, resident in its Washington D.C. office.