The Maryland General Assembly’s 2024 session ended at midnight on Monday, April 8. A number of employment bills that were passed will have a significant impact on employers, including another delay to the forthcoming paid family and medical leave insurance (FAMLI) program, a new wage range posting mandate, expanded pay stub notice requirements, and additional discrimination protections, including an expansion of the equal pay law. Employers will also face increased penalties for occupational safety and health violations. Additionally, there was a revision to the law restricting the use of non-compete agreements to make it applicable to certain health care providers and veterinarians.

At this point, all of these bills have gone to the Governor, and he has already signed two into law. As for the rest, he can also sign them into law, veto them, or allow them to become law without his signature. Given that we now have a Democratic Governor working with the majority Democratic General Assembly, vetoes are not expected on the remaining bills. Once they become law (i.e. are enacted), most new laws have an effective date of October 1, 2024; however, some of these will take effect earlier.

Webinar: In partnership with the Maryland Chamber of Commerce, we will be holding a complimentary webinar on Thursday, May 2, 2024, at noon Eastern. Senior Vice President of Government Affairs Andrew Griffin, and Shawe Rosenthal partners Fiona Ong and Parker Thoeni will explain further the obligations and requirements of these new laws, and will provide guidance on compliance. You may register for the webinar here.

A. Revisions to FAMLI (SB0485/HB0571)

Takeaway:Implementation is further delayed until July 1, 2025 for contributions and July 1, 2026 for benefits. Only employees performing services under employment located in the State are eligible for benefits. Employers will be able to receive information about employee claims. The State’s costs of successful appeals by employees may be assessed against the employer or its insurer.

As most employers know, in 2022, the General Assembly passed a law, over then-Governor Hogan’s veto, that set up a paid family and medical leave insurance program (FAMLI). The program will apply to all employers with employees in Maryland. It will provide eligible employees with 12 weeks of paid family and medical leave, with the possibility of an additional 12 weeks of paid parental leave (for a possible total of 24 weeks of paid leave). This $1.6 billion program will be administered by the State and funded by contributions from employers and employees. Contributions were to begin October 1, 2023, with benefits starting January 1, 2025. The Maryland Department of Labor was directed to conduct studies and issue regulations to implement the provisions of the law.

We summarized the extensive provisions of the original law in our April 12, 2022 E-lert and identified many of the concerns raised by the hastily-passed and poorly-structured law in our April 6, 2022 E-lert. Last year, the General Assembly passed revisions to the law that delayed implementation for a year, capped the total contribution amount at 1.2% of wages, and split the contribution 50-50 between the employer and employee, as detailed in our April 12, 2023 E-lert. But the Department of Labor’s FAMLI Division ran into significant challenges in implementing the program, leading to additional revisions this year. Among the more significant changes to the law include the following:

  • Implementation dates are delayed again. Contributions will now begin on July 1, 2025, and benefits will begin on July 1, 2026. The Secretary of Labor has been directed to issue regulations implementing the program by January 1, 2024.
  • Covered employees must perform services under employment located in the State.
  • The State may disclose information to the employer about an employee’s application for FAMLI benefits for the purpose of claim administration. This is good for employers, who previously were not entitled to receive any information about an employee’s claim.
  • The Secretary of Labor will set the applicable rate of contribution on or before February 1, 2025. The previously announced rate of .90% of an employee’s covered wages will likely change.
  • The employer’s ability to implement a private employer plan in lieu of participating in the State program may be met through either a State-approved employer-provided benefits program or an authorized insurance plan – but no longer a combination of both. The Secretary will establish criteria for authorization of an employer-provided benefits program, and employers may be required to pay application and renewal fees.
  • If a covered employee prevails in an appeal of an adverse decision under a private employer plan, the State may assess its costs of the appeal against the employer or its insurer.

There are still many issues left to be addressed – hopefully by the required regulations. The FAMLI Division has issued “draft” regulations, and has stated that these will be revised following the session. As for the actual implementation of the program, it seems that the Department of Labor, which is understaffed and under-resourced, is considering outsourcing it to a third party.

These revisions are scheduled to take effect on October 1, 2024.

B. Wage Range Posting Requirement (SB0525/HB0649)

Takeaway: Employers will be required to include wage ranges, benefits and any other compensation in their job postings for jobs that are physically performed, at least in part, in Maryland.

In 2020, Maryland’s Equal Pay for Equal Work Act was amended to require employers to provide the wage range for the position in question only upon an applicant’s request, as discussed in our March 2020 E-Update. This bill will now require employers to include the wage range, a general description of benefits, and any other applicable compensation, in any internal or external job posting. If this information is not included in a posting, it must be provided to the applicant before any discussion of compensation and upon request of the applicant. The Department of Labor will develop a form that may be used by employers to comply with this requirement. Employers must retain records of compliance for at least three (3) years.

“Wage range” is defined as the minimum and maximum hourly rate or salary, set in good faith by reference to one of the following: any applicable pay scale; any previously determined minimum and maximum hourly rate or salary for the position; the minimum and maximum hourly rate or salary for an individual holding a comparable position at the time of the posting; or the budgeted amount for the position.

The bill also adds that employers may not refuse to promote or transfer an employee (in addition to refusing to interview, hire or employ an applicant) because the employee refused to provide their prior wage history (in accordance with the existing salary history ban), asked for the wage range, or exercised any other rights under the law. 

Notably and fortunately for employers, the bill does not allow employees to bring their own lawsuit against their employer for violations of the law. Employees and applicants may only file a complaint with the Commissioner of Labor and Industry, who may order compliance and impose a civil penalty.

This bill is scheduled to take effect on October 1, 2024.

C. New Pay Stub Requirements (SB0038/HB0385)

Takeaway: Employers must comply with new and expansive notice requirements on pay stubs, and may use a DOL form to do so.

Currently, at the time of hiring, employers must give notice regarding the rate of pay, the regular paydays, and leave benefits. They must also provide for each pay period a statement of the employee’s gross earnings and any deductions.

The bill makes clear that these notices must be in writing. In the case of the pay period statements, the required information must be on the physical pay stub or the online pay statement. The bill also greatly expands the information that must be provided each pay period to specifically include the following:

  • The employer’s name as registered with the State, address and telephone number;
  • The date of payment and the beginning and ending dates of the pay period for which the payment is made;
  • For non-exempt employees, the number of hours worked in the pay period;
  • The rates of pay;
  • The gross and net pay earned during the pay period;
  • A list of additional bases of pay, including bonuses, sales commissions, or anything else; and
  • For piece-rate employees, the applicable piece rates of pay and number of pieces completed at each rate.

The MDOL will create a pay stub template that may be used by employers to comply with these new requirements. If an employer fails to comply, the Commissioner of Labor and Industry may order the employer to provide the required information and impose an administrative penalty of up to $500 for each employee who did not receive the required notice. Employers may appeal an order by requesting an administrative hearing. If an employer fails to comply with the order, the Commissioner can bring suit against the employer for enforcement.

This bill is scheduled to take effect on October 1, 2024.

D. Expansion of the Equal Pay for Equal Work Act (HB0602 and HB1397)

Takeaway: Employers may not offer less pay or provide less favorable employment opportunities based on race, religious beliefs, sexual orientation, or disability, in addition to the existing protection for sex and gender identity.

We have an odd situation where two different bills overlap in part to do the same thing – to add “sexual orientation” to the list of protected characteristics under the Equal Pay for Equal Work Act. The first bill, HB0602, is limited to that specific purpose, while the second bill, HB1397, is far broader in scope.

Some background is helpful. This past year, as we discussed in our August 16, 2023 E-lert, the Maryland Supreme Court determined that, unlike federal law, the State’s prohibition against “sex” discrimination does not include sexual orientation or gender identity – arising from the fact that all three are specifically listed in the antidiscrimination law. Additionally, the Equal Pay for Equal Work Act specifically prohibits discriminatory pay practices based only on sex and gender identity for employees who work in the “same establishment” and perform work of comparable character or work in the same operation, in the same business, or of the same type. Thus, sexual orientation is not protected under this law.

HB0602 seeks to fill the gap in the Equal Pay for Equal Work Act by simply adding “sexual orientation” to “sex” and “gender identity.” However, HB1397 goes much further, by expanding the list of protected characteristics, so that employers may not pay different wages or offer less favorable employment opportunities based on race, religious beliefs or sexual orientation as well.

Oddly, HB0602 further specifies that employers may not provide less favorable employment opportunities also based on disability – but disability is not specifically included in the list of protected characteristics for pay differences. However, the existing law sets forth legitimate factors on which pay differences may be based (e.g. seniority, different skills or duties, different shifts, quality or quantity of production, etc.), and HB0602 provides that an employee may demonstrate that an employer’s reliance on one of these factors may be a pretext for discrimination on the basis of the expanded list of personal characteristics – including disability. It also allows employees to bring a lawsuit against an employer for injunctive relief and to recover the wage differential between employees based on that same expanded list – again including disability. Thus, it appears that the omission was simply a drafting error.  

Both bills are scheduled to take effect on October 1, 2024.

E. Discrimination Protections for Military Status (SB0413/HB0598)

Takeaway: Military status (meaning a member of the uniformed services or reserves, as well as being a dependent of such a member) is added to the list of protected characteristics under Maryland’s anti-discrimination law.

Maryland’s antidiscrimination law prohibits discrimination or harassment in employment based on race, color, religion, sex, age, ancestry or national origin, marital status, sexual orientation, gender identity, disability, genetic testing – and now, military status. The exception to these protections for religious entities with respect to the employment of individuals of a particular religion, sexual orientation, or gender identity will also apply to military status. The bill also provides that military status (like sex, age, race, religion, national origin, and disability) may be a bona fide occupational qualification under certain circumstances.

“Military status” is defined as the status of being a member of the uniformed services or the military reserves. It also includes dependents of the member, meaning spouse, child or an individual for whom the member provided more than ½ of the individual’s support for the immediately preceding 180 days. Child is further defined as: one under the age of 18; one who became permanently incapable of self-support before turning 18; or one between the ages of 18-23 who is a student.

This bill is scheduled to take effect on October 1, 2024.

F. Hiring Preferences for Military Spouses (SB0478)

Takeaway: Employers may grant a preference in hiring or promotion to the spouse of an active military member.

Maryland law currently allows employers to grant a preference in hiring or promotion to an eligible veteran (meaning one who received an honorable discharge or certificate of satisfactory completion of uniformed service), as well as the spouse of an eligible veteran who has a service-connected disability or the surviving spouse of a deceased eligible veteran.

The bill adds the spouse of a full-time active member of the uniformed services to the list of those who may be granted a preference in hiring or promotion.

This bill has already been signed by the Governor and will take effect on July 1, 2024.

G. Increase in Penalties for MOSH Act Violations (HB0244)

Takeaway: Employers will face greatly increased penalties for violations of the Maryland Occupational Safety and Health Act.

Employers who violate the MOSH Act are subject to civil penalties – currently up to $7,000 for each violation, $7,000 for each day that a violation continues after the period allowed for correction, and $70,000 for willful or repeated violations (with a minimum of at least $5,000 for willful violations).

The bill will increase these penalties significantly. For penalties assessed before July 15, 2025, the amount is set at up to $16,131 per violation or per day for uncorrected violations, and $161,323 for willful or repeated violations (with a minimum of $11,162 for willful violations). These penalties will increase annually in accordance with any increases in the Consumer Price Index beginning on July 15, 2025.

This bill has already been signed by the Governor and will take effect on July 1, 2024.

H. Noncompete Provisions for Veterinary and Health Care Professionals (HB1388)

Takeaway: For any agreements entered into starting July 1, 2025, noncompete provisions are banned for veterinary professionals and for health care professionals earning $350,000 or less in total compensation. For those health care professionals earning more, any noncompete restrictions may not exceed 1 year and 10 miles.

Maryland previously banned noncompete agreements for employees earning up to 150% of the minimum wage. The bill amends the law now to cover: (1) veterinary practitioners and veterinary technicians who are required to be licensed under the Agriculture Article, and (2) health care professionals who are required to be licensed under the Health Occupations Article and provide direct patient care.

  • For veterinary professionals, it bans noncompetes altogether.
  • For those health care professionals who earn $350,000 or less in total annual compensation, it bans noncompetes altogether.
  • For those health care professionals who earn more than $350,000 in total annual compensation, any noncompete or COI provision cannot exceed 1 year from the last day of employment, and any geographical restriction may not exceed 10 miles from the primary place of employment.
  • Employers must provide the health care professional’s new location in response to a patient’s request.
  • The bill does not apply to any contracts/agreements regarding the taking or use of patient lists or other proprietary patient-related information.
  • These new noncompete ban/restrictions for health care professionals will only apply to contracts/agreements executed on or after July 1, 2025. The ban for veterinary professionals takes effect June 1, 2024.

The bill also requires the Maryland Health Care Commission to hire a private consultant to look into the following: the impact of private equity firms on the health care market in the State; the payer mix for physician practices and groups with private equity ownership; the impact of hospital consolidations on physician practices; the acquisition of physician practices; and the impact on the ability of nonprofit hospitals and health systems to maintain access to care, including the ability to hire and retain physicians. The Commission is supposed to report on the findings and recommendations to certain General Assembly committees by January 1, 2025.

The bill is scheduled to take effect on June 1, 2024.