Employment Law Alert: Maryland FAMLI Is Moving Forward: What Employers Should Do Now to Prepare for January 2027
In our prior alert, we explained that Maryland’s Family and Medical Leave Insurance program, known as FAMLI, will create a statewide paid family and medical leave system for Maryland workers. The program covers leave for bonding with a new child, an employee’s own serious health condition, caring for a family member with a serious health condition, and qualifying military-related needs, with the final regulations also recognizing leave to care for a service member whose serious health condition resulted from or was exacerbated by uniformed service. We also noted that the program is not limited to large employers: Maryland employers generally must participate if they employ at least one individual performing qualified employment in the State.
The most important employer takeaway remains timing. Contributions are scheduled to begin January 1, 2027. Benefits become available beginning January 1, 2028, after the one-year seeding period. Employers therefore should use the balance of 2026 to register, update payroll and HR systems, make private-plan decisions, and prepare employee communications before contribution obligations begin.
What Employers Should Do Between Now and December 31
Decide whether to remain in the State plan or pursue a private plan
Employers considering opting out of the state insurance program for an Equivalent Private Insurance Plan, or EPIP, should begin those discussions now. An EPIP is a Maryland DOL FAMLI Division-approved commercially insured or self-insured plan that meets or exceeds the State plan, and employers must remain in the State plan until the Division-approved effective date of an EPIP. EPIPs must cover all employees performing qualified employment, pay benefits to any employee who would be eligible under the State plan, allow leave for the same purposes and increments as the State plan, and avoid additional restrictions beyond those authorized by the State plan.
The Maryland DOL FAMLI Division’s website provides information for those wishing to use a private plan (https://paidleave.maryland.gov/employers/understand-your-plan/). Employers who intend to apply for a private plan in 2027 and wish to be exempt from contributions during the seeding period must submit a Declaration of Intent (DOI) between September 1 and November 15, 2026.
Employers Using the State Plan Must Register with FAMLI
Employers should register with FAMLI now rather than waiting until payroll contributions begin. The regulations require every employer to create and maintain an online account with the FAMLI Division to submit required information reports, remit contribution payments, and communicate with the Division about reporting and contribution obligations. Employers that use outside payroll, benefits, HR, or accounting support should coordinate account access early because TPAs cannot register their employer clients.
Prepare payroll systems for contribution withholding and reporting
Employers should also decide before the first 2027 payroll whether they will withhold the employee share or pay some or all of that share themselves. Employers are responsible for remitting 100 percent of contributions due each quarter, but may withhold up to 50 percent of the total contribution rate from employees or elect to pay all or part of the employees’ share. Written notice of the commencement of withholding and any change to employee contributions must be provided at least one pay period before withholding begins or changes.
This is an area where implementation errors can be costly. If an employer fails to make a proper payroll deduction, the employer is treated as having elected to pay the employee’s portion for that pay period and generally may not recoup the missed employee share from later pay cycles, subject to a narrow six-pay-cycle exception where insufficient paycheck funds were available due to higher-priority required withholdings.
Employers can use the Quarterly Wage and Hour Report File Guide and Sample Quarterly Wage and Hour Report template now to test whether their payroll systems can capture and report the required wage and hour data. Quarterly wage and hour reports must include wages and hours worked for each employee performing qualified employment in the immediately preceding quarter, and those reports are due on or before the quarterly contribution payment due date. Contributions apply to wages paid to employees performing qualified employment up to the Social Security wage base.
Confirm employer size and contribution responsibility
Employers should determine whether they qualify as a small employer before contributions begin. A small employer is one with fewer than 15 employees, determined by counting employees within and outside Maryland and averaging the number of employees paid wages each quarter over the previous calendar year. Employers under that threshold are responsible for remitting only 50 percent of the total contribution rate. Because employer size is based on all employees, not only employees performing qualified employment in Maryland, multi-state employers should not assume that a small Maryland workforce automatically means small-employer treatment.
Update leave, PTO, disability, and FMLA procedures
Employers should review their leave policies before January 1 because FAMLI will interact with existing FMLA, PTO, sick leave, short-term disability, and other paid-leave programs. The regulations provide that an employee’s FAMLI leave duration may be reduced by FMLA usage only if the FMLA leave was also FAMLI-eligible, the employer notified the employee of potential FAMLI eligibility when the employee took FMLA, and the employee did not apply for FAMLI leave. This means employers should build FAMLI eligibility screening into FMLA intake and approval processes before claims begin.
Employers also should revise PTO and wage-supplement policies to account for the difference between general purpose leave and Alternative FAMLI Purpose Leave. Neither the employer nor the employee may require general purpose leave to substitute for FAMLI leave, but the employer and employee may mutually agree to use general purpose leave wages to supplement FAMLI benefits up to 100 percent of the employee’s average weekly wage. By contrast, an employer
may require Alternative FAMLI Purpose Leave to run concurrently or in coordination with FAMLI leave only if that leave satisfies the regulatory criteria, including that it is paid, not accrued, not subject to repayment on separation, not available for general purposes, and available without requiring exhaustion of another form of leave.
Prepare employee notices and manager training
Employers should prepare employee communications before payroll deductions begin. The initial alert identified the need to notify employees one pay period before payroll deductions begin, at hire, annually, when an employee requests leave using FAMLI-related language, and when the employer knows an employee is taking leave for a qualifying reason. The final regulations also require employer notice about FAMLI leave and benefits six months before benefits commence, at hire, annually, 30 days before changes to the employer’s FAMLI procedures or plan, and when the employer knows an employee’s leave or leave request may be FAMLI-eligible.
Employers should train HR, benefits, payroll, and front-line managers to identify FAMLI-triggering facts and route requests promptly. Employees generally must provide 30 days’ notice of foreseeable FAMLI leave, but they need only provide notice as soon as practicable when the need for leave was unforeseeable. For intermittent leave, employees must make reasonable efforts to schedule leave in a way that minimizes disruption and provide reasonable and practicable prior notice of the reason, dates, and duration of intermittent leave.
Build a claims-response process
Although benefits are not scheduled to begin until 2028, employers should design the claims-response process now because the final regulations impose short response periods once claims are filed. A covered individual may file a claim within 60 days before the anticipated start of leave and no later than 60 days after leave begins, subject to a good-cause waiver. An employer has five business days to respond to a claim notification from the Division or an EPIP, and if the employer does not respond, the application is treated as complete. Employers therefore should determine now who will receive claim notices, who will verify employment and wage information, and how FAMLI claims will be coordinated with FMLA, disability, sick leave, PTO, and any EPIP.
DOL Resources For Employers
Employers should register using the Department’s “Register with FAMLI as an employer or TPA” resource identified in the DOL news alert. Employers should also review the Department’s Quarterly Wage and Hour Report File Guide and Sample Quarterly Wage and Hour Report template so payroll, HRIS, and vendor systems are ready to submit wage and hour data. Employers evaluating whether to opt out of the State plan should review the Department’s private plan and Declaration of Intent resources now, particularly if they need to consult with an insurance producer or carrier before making a private-plan decision. Employers that rely on CPAs, payroll administrators, HR administrators, or benefits administrators should review the Department’s guidance on managing FAMLI for clients and coordinate registration because TPAs cannot register on behalf of clients.
- Download a Quarterly Wage and Hour Report (QWHR) File Guide to help you understand more about the file specifications and submission process.
- Download a Sample QWHR template so you can update your systems and processes. Alternatively, you will have the option to manually enter the data once you are logged in.
- Learn more about private plans, including the upcoming Declaration of Intent (DOI) process.
- Register as an employer with FAMLI, so you’re set up for next steps, including inviting team members to join your profile. While TPAs cannot register on behalf of clients, TPAs can register and send invitations to connect with registered clients.
Bottom Line
Maryland employers should treat the remainder of 2026 as the implementation runway for FAMLI. By December 31, employers should be registered, payroll systems should be ready to calculate contributions and generate quarterly wage and hour reports, employee notices should be prepared, leave policies should be updated, and any private-plan strategy should be well underway. Employers that wait until contributions begin risk payroll errors, notice failures, missed private-plan deadlines, and avoidable disruption when FAMLI moves from planning to administration.