Quick Hits
- Because FAMLI allows an employer to choose to cover an employee’s portion of the contribution, a unionized employer that implements FAMLI’s default 50/50 contribution split without first providing the union with advance notice and an opportunity to request bargaining may risk an unfair labor practice charge.
- Since employers must already bargain over the contribution split, they could include notice of whether they will implement an Equivalent Private Insurance Plan or the state plan at the same time.
- Because contributions will begin on January 1, 2027, unionized employers may wish to act promptly to satisfy their bargaining obligations.
Where FAMLI and the National Labor Relations Act Meet
FAMLI is Maryland’s forthcoming state-mandated paid family and medical leave insurance program. Employers and employees share the cost of contributions that will fund paid leave benefits for certain qualifying events (i.e., the employee’s own or a family member’s serious health condition, bonding with a new child, or addressing military deployment–related needs). The contribution rate is capped at 1.2 percent of wages, up to the Social Security wage cap, with the actual rate adjusted annually and currently set at 0.9 percent. Contributions begin on January 1, 2027, with benefits commencing in January 2028.
Employers may implement an approved equivalent private insurance plan (EPIP) in lieu of participating in the state plan. We have discussed FAMLI in detail in prior articles, including our most recent one on new compliance resources from the Maryland Department of Labor to assist with employer implementation, as well as one on the EPIP pre-application process for filing a Declaration of Intent (DOI).
Both the contribution and EPIP provisions may trigger bargaining or notice obligations for unionized employers. Section 8(a)(5) of the National Labor Relations Act requires employers to engage in good-faith negotiations with unions regarding employees’ wages, hours, and other terms and conditions of employment, including benefits.
The Discretionary Split and Why It Matters
FAMLI defaults to a 50/50 split of the contribution, meaning that the employer and employee will each be responsible for 0.45 percent of the current 0.9 percent. Critically, the law provides that employers may pay the employee’s share in part or in full. That discretion gives rise to a labor relations issue: under Section 8(a)(5), implementing the employee payroll deduction without first providing the union advance notice and an opportunity to bargain may create risk of an unfair labor practice (ULP) charge.
It is likely that unions will want the employer to pay some or all of the employee share of the full contribution. Therefore, employers that implement the 50/50 split deduction without having provided the union with notice and the opportunity to request bargaining face a possible Section 8(a)(5) ULP finding. The remedy is costly: refunds to all affected employees until the violation is cured, effectively making the employer bear 100 percent of the contribution retroactively.
The Choice of an EPIP
Under the FAMLI statute, an EPIP must provide employees with all the same benefits and rights as the state plan. Given that, it is unclear whether the choice of an EPIP or the state plan will technically impact a term or condition of employment. Nonetheless, since employers will need to provide notice and an opportunity to bargain with regard to the contribution split, it is quite simple for them to include a reference to the plan they will implement at the same time.
Key Takeaways
There are several critical takeaways for unionized employers, who may wish to consider doing the following:
- providing advance written notice to unions of the intent to implement the 50/50 split and, if applicable, a proposed EPIP implementation, with sufficient lead time for a bargaining request;
- if a request for bargaining is made by the union, bargaining over the contribution allocation and/or its effects (there is no obligation to agree with the union’s position, but upon request from the union, the employer must give the union an opportunity to advocate for its position on the issue);
- not unilaterally implementing the payroll deduction without satisfying bargaining obligations;
- preparing for grievances characterizing the deduction as an unauthorized wage reduction; and
- calendaring critical dates: contributions begin January 1, 2027, and the deadline for filing a DOI for an EPIP is November 15, 2026.
Ogletree Deakins’ Baltimore office, Traditional Labor Relations Practice Group, and Leaves of Absence/Reasonable Accommodation Practice Group will continue to monitor developments and will provide updates on the Leaves of Absence, Traditional Labor Relations, and Maryland blogs as additional information becomes available.
In addition, the Ogletree Deakins Client Portal provides subscribers with timely updates on state family and medical leave laws, including Maryland’s FAMLI program. Premium-level subscribers have access to comprehensive Law Summaries and updated policies; Snapshots and Updates are complimentary for all registered client users. For more information on the Client Portal or a Client Portal subscription, please email clientportal@ogletree.com.
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