Maryland employers face two parallel paid leave regimes that interact in non-obvious ways. The Healthy Working Families Act (HWFA) has been in force since February 2018 and produces compliance gaps even now in employee handbooks that were never updated to integrate the law cleanly. The Family and Medical Leave Insurance (FAMLI) program has been delayed three times since enactment in 2022, and as of 2026 the current implementation calendar has contributions beginning January 1, 2027 and benefits beginning no later than January 3, 2028. A Maryland business law attorney advising employers on paid leave in 2026 spends most of the engagement reconciling existing PTO policies, current HWFA accruals, and the FAMLI obligations coming online in the next 12 months. This post walks through what each regime requires and how they fit together.
The Healthy Working Families Act
Maryland’s HWFA, codified at Md. Code Ann., Lab. & Empl. § 3-1301 et seq., applies to all Maryland employers with at least one employee. The accrual structure depends on size:
- 15 or more employees: paid sick and safe leave accrued at 1 hour per 30 hours worked, capped at 40 hours per year
- Fewer than 15 employees: unpaid sick and safe leave at the same accrual rate and cap
Employees accrue leave from the start of employment but typically cannot use it during the first 106 days unless the employer permits earlier use. Accrued unused leave carries over to the next year, capped at 64 hours of accrued balance at any time.
Qualifying uses include:
- The employee’s own physical or mental illness, injury, or health condition
- Care for a family member with a qualifying condition
- Preventive medical care for the employee or family member
- Maternity or paternity leave
- Domestic violence, sexual assault, or stalking “safe leave” for the employee or family member, including time for medical attention, legal proceedings, and relocation
“Family member” under HWFA covers a broader range than federal FMLA: spouse, child, parent, grandparent, grandchild, sibling, and the parents of the employee’s spouse. The definition often catches employer policies still drafted to track FMLA’s narrower scope.
HWFA notice and recordkeeping
Compliance is not just accrual mechanics. HWFA requires employers to:
- Provide written notice of HWFA rights to each new hire
- Post the Maryland Department of Labor sick and safe leave poster in a conspicuous workplace location
- Track accrued, used, and unused balances for each employee
- Show the available balance on each pay stub or in a regularly accessible electronic record
- Maintain HWFA records for at least three years
- Refrain from any retaliation against an employee for requesting or using HWFA leave
Penalties for HWFA violations include compliance orders, treble damages for unpaid leave under the Wage Payment and Collection Law, and civil penalties.
Where a Maryland Business Law Attorney finds HWFA compliance gaps
A typical handbook audit surfaces the same problems:
- Accrual rate calculated against scheduled hours rather than hours worked, undercounting overtime
- Carryover provisions that cap below the 64-hour statutory floor
- Family member definitions tracking FMLA rather than HWFA’s broader scope
- No safe leave language for domestic violence, sexual assault, or stalking situations
- Missing pay stub or accessible balance disclosure
- New-hire notices that predate the current HWFA notice template
- No retaliation language in handbook
- PTO-only policies that purport to satisfy HWFA without meeting all of its specific requirements
A combined PTO policy can satisfy HWFA, but only if the PTO terms are at least as generous as HWFA’s accrual, carryover, qualifying uses, and notice requirements. Employers that thought they were covered by a generic PTO policy often are not.
FAMLI: the current implementation calendar
FAMLI was enacted under the Time to Care Act in 2022, codified at Md. Code Ann., Lab. & Empl. § 8.3-101 et seq. The implementation calendar has shifted three times. As of 2026, the operative dates are:
- Contributions begin January 1, 2027 (delayed from July 1, 2025)
- First employer remittance to the state FAMLI Fund: April 2027
- Benefits begin no later than January 3, 2028 (delayed from July 1, 2026)
- Maryland Secretary of Labor must set the 2027 contribution rate by May 1, 2026
The final FAMLI regulations, codified at COMAR 09.42.01-.05, took effect March 30, 2026. The regulations are organized into General Provisions, Contributions, Equivalent Private Insurance Plans, Claims, and Dispute Resolution.
FAMLI: who pays and what employees get
When implementation begins:
- FAMLI applies to all Maryland employers with at least one employee
- Contributions are required from employers with 15 or more employees, shared equally with employees through payroll deduction
- Employers with fewer than 15 employees do not pay the employer share but still process employee contributions
- Total contribution rate currently set at 0.90 percent of covered wages, up to the Social Security wage cap
- Benefits run from a minimum of $50 to a maximum of $1,000 per week, with the cap CPI-indexed beginning 2029
- Eligibility requires 680 hours worked in Maryland in the four most recently completed calendar quarters before the anchor date
Covered leave reasons mirror federal FMLA but with FAMLI’s broader family-member definition:
- Employee’s own serious health condition
- Family member’s serious health condition
- Parental bonding following birth, adoption, or foster placement
- Care for an injured or ill military service member who is next of kin
- Qualifying exigencies arising from family member military deployment
Total leave runs up to 12 weeks of paid family and medical leave plus up to 12 additional weeks for parental leave in a 12-month period.
The EPIP option
Employers can opt out of the state plan by offering an Equivalent Private Insurance Plan that meets or exceeds FAMLI’s benefits. The EPIP must be approved by the Maryland Department of Labor and may be insured, self-insured, or a hybrid. Larger employers with existing short-term disability and parental leave benefits often find an EPIP cost-competitive with the state contribution rate.
Integrating HWFA, FAMLI, and existing PTO policies
The interaction questions surface in handbook revisions:
- HWFA leave runs alongside FAMLI for the same qualifying event, and an employee may use both, though employers can require concurrent use in appropriate circumstances
- Existing PTO and short-term disability benefits do not automatically satisfy FAMLI’s requirements
- FMLA (for employers with 50 or more employees) continues to apply alongside HWFA and FAMLI, with concurrent designation typically appropriate
- Employer-funded paid parental leave already in place needs evaluation against FAMLI’s parental bonding benefit, with EPIP analysis as a likely next step
- Sick leave accruals under HWFA do not satisfy FAMLI; they cover different categories of leave with different qualifying events
Employers running multiple parallel leave programs without integration produce coverage gaps, double-counting issues, and compliance exposure across all three frameworks.
Bottom line
Maryland’s HWFA is operational and the gaps in employer compliance are immediate exposure. FAMLI’s January 1, 2027 contribution start is close enough that handbook and payroll work needs to begin in 2026. A consultation with a Maryland business law attorney can audit existing handbooks against current HWFA requirements, evaluate the EPIP-vs-state-plan FAMLI decision, and design an integrated paid leave structure before the next compliance cycle. Useful background reading: Maryland Department of Labor’s FAMLI portal at paidleave.maryland.gov and HWFA guidance at labor.maryland.gov. Internal pages worth pairing with this post include a Maryland SB 525 pay transparency guide, a non-compete enforceability overview, and a fractional general counsel overview.
