On January 12, 2018, the Maryland General Assembly overrode Governor Hogan’s veto of the “Maryland Healthy Working Families Act.” Therefore, Maryland employers are now required to provide paid “earned sick and safe” (ESS) leave to employees to use for themselves and to care for their family members. This law is currently scheduled to take effect on February 11, 2018, but Senator Middleton stated that they may be seeking an extension to make the law effective after 90 days instead. We will be holding a complimentary webinar to further discuss compliance with this new law, but we summarize its detailed requirements and obligations, as follows:
Purpose of Leave: The employee may use ESS leave for the following reasons:
- To care for or treat the employee’s own mental or physical illness, injury, or condition.
- To obtain preventive medical care for the employee or family member.
- To care for a family member’s mental or physical illness, injury, or condition.
- For maternity or paternity leave.
- For absences due to domestic violence, sexual assault, or stalking during the employee’s relocation or to obtain for the employee or family member:
- Medical or mental health attention;
- Services from a victim services organization; or
- Legal services
Which Employers Are Covered: All Maryland employers are covered by this Act, although those with under 15 employees will need to provide only unpaid time off for ESS leave purposes. The number of employees is calculated by using the average monthly number of all employees (including full-time, part-time, temporary, and seasonal) employed during the immediately preceding 12 months.
Notably, the definition of “employer” includes “a person that acts directly or indirectly in the interest of another employer with an employee.” Based on similar definitions in other laws, this means that owners and managers can be sued individually under the Act.
Which Employees Are Covered: All employees are covered except for the following:
- Those who regularly work less than 12 hours a week for an employer.
- Construction industry employees who are covered by a collective bargaining agreement that expressly waives the right to ESS leave under this Act. (Such employees do not include janitors, cleaners, security officers, concierges, doorpersons, handypersons, or building superintendents – who are entitled to the benefits of the Act).
- Those working on an as-needed basis in the health or human services industry, as long as they (1) can reject the shift offered by the employer, (2) are not guaranteed work by the employer, and (3) are not employed by a temporary staffing agency.
In addition, the following persons are not considered “employees” and are therefore not entitled to ESS leave under the Act:
- Independent contractors, under the test set forth in Maryland unemployment insurance law (i.e. the “ABC” test).
- Licensed real estate salespersons or brokers, or those affiliated with a licensed broker by written agreement, who are paid solely on commission, and who qualify as independent contractors for federal tax purposes (which is a different test than under state law).
- Those under the age of 18 before the beginning of the year.
- Agricultural employees processing crops or working for a farmer in the production, harvesting or marketing of product.
- Temporary staffing agency employees, if the agency does not have day-to-day control over their work assignments and supervision.
- Employment agency employees providing part-time or temporary services to another person.
Which Family Members Are Covered: The law applies a broad definition of various family members, including the following:
- Child, including biological, foster, adopted, or step, as well as one for whom the employee has legal or physical custody or guardianship, or stands in loco parentis (i.e. acts as the parent, regardless of the legal relationship).
- Parent, including biological, foster, adopted, or step for the employee or the employee’s spouse, as well as one who was the legal guardian of or stood in loco parentis to the employee or employee’s spouse.
- Grandparent, including biological, foster, adopted, or step, of the employee.
- Grandchild, including biological, foster, adopted, or step, of the employee.
- Sibling, including biological, foster, adopted, or step, of the employee.
Accrual and Carryover of Leave: ESS Leave accrues at a rate of at least 1 hour for every 30 hours worked. Exempt employees are assumed to work 40 hours in a workweek, unless they are regularly scheduled for fewer hours, in which case their regularly scheduled hours are used. Tipped employees receiving paid ESS leave must be compensated at the minimum wage rate, which will be $9.25 at the time that the law becomes effective.
The employer may choose the 12-month period that constitutes a “year” for purposes of this Act. The amount of ESS leave that may be earned per year is capped at 40 hours (five 8-hour days). The total amount of ESS leave that may be accrued (including carryover, as explained below) may be capped at 64 hours (eight 8-hour days). The total amount of ESS leave that may be usedby an employee may be capped at 64 hours per year.
No accrual of ESS leave is required: (1) during a 2-week pay period in which the employee worked less than 24 hours; (2) during a 1-week pay period in which the employee worked less than 24 hours in the current and immediately preceding pay period; or (2) during a semi-monthly pay period in which the employee worked less than 26 hours.
An employer may make available to the employee the full annual allotment of ESS leave at the beginning of the year. If it does not do so, it must permit carryover of the balance of any unused ESS leave to the next year, up to a maximum of 40 hours.
Accrual commences upon hire, but an employer may prohibit the use of leave during the initial 106 calendar days of employment.
Borrowing and Termination: An employer may, but is not required to, permit an employee to “borrow” ESS leave that has not yet been accrued. If the employee terminates employment before the borrowed ESS leave has been accrued (and therefore paid back), the employer may deduct the advanced amount of ESS leave from the employee’s final paycheck only where there is a written, signed authorization by the employee to allow the employer to do so.
Accrued unused paid ESS leave need not be paid out upon termination.
If an employee is rehired within 37 weeks, the employer must reinstate the bank of unused ESS leave unless it was paid out upon termination.
If an employer acquires another company and retains employees from that company, the employees retain the ESS leave accrued under the prior company.
Notice and Use of Leave: If the need for ESS leave is foreseeable, the employee can be required to provide up to 7 days of notice. If it is not foreseeable, the employee must provide notice of the need for such leave as soon as practicable and must comply with the employer’s notice requirements for absences, as long as those requirements do not interfere with the ability to use ESS leave.
The employer may deny the use of ESS leave if the employee fails to provide the required notice and the absence will cause a disruption.
There is also a specific provision for private employers providing services to developmentally disabled or mentally ill individuals: ESS leave may be denied if the need for leave is foreseeable, the employer is unable to find a suitable replacement for the employee despite reasonable efforts, and the absence will cause a disruption in service to at least one disabled or mentally ill individual.
The employer cannot require the employee to look for or find a replacement worker. The employer and employee may mutually agree for the employee to work additional hours or trade shifts during the current or following pay period to make up hours in lieu of taking ESS leave. (We note, however, that if the hours are made up in the following week and this results in the employee working more than 40 hours in that week, overtime payment will be required). The employer is not required to consent to a request to work additional hours or trade shifts if it would result in the payment of overtime to the employee.
There is a specific provision for tipped employees working in restaurants. If such an employee would prefer to work additional hours or trade shifts in the current or following pay period, and this would require the employer to find coverage, then the employer may offer the employee the choice of receiving ESS leave (at the minimum wage rate) or working the equivalent number of additional hours in the same or following pay period. If the employer decides not to offer the choice to the employee, then ESS leave must be paid.
The employee may use ESS leave in the smallest increments used by the employer’s payroll system to account for absences or work time, except that the employee may be required to take ESS leave in an increment not exceeding 4 hours.
Verification: An employer can request verification of the appropriate use of leave if an employee uses more than 2 consecutive scheduled shifts of ESS leave. Verification may also be required if the employee uses ESS leave between the 107ththrough 120th calendar days after beginning employment, on terms that the employee agreed to at the time of hire.
If the employee fails to provide the verification, subsequent requests to take ESS leave for the same reason may be denied.
Employer’s Notice and Recordkeeping Requirements: Each time wages are paid, the employer must provide a written statement of available ESS leave. This requirement may be satisfied through an electronic system where the employee can access their leave balances.
An employer must also provide notice to employees that they are entitled to ESS leave. This notice must include the following:
- A statement of how ESS leave is accrued.
- The permitted uses of ESS leave.
- A statement (1) that the employer must not take adverse action because an employee exercises rights under this Act, and (2) that the employee may not, in bad faith, make a complaint, bring an action, or testify in an action.
- Information about the employee’s right to report alleged violations to the Commissioner of the Maryland Department of Licensing and Labor Regulation (DLLR) or to bring a civil action against the employer.
The DLLR will be creating a poster and model notice, as well as a model policy. We will alert you when the model documents are available.
Employers must also keep for at least three years records of the ESS leave accrued and used by each employee. Failure to keep these records creates a rebuttable presumption that the employer has violated the Act. These records must be available for inspection by the DLLR.
Prohibited Actions and Enforcement: Employers may not take adverse action (defined as discharge, demotion, threatening discharge or demotion, or any other retaliatory action that results in a change to the employee’s terms and conditions of employment) against employees for exercising in good faith their rights under the Act. Nor may they interfere with, restrain or deny the employees’ exercise of ESS rights. In addition, employers may not count ESS leave against an employee under an absence policy. Employers may, however, prohibit the improper use or a pattern of abuse of ESS leave.
An employee can file a written complaint of violation with the Commissioner of the DLLR. The DLLR will investigate within 90 days and attempt to resolve any issue informally through mediation. If the Commissioner finds a violation and is unable to reach informal resolution, the Commissioner will issue an order that describes the violation and directs payment for the ESS leave and economic damages. The Commissioner may also (but is not required to) direct the payment of up to three times the value of the employee’s hourly wage, and may also assess a civil penalty of up to $1000 for each employee for whom the employer is noncompliant.
If the employer does not comply with the Commissioner’s order within 30 days, the Commissioner may bring an action against the employer on behalf of the employee and may also bring an action to seek enforcement of any civil penalty order. In addition, the employee may bring a civil action in court to enforce the Commissioner’s order within 3 years after the date of the order. If the employee’s court action is successful, the court may (but is not required to) award three times the value of the unpaid ESS leave, punitive damages, attorneys’ fees and costs, and may order injunctive relief or other relief as deemed appropriate.
An Employer’s Existing Policy: An employer may continue with a paid leave policy that (1) meets the minimum accrual and usage requirements of this law, or (2) does not reduce compensation for an absence due to sick or safe leave. The paid leave may include vacation, sick, short-term disability benefits, floating holidays, parental leave, or any other paid time off that may be used for ESS leave purposes.
County Laws: Notably, for employers that are already required to comply with Montgomery County’s Earned Sick and Safe Leave Act, the State law expressly does not preempt any local law that was passed prior to January 1, 2017, which Montgomery County’s law was. Thus, employers in Montgomery County must comply with the requirements of both the state and local laws – and there are differences as to which family members are covered, the purposes for using ESS leave, and verification procedures, among other things.
Of note, Prince George’s County recently passed its own Earned Sick and Safe Leave Act. However, because it was passed after January 1, 2017, it is preempted by the new state law.
What Should Maryland Employers Do? Maryland employers should plan to review any existing sick leave or PTO policies to ensure that they comply with the very technical requirements of this new law. Or if an employer does not yet provide such leave, it should develop the appropriate sick leave policies and procedures in advance of the law’s effective date.
Although the DLLR will be issuing regulations and model documents to assist employers in complying with the law, it is unclear if these will be released prior to the February 11, 2017 effective date.
The webinars have filled if you are interested in being put on the wait list and receiving a recording, please contact Liam Preis at email@example.com or 410-752-1040.