Guide to Maryland employee benefits and HR rules

Is your organization compliant with Maryland's employment and HR laws?

If you're based in Maryland or employ workers there, it's important to familiarize yourself with the state's benefits and HR compliance laws. This guide to HR laws in Maryland will provide a general overview of the laws you need to know

Topics covered in this guide include:

• What are an employee’s rights in Maryland?
• What are employers required to provide in Maryland?
• Health insurance in Maryland
• Wage laws in Maryland
• Other HR rules in Maryland

What are an employee’s rights in Maryland?

State and federal laws protect employee rights. If you currently have or plan to hire workers in the state, you must know what rights your employees have.

Some Maryland-specific state rights include:

• At-will employment
  • In Maryland, employers and employees can end the employment relationship at any time without needing a reason or notice. The state considers wrongful discharge an exception to the general rule of at-will employment.
• Equal pay and pay transparency
  • Maryland's Equal Pay for Equal Work law prohibits employers from paying different wages or providing less favorable opportunities based on sex or gender identity to employees with the same jobs.
  • The law also prohibits employers from requiring employees to sign waivers or documents that deny their right to disclose or discuss wages with another employee. Employers may establish rules around when employees can discuss wages during the workday, but they can’t prohibit those discussions.
• Living wages
  • Maryland's Living Wage law mandates that private businesses working on state government contracts pay their employees a living wage. This is $16.13 for “Tier 1” areas and $12.11 for “Tier 2” areas. Since the state minimum wage is higher than the living wage in “Tier 2” areas, employers must pay at least the state minimum wage.
• General contractor liability
  • General contractors in Maryland can be held responsible for unpaid wages if a subcontractor doesn't pay its employees.
• COBRA
  • Maryland follows the federal Consolidated Omnibus Budget Reconciliation Act (COBRA) but also has a regulation called Maryland Continuation Coverage (MCC). Since COBRA applies only to companies with 20 or more employees, MCC requires continuation coverage for employees at organizations with fewer than 20 workers.

What are employers required to provide to Maryland employees?

In addition to what federal law requires, Maryland employment law mandates that employers must provide eligible employees with specific employee benefits and accommodations.

Required benefits include:

• Retirement benefits
  • Maryland organizations with automatic payroll processing that have been in business for at least two years must participate in the MarylandSaves program. This program allows employees to contribute to their retirement through payroll deferral.

• Court and jury duty leave
  • In Maryland, employers must allow employees to take unpaid leave to serve as jurors. Employers must also allow employees to take unpaid leave to appear as witnesses in civil or criminal court proceedings. An employer can't penalize an employee for missing work to respond to a jury summons or court attendance.
• Voting leave
  • Maryland law requires employers to allow registered voters at least two hours off work on election day to vote, with pay. Employees must provide proof of voting if the employer requires it.
• Parental leave
  • Employers in Maryland must provide up to six weeks of unpaid parental leave for the birth, adoption, or foster placement of a child. This law applies to employees in companies with 15 to 49 employees. To qualify for parental leave, employees must have worked for the employer for at least a year and have worked at least 1,250 hours. Independent contractors and employees at sites with fewer than 15 employees aren’t eligible for parental leave.
• Sick and safe leave
  • Maryland employers must provide employees with at least one hour of sick and safe leave for every 30 hours worked, up to 40 hours per year.
    • Employees can take this leave for medical reasons, family care, maternity/paternity leave, preventive care, or to address domestic violence, sexual assault, or stalking situations.
  • Employers with 15 or more employees must provide paid "sick and safe leave," while those with fewer than 15 employees can choose whether it's paid or unpaid.
• Family leave
  • Maryland implemented the Family and Medical Leave Insurance Program (FAMLI Program) on April 9, 2022, referred to as the Time to Care Act of 2022. Under this act, employers and employees will contribute to the FAMLI fund, managed by the Maryland Department of Labor.
  • The act offers employees up to 12 weeks of pay for certain reasons. Starting Jan. 1, 2025, covered individuals can claim benefits for caregiving or attending to specific needs, such as:
    • An infant or child recently placed in the care of an individual within the first year of birth, adoption, foster care, or kinship care
    • A family member with a serious health condition
    • A next-of-kin service member or a qualifying exigency arising out of the employee's family member's deployment
• Flexible leave
  • According to the Maryland Flexible Leave Act (MFLA), employers with 15 or more employees must allow employees to use their earned paid leave to care for an immediate family member who’s ill or for bereavement purposes.
• Military Leave
  • Maryland law mandates that employers give 15 days of paid leave to employees who are in a reserve unit of the Armed Forces. Employees can use this leave for deployment or military training. Employees with at least 1,250 hours worked in the past 12 months are entitled to a day off on the day of their immediate family member's deployment if their workplace has 50 or more employees.
  • If an employee's immediate family member departs or returns from active duty outside the United States, that employee is entitled to take leave on that day. This law applies to Maryland businesses with more than 50 employees.

• Emergency response leave
  • Employees involved in emergency response organizations like the Civil Air Patrol and volunteer fire departments are protected from punishment by their employers for missing work for emergency response-related duties.
  • They can take up to 15 days of leave per year for emergencies declared by the governor as long as they have proper certification from organizations like the American Red Cross.
• Bereavement leave
  • Maryland employers with 15 or more employees must provide paid bereavement leave.
• Meal breaks
  • Maryland only requires employers to provide meal breaks to minors. Minors must have a 30-minute break for every five hours worked.
  • According to the Healthy Retail Employee Act, employees who work in certain retail establishments are entitled to a non-working shift break, depending on the number of hours worked.
• Organ and bone marrow donation leave
  • Private companies must provide up to 60 days of unpaid leave for organ donors and up to 30 days for bone marrow donors.
  • State employees are allowed up to 30 days for organ donation and seven days for bone marrow donation.
• Workers' compensation
  • Maryland employers with one or more employees must have workers' compensation insurance in case of work-related injuries or illnesses.
• Breastfeeding
  • In Maryland, mothers are legally allowed to breastfeed their children in any public or private place. It's illegal for anyone to restrict or limit this right.

Maryland doesn’t require the following benefits:

• Holiday leave
• Vacation time
• Severance pay
• Health insurance benefits
  • The state and federal governments don’t require employers with fewer than 50 full-time equivalent employees (FTEs) to offer health insurance coverage.
  • Federal law requires organizations with 50 or more FTEs to provide affordable health benefits with minimum essential coverage (MEC) and minimum value (MV).

Health insurance coverage in Maryland

Even if the Affordable Care Act (ACA) doesn’t require you to provide health insurance to your employees if you have fewer than 50 FTEs, health benefits are an excellent way to attract and retain top talent, especially in a tight labor market. However, rising premium costs have made it challenging for small and medium-sized businesses to offer traditional group health insurance.

In Maryland, individual health insurance tends to be cheaper than group coverage in most counties. The chart below shows the difference in monthly premiums for Maryland's three most populated counties.

Health reimbursement arrangement (HRA)

A health reimbursement arrangement (HRA) is an IRS-approved, employer-funded health benefit that allows you to reimburse your employees, tax-free, for their individual health coverage premiums and other qualifying medical expenses, depending on the type of plan you offer.

With an HRA, you have complete control over your benefits budget while giving your employees more freedom to choose how they want to use their benefits.

Some HRAs, such as the individual coverage HRA (ICHRA), can satisfy the federal regulations for applicable large employers (ALEs). This allows organizations of all sizes that offer an HRA to save money on their health benefits.

Learn more about each HRA

Health stipend

A health stipend is a fixed sum of money offered to your employees to help pay for their healthcare expenses. A health employee stipend isn't a formal group health plan, so you have complete control over which expenses are eligible for reimbursement.

This makes a health stipend an excellent option for small businesses looking to offer a health benefit that covers costs health insurance or HRAs may not cover, such as mental health expenses.

However, a stipend doesn’t satisfy the Affordable Care Act’s employer mandate, and all reimbursements are taxable for employers and employees.

Wage laws in Maryland

There are various federal and state laws you need to consider when it comes to setting employee wages in Maryland.

Minimum wage laws

Starting in 2024, all Maryland employers must pay their hourly employees a minimum wage rate of $15 due to Maryland Senate Bill 555, also known as the Fair Wage Act of 2023.

Montgomery County has its own minimum wage law that requires employers to pay a minimum wage of $15 or more per hour. This new state minimum wage requirement will apply to Montgomery County employers with 10 or fewer employees who must raise the hourly wage from $14.50 to $15 beginning Jan. 1, 2024.

On July 1, 2023, the Montgomery County minimum wage increased to:

• $16.70 per hour for large employers (those with 51 employees or more)
• $15.00 per hour for mid-sized employers (11 to 50 employees)
• $14.50 per hour for small employers (One to 10 employees)

Employers in Montgomery County must comply with the state or County’s minimum wage, whichever is higher. Therefore, large employers must continue paying their employees a minimum wage of $16.70 per hour.

Subminimum wage laws

In 2020, Maryland became the second state in the nation to eliminate subminimum wages.

Tipped employees

Tipped employees (employees who earn more than $30 per month in tips) in Montgomery County must earn the hourly minimum wage. Employers must pay an hourly rate of at least $4.00. This amount plus tips must total the minimum wage.

Payment of wage

The Maryland Department of Labor requires employers to pay wages to employees at least twice per month on set days specified by the employer. Employers may pay some employees, such as executive, professional, and administrative employees, less frequently.

Overtime laws

Maryland follows the Fair Labor Standards Act (FLSA) for overtime hours. Hourly non-exempt employees must receive overtime pay at one and a half times their regular rate for any hours worked more than 40 in a week unless exempted by federal FLSA regulations.

Final pay

Maryland employers must pay employees all wages earned before termination or resignation by the date the employee would have been paid. Failure to do so may result in the employee receiving three times the unpaid wages, plus attorney's fees and other costs.

In Maryland, employers don't have to pay employees for accrued leave if there’s a written policy that limits compensation, they inform the employee about leave benefits, and the policy states no payment is due at termination.

Unpaid wages or outstanding payroll checks held by a Maryland employer for three years are considered abandoned property. If the amount is greater than $100, the employer must notify the employee by First-Class Mail. The notice should state that the wages will be presumed abandoned unless the employee responds within 30 days. If the unclaimed wages are less than $100, the employer doesn’t require written notice.

Record-keeping laws

Maryland employers must maintain accurate records on each employee for three years after termination. The records should include the following employee information:

• Name
• Address
• Race
• Gender
• Occupation
• Rate of pay and the amount of each pay period
• Daily and weekly work hours

Child labor laws in Maryland

Maryland law has strict rules for employing minors. They need a work permit if they're younger than 18 and can't work for more than five consecutive hours without a break.

A minor younger than the age of 16 can't work:

• Before 7 a.m.
• After 8 p.m. from the day after Labor Day through the day before Memorial Day
• After 9 p.m. from Memorial Day through Labor Day
• For more than four hours on a day when school is in session or eight hours on a day when school isn’t in session

The commissioner may grant an exception to the restrictions if they receive written consent from a minor's parent or guardian. They must also determine that granting the exception will not impede the minor in fulfilling school requirements.

Other HR rules in Maryland

There are a few other HR rules you need to be aware of in Maryland.

Social media regulations

Maryland's Username and Password Privacy Protection law prohibits employers from requesting employees to provide their social media account login information, ensuring privacy in the workplace.

Employee monitoring

In Maryland, employers are allowed to conduct phone call surveillance for job-related reasons, such as customer service calls. However, they're prohibited from recording personal calls or in-person conversations without consent from all parties involved.

Sexual harassment training

Maryland requires all public employees to undergo a two-hour sexual harassment prevention training within six months of starting their job and then every two years thereafter.

Employment discrimination

Maryland's Commission on Civil Rights protects employees from discrimination based on various factors, including:

• Race
• Religion
• National origin
• Sex
• Age
• Marital status
• Sexual orientation
• Gender identity
• Genetic information
• Disability

Background checks

Maryland prohibits employers from asking job applicants about their criminal history before the first in-person interview. However, during the first in-person interview, employers may ask applicants about their criminal record.

However, Maryland's Ban-the-Box law does not restrict an employer from making inquiries or taking actions required by other applicable federal or state laws or applying to employers providing programs or services to minors or vulnerable adults.

No smoking

Smoking isn't allowed in indoor workplaces in Maryland. Employers must enforce this rule and put up no smoking signs at all entrances.

Drug and alcohol testing

Drug testing for job applicants and employees in Maryland is legal.

Immigration verification

Maryland places no additional employment verification procedures on employers beyond federal I-9 compliance.

Frequently asked questions