House Passes Statewide Paid Leave Program

The House of Delegates gave final approval to a paid family and medical leave program on Wednesday that would cover most Marylanders but does not specify how much employers and workers would have to contribute until an analysis is complete.

The Time to Care Act, sponsored by Sens. Antonio Hayes (D-Baltimore City) and Joanne Benson (D-Prince George’s), would offer Marylanders 12 weeks of partially paid family leave each year to care for themselves after a serious health issue and up to 24 weeks of paid leave for new parents.

This has been a long-time coming for Maryland, as state lawmakers have previously tried to establish a paid family leave program but instead created a task force to study and make recommendations for establishing such a benefit. Over the last two years, however, the coronavirus pandemic had laid bare the need for job-protected paid leave, as normal caretaking arrangements fell apart and more people had to take care of sick family members.

If this measure becomes law, Maryland would join the other nine other states — California, Colorado, Connecticut, Massachusetts, New Jersey, New York, Oregon, Washington, Rhode Island — and the District of Columbia in offering statewide paid family leave.

“I think it’s a huge step for Marylanders,” Del. C.T. Wilson (D-Charles), the chair of the House Economic Matters Committee, which also considered the bill, said in an interview after the final vote. “I really do believe that this is going to incentivize more individuals to come into the workforce…this is how we solve [the worker shortage] — by treating our workers better. This is how you give them value: by giving them benefits.”

Advocates who have been fighting for paid leave in Maryland for years commended the House for passing a program this year.

“It’s a really strong bill that reflects a great deal of thought to this very important issue, and it’s a very proud moment for those of us who have been supporting this for a long time,” said Clinton Macsherry, director of public policy for Maryland Family Network and a part of the Time to Care Coalition.

Under this bill, depending on their pay, Marylanders — who worked either part-time or full-time for at least 680 hours in the last year — would receive a partial wage replacement of between $50 and $1,000 a week during their leave. This insurance program would be funded by both employers and workers, with the exact contribution from each to be determined from a cost analysis completed by the Department of Labor once every two years starting later this year.

More specifically, the Department of Labor would be required to determine the contribution rate (or the amount deducted from payrolls) and the cost share between employers and workers to ensure a solvent paid family insurance program. The first study will be completed by December 2022, intentionally before the next legislative session begins in order to give lawmakers time to tweak the program before employers and workers are required to start contributing into the fund in October 2023.

The Senate had passed a bill that required workers to contribute 75% of the program costs and employees to pay 25%, but under the amended bill, the cost share could be anywhere between a 75/25 split with workers paying more and a 25/75 split with workers paying less, depending on the Department of Labor’s analysis.

Establishing a statewide paid family leave program appeared to be in flux after the Economic Matters Committee voted to approve House Bill 496, which would have reduced the Time to Care Act to a commission that would instead make recommendations on the specifics of statewide paid leave with the “intent” of implementing a program next year.

But on Wednesday, the House passed the Senate bill that would allow Marylanders to start receiving benefits in January 2025. Wilson said he was able to incorporate a large part of what he wanted a commission to study into the Department of Labor’s cost analysis under the Senate bill “to make sure we don’t run to the finish line before we’re ready.”

“I thought, in some ways, the Senate was trying to build the plane as they were flying it,” he continued.

Macsherry said he thought it was “entirely appropriate for the General Assembly to make sure that we’re getting [paid family leave] right before they commit to that.”

However, Republican delegates said mandating paid leave would hurt employers, especially small business owners who may not be able to easily find a replacement. Del. April Rose (R-Carroll) proposed an amendment that would have allowed employers to deny a claim for benefits if the worker’s absence will “cause a demonstrated hardship to the employer.” The Senate had included this provision, but cut it out before final passage of the bill.

“If a small business of 15 or 16 people, they could have any number of employees who use this benefit and are gone, and it can be very financially devastating to that business,” Rose said.

The House had added provisions in an effort to protect small businesses by excluding employers with 14 employees or less from having to contribute to the paid leave insurance fund. However, their employees would still be eligible to participate.

Under this measure, employers could terminate workers if their absence causes a substantial economic hardship on the business, which would mean that the worker could no longer receive benefits from the family leave insurance program and would become eligible for unemployment benefits. “We do understand there are circumstances outside of employers’ control,” Wilson said.

“It seems then that it would behoove an employer to terminate the employee who we’re trying to give leave to and put them on the unemployment roll, but then they just lost their job,” Rose said.

Wilson said any “decent hardworking business owner” would understand the difficulty of retraining employees and would not prefer to fire their workers. Rose’s amendment failed in a 40-92 vote.

“This bill has been described as an anti-business bill — we have many small business owners who do this already, it is not anti-business,” said Del. Kriselda Valderrama (D-Prince George’s), the sponsor of the House cross-file of the Senate’s bill. “It helps improve retention and productivity and boosts labor force participation.”

The House also added a provision to the measure that would require employees to exhaust all their paid leave provided by their employer before they can claim benefits from the paid family leave insurance fund.

Del. Lorig Charkoudian (D-Montgomery) introduced an amendment that would ensure that jobs are protected while employees take their employer-provided leave before the 12 weeks of paid leave established under this bill. It was adopted as a friendly amendment.

Del. Susan Krebs (R-Carroll) asked if this program would encourage employers to stop offering paid time off that they otherwise would if they knew that their employees would have to be covered under the state’s insurance plan.

If employers offered a paid leave plan that is comparable to what would be established under the Time to Care Act, they would be exempt from contributing to the state insurance fund, Wilson said.

Some lawmakers expressed concerns about whether the Department of Labor could manage this insurance program, after the department experienced a backlog of unemployment claims during the COVID-19 pandemic and reportedly placed thousands of claimants under fraud investigation without confirming their identities in a timely manner.

The House amended the bill to include a provision that requires the Department of Legislative Services to make recommendations on the capability of the Department of Labor to administer the statewide paid family leave program.

Republican lawmakers also took issue with the estimated $1.4 billion worth of contributions that the insurance fund needs to reach before Marylanders can start receiving benefits. Del. Johnny Mautz (R-Middle Shore) called the bill a “one billion dollar payroll tax.”

Republican lawmakers offered a total of 14 amendments, including one that would have shortened the paid leave time to eight weeks a year, one that would have allowed employees to opt out of the program and another that would have excluded temporary workers from participating in the program.

All of the Republican amendments failed except for one by Del. Teresa Reilly (R-Harford) that would require the Department of Labor to develop “standard notices” for an employer. Employers have to provide a written notice on each employer’s rights upon hire, under this bill.

Business organizations decried the passage of the bill, contending that it will hurt small business owners.

“It’s incredibly disappointing to see the House of Delegates pass a payroll tax at a time of record inflation and rising prices on everything from a loaf of bread to a gallon of gas,” Mike O’Halloran, the state director for the National Federation of Independent Business, said in a statement. “The legislature is telling small businesses and their employees to stretch their paychecks even further at a time when they can least afford it.”

The amended Time to Care Act is expected to go back to the Senate Finance Committee for approval, as lawmakers rush to send the bill to Gov. Lawrence J. Hogan Jr. (R) by Saturday to be able to override a gubernatorial veto before the end of the 90-day legislative session on April 11.

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