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Maryland Healthy Working Families Act: Employer Best Practices to Avoid Traps for the Unwary

On January 18, 2018, the Maryland General Assembly voted to override Governor Hogan’s veto of the sick and safe leave provisions of the Maryland Healthy Working Families Act.  By doing so, Maryland joins the list of many state and local jurisdictions adopting paid leave for employees.  At present, the law is slated to go into effect on February 11, 2018, but there are indications that implementation could be delayed.  Until further notification, employers should be prepared for implementation on February 11, 2018.

The law is complex, with many exceptions to the exceptions, such that careful review of the entire law is necessary.  Considering this, this article points out certain areas for more focused attention by employers as they implement the provisions of the law, utilizing italicized text to draw attention to the traps in the law for the unwary.  Due to the specific nature in which certain occupations are treated, employers in those industries should carefully review existing policies to ensure compliance.

TIP: It is essential to note that the law provides for accrual for existing employees starting on January 1, 2018, such that any delay of the implementation date will not affect accrual unless the law is amended.

Covered Employers

Virtually all Maryland employers are covered, including state and local governments.  The question of coverage focuses less upon whether an employer is covered, with certain enumerated exceptions, and more on whether a covered employer must provide unpaid or paid leave. 

For employers with 14 or fewer employees, earned sick and safe leave is unpaid.  For employers with 15 or more employees, earned sick and safe leave is paid at the same wage rate that the employee typically earns.

TIP: The counting rules provide that the number is determined by the average monthly number of employees during the preceeding year, including not only full-time employees, but also part-time, temporary and seasonal employees without regard to their status and eligibility for safe or sick leave.

Covered Employees

The law is intended to cover all employees except those in certain enumerated categories, including the following:

  • Those regularly working less than 12 hours per week
  • Under 18 years of age
  • Independent contractors
  • Real estate agents or brokers
  • Those working in the agricultural sector
  • Those in certain temporary services agencies
  • Those working on an as-needed basis in the health or human services industry
  • Those in the construction industry
  • Those covered under a collective bargaining agreement, provided that the provisions of the new law are expressly waived in clear and unambiguous terms

TIP: The coverage provisions are complicated and contain exceptions to the exceptions; employers in the industries listed above need to carefully review the exceptions.  For example, the exception for the construction industry includes seven separate job titles that are not excluded.  Likewise, the exceptions for temporary services agencies are subject to exceptions and qualifications as are those in the as-needed health or human services fields.

The law covers sick and safe leave for employees or for leave due to their family members.  The definition of family member is broad, particularly the definition of parents, which includes not only biological, adoptive and step-parents, but also foster parents, those in loco parentis regardless of the child’s age, legal guardians or with whom a minor is in custody, those acting as parents to an employee or the employee’s spouse when a minor; and similarly situated grandparents.  Parents include those of the employee and their spouse.  Siblings, albeit biological, adopted, foster and stepsibling, of an employee are also included in the definition.

Accrual

Sick and safe leave accrues at a rate of at least 1 hour for every 30 worked.  Exempt employees are assumed to work 40 hours per week.  For employees who regularly work less than 40 hours per week, the hours are counted based on the hours worked.

Employers may award sick and safe leave in a lump sum at the beginning of the year or provide for accrual during the year. 

Employers are not required to allow employees to earn more than 40 hours in a year or to use more than 64 hours in a year.  Likewise, total accrual may be capped at 64 hours.

TIP: For those employers providing leave in a lump sum at the beginning of the year, carry over of earned leave may be prohibited.  For non-profits or governmental employers, carry over may also be prohibited if the employee is employed pursuant to a grant that is limited to one year and not subject to renewal.

Sick and safe leave does not accrue if an employee works less than 24 hours in any two-week pay period or fewer than a combined total of 24 hours in the current and preceding pay period.  For employers paid twice monthly, sick and safe leave does not accrue for those who work less than 26 hours in the pay period.

For separated employees who return within 37 weeks after termination, earned leave must be reinstated unless the accrued, but unused sick and safe leave was paid at termination.

Use

Sick and safe leave is for an employee’s and their family member’s medical or preventive care due to illness or injury, maternity or paternity leave, and absence due to domestic violence, sexual assault, and stalking, including time needed to obtain legal advice, victim support, and to relocate.

The leave may be taken in the smallest increment that an employer uses to account for absences.  Employers may require an employee to take leave in increments not exceeding 4 hours.

Employers may permit use of sick and safe leave before an employee accrues it. 

TIP: Employers who choose to permit this must obtain a specific written authorization signed by the employee to allow for deduction of the amount paid from final pay.

For leave that is foreseeable, employers may require notice 7 days before the leave would begin.  If the leave is unforeseeable, employees are required to give notice as soon as practicable and must comply with existing leave policies, provided that the policies do not interfere with an employee’s ability to use the leave.

Denial of leave is limited, including in those instances where an employee fails to follow the provisions requiring notice for foreseeable or unforeseeable leave, but the absence under such circumstances must cause a disruption to the employer to be denied.  For employers providing services to the developmentally disabled or mentally ill, leave may be denied if the leave was foreseeable, a suitable replacement cannot be located, and service disruption to at least one client would occur due to the absence.

For new employees, sick and safe leave can be denied during the first 106 calendar days worked.

Employers may not require an employee to find a substitute as a condition of granting a request for leave.  However, an employer may enter into an agreement with an employee to work additional hours in a pay period or the following pay period, to trade shifts to account for the leave, or to make up hours to cover the hours.  In that event, an employer may not deduct accrued sick and safe leave if the hours are covered.  Employers are not required to offer schedule changes or to accept requests from employees to alter their hours.  In addition, employers are not required to accept schedule changes that would result in an employee’s entitlement to overtime. Accrued, but unused sick and safe leave is not payable at termination of employment.

TIP: There are specific rules regarding use of leave for the restaurant industry, particularly involving tipped employees.

Verification

Employers may request verification for sick and safe leave that exceeds two consecutive scheduled shifts.  Verification is also permissible for new employees who use leave between their 107th through 120th calendar days after starting employment.  Failure to provide verification may result in denial of the leave request and for leave requested for the same reason.

TIP: Employers must add the verification requirement for new employees at onboarding.  The law allows for verification only if there is an agreement at the time of hire.

Notice and Recordkeeping

Employers are required to notify employees of the new law and their rights, including the right to be free from retaliation for exercising rights under the law as well as the prohibition against an employee making a complaint, filing or testifying in an action in bad faith.  The notice must also notify employees of the right to report alleged violations.  The Maryland Department of Labor, Licensing and Regulation has been tasked to prepare the poster and post it on its website.  DLLR must also prepare a model policy to assist employers.

In addition to the posting, employers are also required to provide employees with a written statement regarding the amount of leave available for use.  This requirement can be satisfied by providing an online system that allows an employee to learn their leave balance.

Records must be kept for 3 years, which are subject to inspection by DLLR.  Failure to display the records for inspection gives rise to a presumption of violation of the law.

Violations

It is a violation for an employer to interfere with, restrain or deny an employee’s rights under the law or to take adverse action.  Complaints may be filed with DLLR, which has 90 days to investigate and attempt resolution.  For violations, DLLR is empowered to order payment for the leave and to award economic damages, including treble damages and civil penalties of $1,000 for each affected employee.  If an employer fails to comply, DLLR may seek enforcement in court.  Should an employer fail to comply within 3 years after the date of the order, an employee may bring a private right of action under the law.  A court may order treble damages, punitive damages, attorney’s fees and injunctive relief as necessary.

Next Steps for Employers

Review existing leave policies 

If the current policy is at least as generous as the new law, then the amount of leave does not need to be changed. However, a word of caution: while the law states that it does not require modification of existing policies, it expressly states that existing policies must permit accrual and use of leave under terms and conditions at least equivalent to that in the law.  For many employers, policies may need to be amended if they do not cover family members in the same fashion as the law, do not cover the permissible uses enumerated in the law, or do not contain anti-retaliation provisions.

Onboarding

Ensure that new employees agree to verification as part of the onboarding process.

Authorizations

Ensure that every time that leave is advanced that it is accompanied by an authorization that provides for deduction from final pay in the event of termination before the leave has been accrued.

Local laws

Montgomery County employers must continue to comply with the existing county law.  The Montgomery County provisions are more generous, such that compliance with the state law will not suffice there.  The Maryland law provides that existing laws may remain in effect, but that laws enacted after January 1, 2017 are preempted.  An example of a law that is preempted is the Prince George’s County code provision.

Watch DLLR’s Website

Remember that DLLR is responsible for creating a poster and publishing a model policy.  The law provides for posting on the DLLR website.  Once the poster is online, post it.  Review the model policy and compare it with existing policies. 

Recordkeeping

Accrual started on January 1, 2018. Review payroll practices and inform vendors of the requirements.  Ensure that wage statements or online portals will be available to provide the requisite information at each pay period. Update recordkeeping policies and practices to ensure that the applicable records are maintained for 3 years.

Paul M. Finamore is a Partner at Niles Barton, & Wilmer LLP in Baltimore. Mr. Finamore regularly counsels employers on employment issues, workplace policies, and compliance with federal, state, and local employment laws. For additional questions about changes in this law, please contact pmfinamore@nilesbarton.com. 

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