Change is coming for Maryland employers, and now is the time to prepare. The Family and Medical Leave Insurance (FAMLI) program is designed to provide paid leave benefits to employees while balancing the financial responsibility between workers and businesses. Whether you own a small company or manage a large workforce, understanding how FAMLI impacts your business is essential for staying compliant and supporting your team. 

What is Maryland’s FAMLI Program? 

The Family and Medical Leave Insurance (FAMLI) program is Maryland’s new state-run paid leave initiative. This insurance program allows eligible employees to take paid time off for significant life events, such as: 

• Recovering from a serious health condition 

• Caring for a family member with a serious health condition 

• Bonding with a new child (birth, adoption, or foster placement) 

• Handling responsibilities related to military family leave 

Eligible employees can take up to 12 weeks of paid leave, with wage replacement provided through payroll contributions shared by employers and employees. In some situations, employees may take up to 24 weeks of paid leave. Additionally, if an employee is on this leave, their job is “protected”; employers must reinstate the employee to the same or an equivalent position upon their return from FAMLI leave.  

What Employers Need to Know 

We recommend that you start planning now. In the Spring of 2025, employers will be able to register with the State through an online application for a seamless way to comply.  

1. Payroll Contributions Start in 2025 

• Starting on July 1, 2025, Maryland businesses will need to begin payroll contributions to fund the program. 

• Employers will remit the first payment to Maryland in October 2025. 

• Employers and employees may both contribute to the program through payroll deductions depending on the employer size. 

The total contribution rate will be set by the state and will depend on business size, and businesses will need to ensure proper deductions are made. 

 2. Employees Can Begin Taking Leave in 2026 

• Starting July 1, 2026, employees who qualify will be able to apply for and receive benefits through the state-administered program. 

• The state will handle benefit payments, meaning employers do not pay employees directly for FAMLI leave. 

• The employees may use additional paid time and any short-term disability benefits as long as they do not exceed 100% of their normal income.  

3. Who is Covered? 

• Maryland employers with one or more employees working in a position located in Maryland must participate.  

• State residence does not factor into the calculation.  

• Seasonal and part-time employees must be included if they have worked 680 hours within the four calendar quarters reported before they need to take leave.  

• Employers with 15 or more employees must contribute the employer portion of payroll deductions. Employers have the option to withhold half of the contribution rate from the employees. Smaller employers (fewer than 15 employees) are only responsible to deduct and remit the employee portion of contributions. They are not required to make an employer contribution.  

4. How Much Will It Cost? 

• The exact contribution rate is determined by the State and is still being finalized. However, there are unfinalized rates on their website currently.  The amount is a percentage of each employee’s wages up to the Social Security income cap. These rates may change effective following the State’s July 1 through June 30 fiscal year.  

• Employers may have the option to use a private plan instead of the state-run program, as long as it meets the same requirements. Those employers will still be required to submit quarterly reports and must apply to do this instead.  With private plans, the employer may withhold a similar amount from employees to help fund it.  

Why This Matters for Employers 

The FAMLI program aims to provide financial security for Maryland workers while recognizing the realities businesses face. Planning ahead will help minimize disruptions and ensure compliance when contributions begin. Employers should: 

• Stay informed – Keep an eye on state updates regarding final rates and guidelines. Here’s the link to sign up for emails directly from the State.  

• Prepare payroll systems – Work with your payroll provider to prepare implementation deduction plans. 

• Explore compliance options – Consider whether a private plan could be a better fit for your business.  

• Communicate with employees – Once this is finalized this spring, and you have determined which route you’ll take, communicate with your team.  

Final Thoughts 

While this is a big shift for Maryland businesses, it’s also an opportunity to provide meaningful support to employees. By preparing now, employers can ensure a smooth transition into FAMLI while maintaining compliance with state requirements. 

Want to stay up to date? Keep an eye on the latest program details from Maryland and YHB and reach out for guidance as new information is released.