Maryland Employment Law Updates: Minimum Wage, Time to Care Act & Non-Compete Agreement Limitations

At the end of its recent session, the Maryland legislature passed two new pieces of employment legislation for Governor Wes Moore’s signature.

In its long-running efforts to implement family leave, the legislature passed Senate Bill 828, which is a modification to the Time to Care Act that governs Maryland’s new Family and Medical Leave Insurance Program. The bill would delay the start date and make administrative changes to the program.

The legislature also sought to increase the state minimum wage with Senate Bill 555, which will bolster the minimum hourly wage to $15.00 per hour. The increase will apply to all Maryland employees by 2026. 

The minimum wage legislation would outlaw non-compete agreements for certain lower wage workers.

Time to Care Act Modifications & Delay

The purpose of Senate Bill 828 is to alleviate some employer concerns around the implementation of the new program. The bill makes several changes to the administration of the Family and Medical Leave Insurance (FAMLI) Program, also known as the Time to Care Act, including delaying the start dates for required contributions and benefit payments, by one year, to October 1, 2024, and January 1, 2026, respectively. The current draft of the Time to Care Act would apply to employers of any size. 

The FAMLI Program, which was passed in 2022, will provide paid family and medical leave to eligible employees in the state.

Under FAMLI, the new leave program will provide up to 12 weeks of leave to a covered individual who is taking leave from employment to care for their own serious health condition, that of certain close family members, or a qualifying situation arising out of a family member’s military deployment. Employers and employees are both required to contribute to the program according to a calculation based on an employee’s wages.

This delay will provide employers with more time to prepare for the program’s implementation.

Employers must continue to provide health benefits for employees on leave and restore employees to an equivalent position upon their return. Employers can opt out of the program if they offer a private plan that meets or exceeds the rights, protections, and benefits of the FAMLI Program. Penalties are outlined for individuals and employers who make false statements or fail to report material facts. 

Minimum Wage Increase

Governor Wes Moore received and signed Senate Bill 555, which will raise the minimum wage for most Maryland employees to $15.00 per hour by January 1, 2024. The amended law will not affect Montgomery and Howard counties as they already have local minimum wage rates above $15.00 per hour. 

For Maryland employers with 15 or more employees, the minimum wage will increase to $15.00 per hour effective January 1, 2024. For employers with 14 or fewer employees, the minimum wage rate will phase-in by July 1, 2026. 

In an effort to encourage employers to hire younger workers, the bill allows Maryland employers to pay employees under the age of 18 only 85% of the minimum wage rate, or $12.75 per hour, on January 1, 2024.

Prohibition on Certain Non-Compete Agreements

The minimum wage bill also includes a prohibition on certain non-compete agreements. 

Non-compete agreements are restrictive covenants between employers and employees that restrict where employees may work following the termination of employment. Most non-competes also include time and geographic restrictions.

Prior to the recent legislation, non-competes were prohibited for employees who earned 150% or less of the current minimum wage. 

Under the new law, employers, starting January 1, 2024, may not require an employee, or prospective employee, to sign a non-compete agreement if the employee earns less than or equal to $22.50 per hour, or approximately $46,800. 

If you have questions about new Maryland employment legislation and how it affects you, contact the employment attorneys at Potomac Legal Group PLLC. 

Contact Us Today to Schedule a Consultation

Share this Post...

Leave a Reply