Maryland’s New FAMLI Program: What Employers and Employees Should Know

Maryland is joining a growing list of jurisdictions that require paid family and medical leave through a state-run insurance program.

The program is called Family and Medical Leave Insurance, or FAMLI, and it will affect Maryland employers, payroll systems, and employees over the next few years.

This is not just an HR issue. For employers, FAMLI is a payroll, compliance, employee-benefits, and cash-flow issue. The rules will need to be built into payroll systems, employee handbooks, leave policies, and multi-state compliance planning.

What Is Maryland FAMLI?

Maryland FAMLI is a paid family and medical leave insurance program. Once benefits begin, eligible Maryland workers will be able to take paid, job-protected leave for qualifying life events.

Those qualifying events generally include:

• Caring for a new child after birth, adoption, or foster placement;
• Recovering from the employee’s own serious health condition;
• Caring for a family member with a serious health condition; and
• Certain military-family needs.

Maryland’s program is designed as a payroll-funded insurance system. Employees and employers pay into the program, and eligible employees later receive wage-replacement benefits when they qualify for leave.

For employers, the practical issue is payroll readiness. The benefit program does not begin until 2028, but the contribution system begins in 2027.

Key Maryland FAMLI Dates

Maryland’s current implementation timeline is:

For 2027, Maryland has set the total contribution rate at 0.9% of wages, split equally between employers and employees: 0.45% employer and 0.45% employee.

The rate applies up to the Social Security wage base. Employers with fewer than 15 employees have a reduced obligation because they are not required to pay the employer share, although they still remit employee contributions.

Once benefits begin, Maryland employees may generally receive up to 12 weeks of paid leave, with benefits capped at $1,000 per week. In limited situations, such as when an employee has both a serious health condition and welcomes a child in the same year, additional leave may be available.

Why Employers Should Start Planning Before 2027

The first payroll deductions are not due until 2027, but waiting until January 2027 is not ideal.

Employers need time to confirm whether they have Maryland-covered employees, coordinate payroll settings, communicate deductions to employees, update handbooks and leave policies, and understand how Maryland’s program interacts with other leave benefits.

For single-state employers, this may be a payroll setup project. For multi-state employers, it can be more complicated because nearby jurisdictions are taking different approaches.

How Maryland Compares to Colorado FAMLI

Colorado’s program is also called FAMLI, but it is further along. Colorado began operating its paid leave system earlier, and employees are already able to claim benefits.

Colorado’s program is useful as a preview of where Maryland is headed. Like Maryland, Colorado uses a payroll-funded insurance model and covers common family and medical leave events, including bonding with a new child, caring for the employee’s own health condition, caring for a family member, military-family needs, and safety-related leave for domestic violence, stalking, or sexual assault.

For 2026, Colorado’s total premium rate is 0.88% of wages, generally split between employer and employee at 0.44% each. Small employers with fewer than 10 employees are generally exempt from the employer portion.

Colorado employees may receive up to 12 weeks of leave, with additional leave available for pregnancy or childbirth complications. Colorado has also added a neonatal care leave category, allowing additional leave when a newborn is receiving NICU or higher-level care.

The biggest difference is timing: Colorado is already live, while Maryland is still in the payroll setup and implementation phase.

How Maryland Compares to Washington, D.C.’s Paid Leave Program

Washington, D.C. has a paid family leave program, but its funding structure is different from Maryland’s.

D.C.’s program is funded through an employer-only payroll tax. Employees do not have a payroll deduction for D.C. Paid Family Leave.

For 2026, the D.C. Paid Family Leave tax rate is 0.75% of wages, paid by covered employers.

D.C. currently provides up to:

D.C.’s weekly benefit is wage-based and subject to a maximum. For employers, the most important distinction is that D.C. is employer-funded, while Maryland is generally shared between employer and employee.

How Maryland Compares to Virginia’s New Paid Leave Plan

Virginia recently enacted a statewide paid family and medical leave program, making it one of the newest states to join the paid leave movement.

Virginia’s program is scheduled to begin later than Maryland’s. The Virginia Employment Commission will administer the program. Payroll contributions are scheduled to begin April 1, 2028, and benefits are scheduled to launch December 1, 2028.

Virginia’s program will provide up to 12 weeks of paid leave for qualifying events such as:

• Welcoming a new child;
• Recovering from a serious health condition;
• Caring for a family member with a serious health condition;
• Military-family needs; and
• Domestic violence, sexual assault, or stalking-related needs.

Like Maryland, Virginia will be funded through payroll contributions shared by employers and employees. However, Virginia’s contribution rate has not yet been finalized; the Virginia Employment Commission is expected to set rates as part of the program rollout.

Side-by-Side Comparison

What Employers Should Do Now

Even though Maryland benefits do not begin until 2028, the payroll work starts sooner. Employers with Maryland employees should begin preparing during 2026 so payroll deductions and quarterly reporting are ready by January 2027.

Recommended next steps include:

1. Identify Maryland-covered employees. Coverage generally depends on where the work is localized, not simply where the employee lives.
2. Coordinate with payroll providers. Maryland contributions must be collected through payroll and remitted quarterly.
3. Review multi-state payroll exposure. Employers with workers in Maryland, D.C., Virginia, and Colorado may be subject to different paid leave rules in each jurisdiction.
4. Update employee handbooks and leave policies. Paid leave programs often interact with existing PTO, short-term disability, FMLA, and employer-provided parental leave policies.
5. Budget for employer contributions. Maryland’s 2027 employer share is expected to be 0.45% of covered wages for employers with 15 or more employees.
6. Watch for private plan options. Some states allow employers to use approved private plans instead of the state plan. Employers should evaluate whether that option makes sense once Maryland’s process is fully available.

Why This Matters for Multi-State Employers

Employers operating in Maryland, D.C., Virginia, Colorado, or other paid-leave states should not assume one payroll setup will solve every jurisdiction.

The programs may sound similar, but they differ in important ways:

• Who pays the contribution;
• Whether employees have payroll deductions;
• Whether small employers receive reduced obligations;
• When contributions begin;
• When benefits become available;
• Which agency administers the program;
• How private plans are approved; and
• How the paid leave program interacts with existing employer policies.

This is where payroll compliance can become messy. A business with remote employees in multiple states may have to track different contribution rates, withholding rules, benefit programs, and employee communications.

Common Questions Employers Should Ask

Before Maryland payroll contributions begin, employers should be asking practical questions:

• Do we have employees whose work is localized in Maryland?
• Do we also have employees in D.C., Virginia, Colorado, or other paid-leave states?
• Can our payroll provider handle Maryland FAMLI contributions by January 2027?
• Will our payroll reports separately track employer and employee contributions?
• Do we have fewer than 15 employees for Maryland purposes?
• How will FAMLI interact with our existing PTO, parental leave, disability, or FMLA policies?
• Should we evaluate a private plan option?
• Who inside the business will be responsible for notices, employee questions, and payroll coordination?

These questions should be addressed before the first contribution deadline, not after payroll has already started withholding incorrectly.

The Bottom Line

Maryland FAMLI is not just another HR notice. It is a payroll, tax, compliance, and employee-benefits change that will require advance planning.

For Maryland employers, the most important immediate deadline is January 1, 2027, when payroll contributions begin. For employees, the major change arrives in January 2028, when paid leave benefits become available.

Employers operating across the Mid-Atlantic should pay especially close attention. Maryland, D.C., and Virginia are moving in the same policy direction, but their programs differ in contribution rates, funding structure, timing, and administration.

Getting payroll systems and employee policies aligned early will help avoid costly corrections later.