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Employment Law Alert – Maryland and D.C. Paid Leave Legislation, and Fourth Circuit Implications for Businesses Using Temps

December 9, 2016

Reading The Tea Leaves:  Maryland and D.C. Employers Should Prepare for Paid Leave Legislation

Recent steps taken in Maryland and D.C. indicate that many local employers may soon be required to provide paid sick or family leave for their employees.

On Tuesday, December 6th, the D.C. Council in an 11-2 vote gave preliminary approval to the Universal Paid Leave Amendment Act of 2016 – a bill that would place the District at the forefront of jurisdictions with employee-friendly paid leave laws.  This legislation, if adopted, would provide D.C. employees with 8 weeks of paid leave following the birth or adoption of a child, 6 weeks to care for a family member, and 2 weeks of personal medical care.  The District would impose a new payroll tax on businesses to cover the costs of providing paid leave under this bill.

The Council will vote for final approval of the bill on December 20th.  Although Mayor Bowser has not revealed whether she would support the bill following final approval, if the Council members vote as they did on Tuesday, the bill would be veto proof.  If the bill passes, it is estimated that the District will start collecting taxes in 2019, in order to provide paid leave for employees in 2020.

On Wednesday, December 7th, Maryland Governor Larry Hogan announced his plans to introduce legislation which would provide paid sick leave for many workers in the state.  Governor Hogan’s proposal would require businesses with 50 or more employees to offer at least 40 hours of paid sick leave per year (Note: Most employers in Montgomery County already have to provide paid sick leave to employees pursuant to local law. This new legislation would affect employers state-wide).  Employers with less than 50 employees would be eligible for tax breaks as an incentive to provide leave.  This bill is expected to be introduced when the General Assembly returns in January 2017.

Although no legislation has been finalized, these actions by the D.C. Council and Governor Hogan, suggest that local businesses should start preparing for paid leave requirements in the near future.

Fourth Circuit Holding Has Broad Implications for Businesses Using Temps

In a decision released earlier this week, the Fourth Circuit Court of Appeals held that businesses that use workers retained through staffing agencies, such as temps, may be considered co-employers for the purposes of determining whether workers are covered under insurance policies.  In Interstate Fire & Cas. Co. v. Dimensions Assur. Ltd., No. 15-1801 (4th Cir. Dec. 6, 2016), the court found that a hospital’s policy insuring it for malpractice of its employees extended coverage to a nurse who was hired through a staffing agency.  In making its determination, the Court employed the “control” test, and stated that “one who works in the service of another who has a right to control the details of the work is the employee of the entity with the right to control,” and this rule applied even when “liability for the employee has been assigned by contract between co-employers.”

While this decision was in the insurance context, the court’s holding could have a significant impact if applied broadly going forward.  Any employer using workers provided by a staffing agency should be aware of these issues moving forward.

The contents of this Alert are for informational purposes only, and do not constitute legal advice. If you have any questions about this Alert, please contact a member of the Shulman Rogers Employment and Labor Law Group or the Shulman Rogers attorney with whom you regularly work.


Gregory D. Grant

Meredith “Merry” Campbell

Joy C. Einstein

Stacey L. Schwaber