Maryland will soon implement FAMLI (Family and Medical Leave Insurance), a new paid leave policy. It will give employees up to 12 weeks off to care for themselves or their family. You must be set up before 2027.
FAMLI preparation won’t take a ton of work, but it can be confusing. In this article, I’ll walk you through the setup (including what we’ll handle for you if you’re a client) and how FAMLI will affect your payroll moving forward.
At CSI Accounting & Payroll, we’ve provided financial services to small businesses for 60 years. We follow law changes closely so our clients know how to stay compliant, addressing questions like:
Contributions (from employers and employees) to fund FAMLI will begin on January 1st, 2027, and benefits (the paid time off) will become available in January 2028. That’s coming up quickly! Here’s what you need to do before it kicks off.
If you have at least one employee in Maryland, you’re required to designate an Authorized Officer to create your employer profile on the FAMLI website when it opens in the fall of 2026, no exceptions.
Worried you’ll miss the memo about the portal opening or instructions on how to register? Sign up for FAMLI email updates.
By default, you’ll be enrolled in the state plan, but there are also private plans to choose from. Details are still coming out, but I recommend sticking with the state plan if you’re a very small employer because it’s less work for you if you work with CSI. (You won’t need to make your own payments.)
You must also decide how you’ll handle contributions. The initial contribution rate will be 0.9 percent of wages, and MD Labor will announce the rate for the following year each November. Most employers may withhold up to 50 percent of the total contribution rate from employees’ checks, though employers can also choose to cover the employee portion themselves as an added benefit. Small employers (14 or fewer total employees) may be exempt from the employer portion but must still submit the employees’ portion.
After you’ve selected your plan and employer contribution, you must inform your employees of the benefits that will be available to them. You must do this one pay period before the deductions begin on January 1, 2027, and again in July 2027.
Moving forward, you must remind them annually, when an employee is hired, when you know an employee has a qualifying reason, and when an employee requests it.
Since FAMLI is not directly paid for by the employer, it’s not run through payroll. However, you still need to set up the FAMLI employer and employee deductions in your payroll software to be compliant.
If you’re one of our clients here at CSI, good news! We’ll handle this process for you. We want to get rid of the headaches and potential mistakes. We don’t know if other providers will offer this, and you’re definitely on your own if you don’t outsource your payroll.
How will FAMLI show up in your payroll? You’ll see it on your pay stubs, tax forms, and maybe even pay reports.
On your pay stubs and tax forms, contributions will likely appear under deductions as a tax. FAMLI payroll deductions will begin on January 1, 2027.
Then, although not yet confirmed, I believe the state may send out pay reports at the end of each year. Stay tuned for more details!
What else does FAMLI have to do with payroll moving forward? It mostly comes down to reporting and making payments each quarter.
You must electronically file quarterly wage and hour reports with the FAMLI Division, even if you choose a private plan. Your first electronic report will be made at the start of April 2027.
If you work with CSI, we handle this for you!
You must also make payments quarterly. What you owe is based on your wage and hour reports. If all goes according to plan, your first remittance should also be in April 2027.
If you use a private plan, the payment is your responsibility. However, if you use the state plan and work with CSI, we also handle this for you.
Now that you know how to prepare for FAMLI, how it shows up in your payroll, and what to do with your payroll for FAMLI moving forward, are you ready to check out CSI for payroll services to get some of that off your plate?
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