Maryland FAMLI: The Small-Employer Guide to 2027 Payroll Contributions and 2028 Paid Leave Benefits

On January 1, 2027, a new line item appears on every Maryland paycheck in your company — and not a single employee can claim a dollar of benefits for another full year. That is the deal Maryland's Family and Medical Leave Insurance program, known as FAMLI, has settled on after three rounds of delays: employers and workers fund the trust for all of 2027, and paid leave benefits begin in January 2028.

If you employ anyone in Maryland, the time to prepare is now. Registration is open, payroll systems need the new withholding ready by January, and the decision whether to stay in the state plan or pursue an approved private plan has a deadline of its own. This guide covers what FAMLI costs, who pays, who qualifies, what employees receive, and the compliance checklist to work through before year-end.

What FAMLI Is​

Maryland's Time to Care Act, enacted in 2022 when the General Assembly overrode the governor's veto, created a statewide paid family and medical leave insurance program. It works much like unemployment insurance: payroll contributions flow into a state-administered fund, the state evaluates claims, and the state pays wage-replacement benefits directly to eligible workers.

Once benefits begin, covered employees can take up to 12 weeks of job-protected paid leave in a 12-month period for qualifying reasons, with a possible additional 12 weeks for parental bonding in certain cases. Employers with Maryland employees are covered regardless of size — though, as explained below, the smallest employers get a break on the employer share of contributions.

The Timeline Changed Three Times — Here Is the Final One​

FAMLI's start date has moved repeatedly, which is why so much of what you read about it online is stale. The original law set contributions to begin October 1, 2023. Legislation in 2023 pushed that to October 1, 2024, and a 2024 law pushed it again to July 1, 2025, with benefits to follow July 1, 2026.

Then House Bill 102, enacted in 2025 at the Maryland Department of Labor's request, reset the schedule once more. The current, final timeline:

• Employer registration: open now through the FAMLI Division.
• Contributions begin: January 1, 2027, for both employers and employees.
• First remittance due: April 30, 2027.
• Contribution rate for 2027: 0.9% of covered wages, applying to wages paid January 1 through December 31, 2027.
• Benefits begin: January 2028.
• Private-plan applications: employers pursuing an approved private plan have until October 1, 2027, to submit the application.

The practical consequence: 2027 is a funding year. You will collect and remit contributions for twelve months before any claim can be paid. Budget for the cost starting with your first January payroll, not your first leave request.

What You Will Pay​

The state plan's 2027 contribution rate is 0.9% of covered wages, up to the Social Security wage base. The cost splits evenly:

• Employer share: 0.45% of each employee's covered wages.
• Employee share: 0.45%, withheld from wages like any other payroll deduction.

"Wages" for FAMLI purposes aligns with Maryland's unemployment insurance wage definition, so whatever your payroll system already treats as UI-taxable wages is the starting point. The Social Security wage base caps the bite: the 2026 base is $184,500, and the 2027 figure, announced by the Social Security Administration each fall, will cap 2027 FAMLI contributions.

In dollars, the employee share is modest but visible. A worker earning $60,000 pays about $270 a year; at $100,000 of covered wages, the annual employee deduction is about $450. The employer matches those amounts — unless one of the exceptions below applies.

The small-employer break​

Employers with fewer than 15 employees are not required to pay the employer share. But this is not a full exemption: those employees still owe their 0.45% through payroll withholding, and the employer must still collect and remit it. If you run a 10-person shop, your out-of-pocket cost is zero, but your withholding, remittance, notice, and recordkeeping obligations are the same as a 500-person company's.

Two more funding rules worth knowing​

First, an employer may elect to pay the employee's share on top of its own — a simple way to absorb the full 0.9% as a benefit. The reverse is forbidden: at no time may the employee be made to contribute more than 50% of the state rate.

Second, the rate resets every year. The Secretary of Labor sets the annual rate, and the statute caps the total at 1.2% of covered wages. The 0.9% figure is the 2027 rate only; build a line in your annual budget review to pick up each year's announced rate.

Who Qualifies for Leave​

An employee is eligible for FAMLI benefits after working at least 680 hours in Maryland during the 12 months before leave begins — roughly 13 hours a week averaged over the year. Part-time workers who clear that bar are in; short-tenure and very-casual workers are out.

Qualifying reasons cover the familiar paid-leave territory:

• The employee's own serious health condition.
• Caring for a family member with a serious health condition.
• Parental bonding, including kinship care placements.
• Caring for an injured or ill military servicemember who is next of kin.
• Qualifying exigencies tied to a family member's active-duty military service.

Maryland defines "family member" broadly: children and parents of the employee or the employee's spouse, spouses and domestic partners, and the employee's grandparents, grandchildren, and siblings — across biological, adopted, foster, step, guardianship, and in loco parentis relationships.

12 weeks, plus 12 more in one situation​

The base entitlement is 12 weeks of paid leave in a 12-month period, taken in minimum four-hour increments — intermittent leave and reduced schedules are allowed. The twist: an employee who takes FAMLI leave for their own serious health condition may receive an additional 12 weeks for parental bonding (and vice versa). That stacking rule is easy to miss in policy drafting and worth calling out to your managers now.

FAMLI leave runs concurrently with federal FMLA leave where both apply. And two guardrails protect employees: you may not require workers to burn vacation, sick leave, or other PTO before or during FAMLI leave (though you may let them use PTO to top up to full pay), and employees drawing unemployment or workers' compensation benefits generally cannot draw FAMLI at the same time.

What Employees Receive​

The weekly benefit replaces up to 90% of wages under a two-tier formula: 90% of the employee's average weekly wage up to 65% of the statewide average weekly wage, plus 50% of the portion above that line. The result is bounded by a $1,000-per-week maximum (in effect through December 31, 2028, then adjusted annually starting January 1, 2029) and a $50-per-week minimum.

Three employee-friendly features stand out. There is no waiting period, so benefits start with the leave itself rather than after an unpaid week. The FAMLI Division has 10 days to decide a completed claim. And employers may voluntarily top off the state benefit toward full pay through their own plans — a retention-friendly option for key roles.

The claims mechanics put deadlines on both sides. Employees may apply up to 60 days before or 60 days after the anticipated leave start date. Employers get five days to respond to an application — a genuinely short fuse that argues for designating one person (or your payroll provider) to own FAMLI correspondence before the first claim arrives.

The Private-Plan Option​

Maryland lets employers leave the state plan for an employer equivalent private insurance plan — either self-administered or purchased from a certified carrier — provided the plan meets or exceeds the rights, protections, and benefits of the state program and wins Maryland Department of Labor approval. If the state route's one-size-fits-all claims process does not suit you, or you already carry rich short-term disability and parental-leave coverage that could anchor a qualifying plan, this is the door to walk through.

Three constraints shape the decision. First, approval is mandatory — a private plan that the Department has not blessed does not excuse you from state contributions. Second, applications are due by October 1, 2027, so the evaluation, carrier quoting, and filing work belongs on your first-half-2027 calendar at the latest. Third, a private plan may charge a higher overall rate than the state plan, but it cannot charge employees more than the state plan charges — the extra cost, if any, lands on the employer.

For most small employers, the honest math is that the state plan wins on simplicity: no actuarial filing, no approval risk, no separate claims administration. Price the private route only if your workforce profile or existing benefits make it genuinely cheaper or better.

Your Compliance Checklist Before January 1, 2027​

Work through these items this fall, in roughly this order:

1. Register with the FAMLI Division. Employer registration is open. Confirm your account, your covered headcount, and whether you sit above or below the 15-employee line.
2. Configure payroll withholding. The 0.45% employee deduction must flow starting with the first paycheck of 2027, capped at the Social Security wage base. Confirm with your payroll provider now — January implementations booked in December cost more and go worse.
3. Budget the employer share. At 0.45% of covered payroll, a $1 million payroll costs $4,500 a year. Trivial to model, embarrassing to discover in February.
4. Decide on the private plan. If you are even considering it, start carrier conversations early in 2027; the October 1 application deadline arrives fast.
5. Draft your notices. Covered employers must give written notice of FAMLI rights and duties at hire, annually, and within five days when leave is requested or the employer learns leave may qualify. Build the template once and wire it into onboarding.
6. Set the 30-day / 5-day clocks. Employees owe 30 days' written notice for foreseeable leave (as soon as practicable otherwise, plus reasonable scheduling effort for intermittent leave). You owe a five-day turnaround on benefit applications. Put both in the handbook.
7. Coordinate existing leave policies. You cannot force PTO-first sequencing, but you can require coordination where you already provide paid parental, family-care, military, or disability leave. Review those policies for conflicts now.
8. Plan for job protection and health benefits. During FAMLI leave you may discharge only for cause, must reinstate afterward (absent substantial and grievous economic injury, with notice to the employee), and must maintain health benefits throughout. Brief whoever handles terminations.
9. Track Maryland hours. The 680-hour eligibility test runs on Maryland hours specifically. If you have remote or multi-state workers, your timekeeping must tag work location — see the payroll documentation guidance for recordkeeping patterns that survive an audit.

Mistakes to Avoid​

• Assuming benefits start when contributions do. They do not. Nothing is payable until January 2028. Set employee expectations explicitly or your first "where is my check" conversation will be awkward.
• Treating fewer than 15 employees as full exemption. The employer share is excused; the employee withholding, remittance, notices, and five-day response clock are not.
• Requiring PTO before FAMLI. The statute prohibits it. "Use up your vacation first" is the fastest route to a violation.
• Missing the five-day application response. Calendar it as strictly as a tax deadline — designate an owner and a backup.
• Forgetting the rate resets annually. 0.9% is the 2027 rate. Recheck the Secretary's announcement every year; the cap allows 1.2%.

Keep Your Payroll Records Audit-Ready​

FAMLI adds one more payroll obligation to a stack that already includes unemployment insurance, workers' compensation, and income tax withholding — each with its own wage base, rate, and filing calendar. The employers who sail through new programs like this are the ones whose payroll records already tie every deduction to an employee, a pay date, and a wage base without a spreadsheet rescue mission. Clean books turn January 1, 2027, into a configuration change instead of a scramble.

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