Navigating Maryland FAMLI: What Employers Need to Know

If you have employees working in Maryland, the clock is ticking on a major compliance milestone. The Maryland Family and Medical Leave Insurance (FAMLI) program is officially rolling out, and registration is legally required for any employer with at least one employee localized in the state.

With payroll deductions beginning January 1, 2027, here is your comprehensive guide to understanding Maryland FAMLI and the critical steps you need to take right now.

What is Maryland FAMLI?

Maryland FAMLI is a mandatory insurance program designed to provide eligible workers with paid, job-protected leave for qualifying life events.

Starting January 1, 2028, eligible employees can take up to 12 weeks of paid leave annually. While on leave, they can receive up to $1,000 per week, subject to program rules. To qualify, an employee generally must have worked at least 680 hours in Maryland over the applicable four-quarter base period.

Qualifying reasons for leave include caring for a new child, managing the employee’s own serious health condition, caring for a family member with a serious health condition, and certain qualifying military-related family needs.

How Are Contributions Handled?

FAMLI is funded through payroll contributions that officially begin on January 1, 2027.
The initial 2027 contribution rate is set at 0.90% of covered wages, capped at the annual Social Security wage base limit. How this cost is split depends on your company's size:

Employers with 15 or more employees: The 0.90% rate is split 50/50. The employer pays 0.45%, and the remaining 0.45% is withheld from the employee’s paycheck.

Employers with fewer than 15 employees: The employer pays 0%. However, the employer is still responsible for withholding the employee’s 0.45% share from their wages and remitting it to the state.

Note: Your employer size is determined by your nationwide headcount under your federal Employer Identification Number (EIN), not just your Maryland-based staff.

State Plan or Private Plan?

Employers have two options to comply with the FAMLI mandate: utilizing the default State Plan or applying to use an approved Private Plan.

Under the State Plan, the Maryland Department of Labor administers the program. You deduct the contributions during your regular pay cycles and remit them to the State fund every quarter, either directly or via your payroll provider. When an employee needs to take leave in 2028, they will apply directly through the State. The State determines their eligibility and issues their benefit payments directly. This is best for employers who want a hands-off approach to claims administration and prefer the simplicity of remitting statutory payroll taxes.

Employers can opt out of the state fund by securing a commercial insurance policy or establishing a self-insured plan. To be approved, your Private Plan must offer benefits that are equal to or greater than the State plan, and it cannot cost your employees more than the state rate (0.45%). Claims are managed and paid out by your chosen insurance carrier or third-party administrator (TPA), rather than the State. In order to go this route, you must submit a formal Declaration of Intent (DOI) to the state. The submission window for the DOI is currently open (September 1, 2026 – November 15, 2026). This is best for larger employers, those with existing generous paid leave policies, or businesses looking to integrate FAMLI with their existing short-term disability and leave management carriers for a unified employee experience.

Action Items for Maryland Employers

The most critical takeaway from the Maryland Department of Labor's recent bulletins is that action is required now.

1) Register with the State Immediately: Registration is currently open. TPAs and payroll providers cannot register on your behalf. You must create your organization's account first. Only after you are registered can you invite a TPA to connect and manage tasks for you.

2) Evaluate Your Plan Options: If you are pursuing a Private Plan, ensure you meet the November 15, 2026, deadline to submit your Declaration of Intent.

3) Coordinate with Payroll: Ensure your payroll system is prepared to begin deducting the employee share from the very first pay period in January 2027. You cannot retroactively deduct missed contributions from employees after the pay period ends.

4) Prepare for Reporting: Your first quarterly contribution and Wage-and-Hour report will be due to the state by April 30, 2027.

Need Help?

Compliance deadlines are approaching quickly. Ensure your business is registered and your payroll team is ready for the January 1 rollout!

📞 Call us at (703) 672-1225

📧 Email us at payroll@paysteady.com