Maryland’s FAMLI Program, Part I: An Overview of The Law
In 2022, the Maryland General Assembly overrode Governor Larry Hogan’s veto to enact the law that created the Family and Medical Leave Insurance (FAMLI) program. Applicable to all employers with Maryland employees and starting July 1, 2026, the program will provide most employees in Maryland with twelve weeks of paid family and medical leave, with the possibility of an additional twelve weeks of paid parental leave. Contributions from employers and employees to fund the program will begin July 1, 2025.
Quick Hits
Maryland’s Family and Medical Leave Insurance (FAMLI) program provides most Maryland employees with up to twelve weeks of paid leave, with some eligible for an additional twelve weeks, starting July 1, 2026, funded by contributions from both employers and employees beginning July 1, 2025.
The Maryland Department of Labor has released two sets of proposed regulations for the FAMLI program.
Under the FAMLI program, employees in Maryland will be eligible for paid leave for various family and medical reasons, and if they take leave for their own medical reasons, they will be eligible for an additional twelve weeks for parental bonding purposes.
There is much that employers may need to do to prepare. That preparation will depend on regulations issued by the Maryland Department of Labor (MDOL) to implement the law. Thus far, the MDOL has released two sets of proposed regulations, with more to come. The first set, released in October 2024, covers general provisions, contributions, equivalent-private insurance plans, and claims, while the second set, released on January 13, 2025, and currently open for public comment, covers dispute resolution. Part one of this multipart series explains the law, with parts two and three summarizing the proposed regulations, as well as employer concerns.
The law sets forth a general framework for the program, consisting of the following elements:
Leave Amount and Reasons for Leave
Effective July 1, 2026, all employees who have worked at least 680 hours in Maryland over the prior twelve months will be eligible to receive up to twelve weeks of paid leave for their own serious health condition, to care for a family member’s serious health condition, for parental bonding (including kinship care), to care for an injured or ill military servicemember who is next of kin, or for certain qualifying exigency reasons related to a servicemember’s active duty. If an employee has taken FAMLI leave for their own serious health condition, they may receive an additional twelve weeks for parental bonding purposes (and vice versa). The law requires employees to take leave in a minimum of four-hour increments.
Family members include the child of the employee or their spouse, the parent of the employee or their spouse, the employee’s spouse or domestic partner, and the employee’s grandparent, grandchild, or sibling. These include biological, adopted, foster, step, legal guardian, and in loco parentis relationships.
Contributions
The benefits will be administered through a state program, which will be funded through contributions from employers and employees, starting July 1, 2025. The rate of contribution will be determined annually by the Maryland secretary of labor, but is capped at 1.2 percent of an employee’s wages, up to the Social Security wage base (which will be $176,100 in 2025). The law splits contributions 50-50, unless the employer elects to make the employee share of the contribution as well. The law does not require small employers (those with fewer than fifteen employees) to submit the employer portion of the contribution (although employee contributions are still required), and the Maryland Department of Health will reimburse certain licensed/certified community health providers for up to the full amount of their share of the premium.
Employer Notice to Employees
The law requires covered employers to provide written notice to employees of their rights and duties under the law upon hire, annually, and within five days when leave is requested or when the employer knows leave may qualify.
Employee Notice to Employers
If the need for leave is foreseeable, the law requires employees to provide employers with at least thirty days’ written notice of their intention to take leave. If it is not foreseeable, they must provide notice as soon as practicable and generally comply with the employer’s absence-reporting requirements. If intermittent leave is required, the employee must make a reasonable effort to schedule the leave to not unduly disrupt business operations.
Employee Application for Benefits
Employees may apply for benefits up to sixty days before and sixty days after the anticipated start date of the leave, although the MDOL may waive the filing deadlines for good cause. Employers have five days to respond to an application.
Interaction With Other Benefits
FAMLI leave will run concurrently with federal Family and Medical Leave Act (FMLA) leave. Employers may not require employees to use vacation, sick leave, or other paid time off before or while receiving FAMLI benefits, although employers may permit employees to use such leave to bridge the difference between FAMLI benefits and full pay. However, if an employer provides paid leave specifically for purposes of parental bonding, family care, military leave, or disability, the employer may require employees to use such leave concurrently or coordinated with FAMLI leave. Employees receiving unemployment insurance benefits or workers’ compensation benefits (other than for a permanent partial disability) are not eligible for FAMLI benefits.
Job Protection and Health Benefits
During FAMLI leave, the law states that employers may discharge employees only for cause. They must otherwise be reinstated to their job, unless the employer determines that reinstatement will cause “substantial and grievous economic injury” to their operations and has notified the employee of that fact. In addition, the law requires employers to maintain the employee’s health benefits during FAMLI leave.
Private Employer Plans
Employers may establish their own plan or utilize a certified third-party insurance plan that meets or exceeds the rights, protections, and benefits provided to employees under the law. For such private employer plans to be valid, the MDOL, which is directed to establish “reasonable criteria” for such plans, must approve the plan.
DOL Clarifies That FMLA Paid Leave Substitution Rules Apply When Employees Receive State or Local Paid Leave Benefits
As more states implement paid family leave programs, employers increasingly are faced with questions about how these state programs interact with Family Medical Leave Act of 1993 (FMLA) regulations. A recent opinion letter from the U.S. Department of Labor’s (DOL) Wage and Hour Division (WHD) provides important guidance on this issue.
In an opinion letter dated January 14, 2025, the WHD clarified whether FMLA regulations on the “substitution of paid leave in 29 C.F.R. § 825.207(d) apply when employees take leave under state paid family leave programs.”
Quick Hits
The DOL’s Wage and Hour Division clarified that in the same way employers cannot require the substitution of accrued employer-provided paid leave benefits when employees receive compensation from disability plans and workers’ compensation programs, employers may not unilaterally require employees to substitute accrued employer-provided paid leave benefits when employees receive compensation from state or local paid family or medical leave programs.
The Wage and Hour Division also reiterated that the substitution provision would apply that if an employee’s FMLA-qualifying leave is unpaid.
The DOL Opinion Letter
On January 14, 2025, the WHD issued an opinion letter regarding the FMLA “substitution rule” applicability when employees are receiving state paid family leave benefits. The WHD concluded that the substitution rule did apply and that employers could not require employees to use accrued paid leave when employees were receiving paid family leave benefits. The WHD recognized in its opinion that FMLA regulations did not address the issue directly.
The FMLA provides unpaid job-protected leave for eligible employees for qualifying reasons like childbirth, personal health conditions, or caregiving for a sick family member. Under the FMLA substitution regulation, an employee may elect or an employer may require the employee to “substitute” accrued employer-provided paid leave benefits for any part of the unpaid FMLA leave. Allowing an employee to substitute accrued paid leave helps mitigate an employee’s wage loss.
The WHD consistently has taken the position that neither the employer nor the employee unilaterally can require or elect substitution of employer-provided accrued paid leave during a FMLA absence in which the employee receives disability or workers’ compensation benefits because the employee is on paid, not unpaid, leave. However, an employee and employer mutually may agree, subject to state law requirements, that employees may supplement or “top off” benefits from a disability or workers’ compensation program so that employees receive up to 100 percent of their normal wages.
Because the FMLA only provides unpaid leave, several states have implemented their own paid family and medical leave programs. These programs vary from state to state, but generally provide employees with partial income replacement benefits during their leave for qualifying reasons that often overlap with the qualifying reasons for leave pursuant to the FMLA.
The WHD drew a parallel between paid family leave programs and employer-provided disability and workers’ compensation programs. The opinion letter explained that the FMLA substitution provision does not apply for compensated leave designated as FMLA-qualifying leave regardless of whether an employee receives compensation from either an employer-provided disability or workers’ compensation program, or a state or local family and medical leave program. Accordingly, an employer cannot require that employees use accrued employer-provided paid leave benefits during a FMLA leave when the employee is receiving state or local family and medical leave program benefits.
The WHD’s position is consistent with many states’ approaches to the required substitution issue. For example, California prohibits employers from forcing employees to use PTO/vacation when receiving California Paid Family Leave benefits. Similarly, the Colorado Paid Family and Medical Leave Insurance (FAMLI) program prohibits employers from requiring employees to use or exhaust any accrued vacation leave, sick leave, or other paid time off prior to or while receiving FAMLI benefits, although they mutually may agree to do so. In Massachusetts, employers must allow, but may not require, employees receiving Paid Family and Medical Leave (PFML) benefits to supplement or “top off” their PFML benefits with available employer-provided accrued paid leave.
FTC Finalizes Long-Awaited Updates to Children’s Privacy Rule
On January 16, 2025, the FTC announced the issuance of updates to the FTC’s Children’s Online Privacy Protection Rule (the “Rule”), which implements the federal Children’s Online Privacy Protection Act of 1998 (“COPPA”). The updates to the Rule come more than five years after the FTC initiated a rule review. The Commission vote on the Rule was 5-0, with various Commissioners filing separate statements. The updated Rule, which will be published in the Federal Register, contains several significant changes, but also stops short of the version proposed by the FTC in January 2024. The Rule will go into effect 60 days after its publication in the Federal Register; most entities subject to the Rule will have one year after publication to comply.
Key updates to the Rule include:
Requirement to obtain opt-in consent for targeted advertising to children and other disclosures of children’s personal information to third parties: The Rule will require operators of child-directed websites or online services to obtain separate verifiable parental consent before disclosing children’s personal information to third parties. According to a statement filed by outgoing FTC Chair Lina Khan, this means that operators will be prohibited from selling children’s personal information or disclosing it for targeted advertising purposes unless parents separately agree and opt in to these uses.
Limits on data retention: The Rule will prevent operators from retaining children’s personal information for longer than necessary than the specific documented purposes for which the data was collected. Operators also must maintain a written data retention policy that (1) details the specific business need for retaining children’s personal information and (2) sets forth a timeline for deleting this data. Operators may not retain children’s personal information indefinitely.
Changes to key definitions: The Rule also makes several changes to the definitions that govern its application. For example, the definition of “personal information” now includes biometric identifiers that can be used for the automated or semi-automated recognition of a child (e.g., fingerprints, handprints, retina patterns, iris patterns, genetic data – including a DNA sequence, voiceprints, gait patterns, facial templates, or faceprints). In addition, the factors the Commission will take into account in considering whether a website or service is “directed to children” will be expanded to include marketing or promotional materials or plans, representations to consumers or third parties, reviews by users or third parties and the ages of users on similar websites or services.
Increased Safe Harbor transparency: FTC-approved COPPA Safe Harbor programs are required to identify in their annual reports to the Commission each operator subject to the self-regulatory program (“subject operator”) and all approved websites or online services, as well as any subject operator that left the program during the time period covered by the annual report. The Safe Harbor programs also must outline their business models in greater detail and provide copies of each consumer complaint related to a member’s violation of the program’s guidelines. In addition, Safe Harbor programs must publicly post a list of all current subject operators and, for each such operator, list each certified website or online service.
Importantly, the Rule is notable for what it does not contain.
No EdTech changes: Despite having proposed imposing a wide range of obligations on EdTech companies operating in the education space, the Rule avoids incorporating any education-related requirements. According to the FTC, because the Department of Education has indicated its intention to update its FERPA regulations (34 C.F.R. 99), the Commission sought to avoid changing COPPA in any way that might conflict with the DOE’s eventual amendments. Instead, the Commission states it will continue to enforce COPPA in the EdTech context consistent with its existing guidance.
No coverage of user engagement techniques: The Rule does not incorporate the proposal to require parental notification and consent for the collection of data used to encourage or prompt children’s prolonged use of a website or online service. The Commission indicated that, after reviewing the public comments, it believes the proposed use restriction “was overly broad and would constrain beneficial prompts and notifications.” The FTC cautioned, however, that it nevertheless may pursue enforcement under Section 5 of the FTC Act in appropriate cases to address unfair or deceptive acts or practices encouraging prolonged use of websites and online services that increase risks of harm to children.
Personalization and contextual advertising still exempted: The Rule does not limit the “support for the internal operations” exemption under COPPA to exclude operator-driven personalization or contextual advertising.
No need to tie personal information collected to specific uses: The Rule will not require that operators correlate each data element collected online from children to the particular use(s) of such data element.
In voting in support of the revised Rule, incoming FTC Chair Andrew Ferguson filed a separate statement expressing what he termed “serious problems” with the Rule, which he blamed on “the result of the outgoing administration’s irresponsible rush to issue last-minute rules.” Ferguson would have required the Rule to clarify instances in which an operator’s addition of third parties to whom they provide children’s personal information would trigger a need for updated notice and refreshed consent. He also took issue with the prohibition on indefinite retention of children’s personal information, predicting that it “is likely to generate outcomes hostile to users.” Finally, he indicated his belief that the FTC missed an opportunity to make clear the Rule is not an obstacle to the use of children’s personal information solely for the purpose of age verification.
DOL: Employers Cannot Mandate PTO Use with State/Local Paid Leave Benefits During FMLA
The U.S. Department of Labor Wage and Hour Division (“WHD”) has issiued an opinion letter stating that employers cannot require employees to substtute accrued paid time off during a Family and Medical Leave Act (“FMLA”) leave where the employee is also receiving benefits under a state or local paid family or medical leave program.
The opinion letter – which does not have the force of law but sets forth the agency’s enforcement position – answers a longstanding open question around the interplay between the FMLA, state/local paid leave programs, and accrued paid time off.
A Quick Refresher: FMLA and State Family/Medical Leave Programs
The federal FMLA entitles eligible employees of covered employers to up to 12 weeks (or in limited cases, 26 weeks) of unpaid, job-protected leave per 12-month period for specified family and medical reasons. Covered reasons for FMLA leave include an employee’s own serious health condition, caring for a parent, spouse or child with a serious health condition, and caring for a new child following birth, adoption or foster placement.
Since the FMLA’s enactment in 1993, numerous states (including New York, California, Massachusetts, Connecticut, and others) have instituted family and/or medical leave programs that provide partially paid leave (usually based on a percentage of the employee’s wages, up to a set cap) for personal medical, family care and/or parental leave reasons. Likewise, certain local governments have implemented paid family and medical leave programs specifically for their municipal employees. Many of these programs permit leave for reasons that are also qualifying reasons for leave under the FMLA. However, state/local paid leave programs often include benefits that differ from or exceed what the FMLA provides, such as longer leave periods or additional covered reasons for leave.
What Do the FMLA Regulations Say About Substitution of PTO?
While FMLA leave is unpaid, the governing regulations allow an employee to elect, or an employer to require the employee, to “substitute” accrued employer-provided paid time off (e.g., paid vacation, paid sick leave, etc.) for any part of an unpaid FMLA period – that is, the accrued paid time off may be used concurrently with FMLA leave to enable the employee to receive full pay during an otherwise unpaid leave period. However, the regulations further state that, during any part of an FMLA leave where an employee is receiving disability or workers’ compensation benefits, neither the employer nor the employee can require substitution of paid time off because such leave is not unpaid. Rather, when disability or workers’ compensation benefits are being received, the employer and the employee may only mutually agree (where state law permits) that accrued paid time off will be used to supplement such benefits.
EXAMPLE: John tells his employer he requires 12 weeks of leave to recover from a serious back surgery. John’s employer designates the 12 weeks as FMLA leave. John also applies and is approved for 12 weeks of disability benefits under his employer’s short-term disability program, pursuant to which he will receive a benefit equal to two-thirds of his regular wages. John’s employer cannot require John to substitute his accrued vacation time because he is receiving disability benefits and therefore his FMLA is not unpaid. However, John and his employer agree to use one-third of his available vacation time each week to supplement his disability pay so John receives 100% pay during the leave.
How Does the Opinion Letter Impact Substitution of PTO During FMLA?
Because they have only more recently come into existence, state and local paid family or medical leave programs are not directly addressed in the FMLA regulations. However, the opinion letter now makes clear that “the same principles apply to such programs as apply to disability plans and workers compensation programs.”
First, the opinion letter emphasizes that “where an employee takes leave under a state or local paid family or medical leave program, if the leave is covered by the FMLA, it must be designated as FMLA leave[.]” The opinion letter then goes on to state:
[W]here an employee, during leave covered by the FMLA, receives compensation from a state or local family or medical leave program, the FMLA substitution provision does not apply to the portion of leave that is compensated. Because the substitution provision does not apply, neither the employee nor the employer may use the FMLA substitution provision to unilaterally require the concurrent use of employer-provided paid leave during the portion of the leave that is compensated by the state or local program. [However], if the employee is receiving compensation through state or local paid family or medical leave that does not fully compensate the employee for their FMLA covered leave, and the employee also has available employer-provided paid leave, the employer and the employee may agree, where state law permits, to use the employee’s employer-provided accrued paid leave to supplement the payments under a state or local leave program.
The opinion letter also notes that if an employee’s leave under a state or local paid family or medical leave program ends before the employee has exhausted their full FMLA leave entitlement and the leave therefore becomes unpaid, the FMLA substitution provision would then apply and the employee would be able to elect, or the employer would be able to require the employee, to substitute accrued paid time off.
EXAMPLE: Jane tells her employer she requires 12 weeks of leave to care for her husband while he recovers from a serious back surgery. Jane’s employer designates the 12 weeks as FMLA leave. Jane also applies and is approved for 8 weeks of paid family care benefits under her state’s paid family and medical leave program, pursuant to which she will receive a benefit equal to two-thirds of her regular wages. Jane’s employer cannot require Jane to substitute her accrued vacation time during the 8 weeks of her FMLA leave where she is concurrently receiving state family care benefits because her FMLA during that time is not unpaid. However, Jane and her employer agree to use one-third of her available vacation time each week during the first 8 weeks to supplement her state family care benefit so Jane receives 100% pay during that time. Beginning on week 9, Jane is no longer eligible for state family care benefits and her FMLA leave is now unpaid, so pursuant to its FMLA policy Jane’s employer requires her to substitute her remaining accrued vacation time during the FMLA leave until it is exhausted.
Implications and Action Steps for Employers
The opinion letter clarifies what has been a gray area around the interplay between the FMLA, state/local paid leave programs, and accrued paid time off. For example, the regulations governing the New York Paid Family Leave Law (“NYPFL”) state that “[a]n employer covered by the FMLA . . . that designates a concurrent period of family leave under [the NYPFL] may charge an employee’s accrued paid time off in accordance with the provisions of the FMLA.” However, it had previously been unclear whether this language in fact permitted employers to require substitution of accrued paid time off during a concurrent FMLA and NYPFL leave. It is now clear that such a requirement is impermissible, though employers and employees may agree to use paid time off to supplement NYPFL benefits.
Employers should now review their leave policies and practices to ensure that any provisions around the use of accrued paid time off during FMLA leave comport with the WHD’s interpretation of the requirements of the law. To the extent that any such policies require employees to substitute accrued paid time off during an FMLA leave where an employee is concurrently receiving disability, workers’ compensation or state/local paid family or medical leave benefits, the policies should be revised to provide that paid time off may only be used to supplement such other payments and only if both the employer and the employee agree.
However, employers are reminded that, as noted above, there may be situations where employees are eligible for benefits under state/local paid leave laws that are not also covered by the FMLA. As such, employers should also take note of what an applicable state/local paid family or medical leave law may permit (or not permit) around the substitution of paid time off and apply those rules during any leave period that does not run concurrently with the FMLA.
Ten Minute Interview: Family Investments [Video]
Brian Lucareli, director of Foley Private Client Services (PCS) and co-chair of the Family Offices group, sits down with Kay Gordon, partner, and member of our Fund Formation and Investment Management practice group, for a 10-minute interview to discuss family investments. During this session, Kay explained which are the structures utilized for family investments, the benefits of using external, as opposed to internal, management, and what are some of the legal considerations for retaining internal and/or external managers.
California May Soon Require Companies To Submit Elder Abuse Prevention Plans
California legislators are introducing the first bills in the current biennium. One of these bills, AB 83 (Pacheco), would add an entirely new division to the California Financial Code. This new division would consist of a single section and this single section would consist of a single sentence:
The Department of Financial Protection and Innovation shall require companies to submit to the department an elder abuse prevention plan.
Although it has been said that brevity is the soul of wit,* sometimes brevity is simply witless – like this bill. Will all companies be subject to this requirement or only those licensed or directly regulated by the DFPI? How will an out-of-state company know whether it is subject to this requirement? Is this a one-time requirement or must companies file plans annually or on some other periodic basis? Will the DFPI simply receive the submitted reports or will it review the reports? What are the penalties, if any, for failure to file?
Given that this bill is so scant on important details, I suspect that it is a placeholder for some larger, and perhaps, even markedly different legislation.
_______________________________*Wm. Shakespeare, Hamlet Act 2, Sc. 2.
Illinois Human Rights Act Now Protects Employees With “Family Responsibilities”
As of January 1, 2025, Illinois became the latest in a minority of states and municipalities to expand employment protections for employees who act as family caregivers. House Bill 2161, which passed in August 2024, amends the Illinois Human Rights Act (the IHRA or “the Act”) to additionally prohibit discrimination against employees based on their “family responsibilities.”
The phrase “family responsibilities” is defined broadly, including an employee’s “actual or perceived provision of personal care to a family member.” “Personal care” includes activities that ensure a covered family member’s basic medical, hygiene, nutritional, or safety needs are met as well as transporting family members to medical appointments, if the family member is unable to meet such need(s) for themselves.
As amended, the Act makes it unlawful for any employer to “refuse to hire, to segregate, to engage in harassment . . . or to act with respect to recruitment, hiring, promotion, renewal of employment, selection for training or apprenticeship, discharge, discipline, tenure or terms, privileges or conditions of employment on the basis of . . . family responsibilities.” In addition, employment agencies are prohibited from failing or refusing to properly classify, accept applications and register for employment referral or apprenticeship referral, refer for employment, or refer for apprenticeship on the basis of family responsibilities.
Although the IHRA amendments increase protections for employees serving as caregivers, they also make clear that employers, employment agencies, or labor organizations are not required to make accommodations or modifications to workplace rules or policies for an employee based on family responsibilities, including accommodations or modifications related to leave, scheduling, productivity, attendance, absenteeism, timeliness, work performance, referrals from a labor union hiring hall, and benefits, so long as the employer’s rules or policies do not otherwise violate the Act.
Illinois employers should review their current handbooks and anti-discrimination/harassment policies — and consult their regular employment counsel — to ensure that these new protections are incorporated.
Solo Aging: Planning for Your Best Life
More and more of the clients I see lately are solo agers. A recent study found that 34 percent of older adults do not have a spouse, significant other or children who can provide their care. Although historically children and close relatives were the primary support for aging adults, there are many ways to fill that gap. Whether through informal networks of friends and “found” families, or through the guidance of professionals like our firm, it is important to plan.
When you live alone, you need to plan for aging differently than someone who is married or has a life-partner. In most instances, those with a partner can rely on them to help out with expenses and be a caregiver, if they should become ill. However, when you are single, especially if you do not have close family, you need to plan in advance and you need to plan better.
Most important of all: make sure that decisions about your health and well-being are made the way you want them to be made, if there comes a time you are not able to make them for yourself. That means picking a person you trust and giving them everything they need to act on your behalf. Your surrogate needs to know about your finances, your health information, your values and goals, so they can step into your shoes.
New Jersey law provides several tools to allow individuals to plan for their future and legacy wishes. In addition to a Will, POA, and health proxy, revocable trusts and health care instruction directives can be very useful for directing your surrogate as to how and where you want to be cared for if you need long term care. Solo agers will be best served if they think beyond basic formulaic legal documents. Because New Jersey does not have required statutory forms, estate planning documents can build in protections against financial exploitation such as trust protectors or advisors, POA monitors or tie-breakers, or trusted contacts. A POLST (Practitioner Order on Life Sustaining Treatment) is another great tool in New Jersey to ensure your treatment wishes are followed. Because it is a medical order, it is more likely to be honored than a Living Will. New Jersey also allows individuals to name a Funeral Representative in their Wills which can be essential for those who want to designate someone other than their next of kin to handle their arrangements.
Getting estate planning documents completed is important but it is not the only thing to consider. You need a care plan which addresses emergencies as well as a financial plan. You may want to consider long term care insurance. Someone turning 65 has a nearly 70% chance of needing long-term care in their remaining years. Solo agers are more likely to need to rely on paid professional caregivers. It’s important to consider your options for care before you need it. You also should discuss these issues with your friends or family who you have nominated to make decisions for you, so they know your wishes. No one likes to think about these issues, but studies show that individuals who have not created a care plan and designated a surrogate often end up receiving care they did not want and are more likely to end up in an institutional setting.
There are a growing array of resources and options available to individuals who are ready to put together an aging life care plan and a team to support them along the way. Being proactive will give you the peace of mind to know you do not have to face aging and illness alone.