If you have even one employee working in Maryland, a new state payroll program is about to become part of your business — whether you’ve planned for it or not. It’s called FAMLI (Family and Medical Leave Insurance), and payroll deductions start January 1, 2027.
The good news? The registration process only takes about 30 minutes.
The bad news? A lot of business owners haven’t done it yet — and some are being talked into paying more than they need to.
Here’s what you need to know, and what to do next.
What Is Maryland FAMLI?
FAMLI is a state-run insurance program that gives Maryland employees access to paid, job-protected leave for qualifying reasons, including:
- Bonding with a new child
- The employee’s own serious health condition
- Caring for a family member with a serious health condition
- Certain needs arising from a family member’s military deployment
Starting in January 2028, eligible employees can receive up to 12 weeks of paid leave per benefit year (up to 24 weeks in some cases involving both a medical condition and bonding), with weekly benefits capped at $1,000.
There is no exemption for small businesses or nonprofits based on size — every Maryland employer with at least one covered employee must participate in some form. But size does determine what participation costs you.
Do I Have to Pay for This?
That depends on your headcount:
- 15 or more employees: You split the contribution rate with your employees — currently 0.9% of wages, divided 50/50 (0.45% each).
- Fewer than 15 employees: You only need to remit the employee share. In practice, this means no direct employer cost, as long as you withhold correctly from employee wages.
Either way, you are still required to register, even if you don’t owe a dime.
Two Paths: State Plan or Private Plan
Employers have a choice: participate in the state-run plan, OR apply to MD to get approved for an exemption and purchase an approved private plan instead. Both paths satisfy the law, but they are not identical, and the decision shouldn’t be made on a sales call.
Here’s why we’re alerting you now: insurance agents are actively marketing private FAMLI alternatives to Maryland business owners, sometimes bundling in extra features to make the pitch more appealing. That doesn’t automatically make it a bad option — but it does mean you need to confirm with MD that it is an approved plan. Don’t just jump on it as a default “better deal” just because someone called you first.
Please note that having an independent plan does not immediately exempt the employer from withholdings effective January 1, 2027. Until Maryland approves the alternative plan, these funds will be due to be submitted with each quarterly filing. The state will deposit these funds into an escrow account to be returned to the employer upon approval of the independent plan.
Registration Is on YOU, Not Your Accountant
This is the part that trips people up: the business owner — not the accountant or payroll provider — must personally complete the initial registration. It requires identity verification through Login.gov and must be done by an authorized officer, owner, partner, or executive director.
Once you’re registered, you can authorize your accountant or payroll provider (like Saunders Tax & Accounting) to handle the ongoing filings and contributions on your behalf. But that first step is yours to complete.
Register here: paidleave.maryland.gov
When What Happens
Now Registration is open – https://paidleave.maryland.gov/register/
January 1, 2027 Payroll deductions begin
April 30, 2027 First quarterly wage report and payment due
July 2027 Required employee notices go out (6 months before benefits begin)
January 2028 Employees can begin taking FAMLI leave
A Few Things That Catch Employers Off Guard
- Employees cannot opt out, even if they’ll never work enough hours to qualify, and contributions are not refunded.
- Part-time employees still have deductions taken, even if they never reach the 680-hour eligibility threshold — worth explaining to your team up front.
- Choosing a private plan is not a shortcut. You’ll still file quarterly reports, submit claims data, and keep records for five years.
- Out-of-state employees count toward your employer size, but only Maryland-localized positions actually have contributions taken.
What to Do Before Year-End
1.Register at paidleave.maryland.gov — budget about 30 minutes.
2.Determine your employer size to know whether you owe an employer contribution.
3.Decide: state plan or private plan — and loop in your accountant before you commit to anything an insurance agent offers.
4.Authorize your accountant or payroll provider to manage ongoing filings once registration is complete.
5.Plan your employee notices so you’re ready well before the July 2027 deadline.
FAMLI is coming, and the earlier you register, the smoother this rolls out for your business. Don’t wait until the fourth quarter scramble — and don’t let a sales pitch make the decision for you before your accountant has weighed in.
For more information, contact Saunders Tax & Accounting at http://www.saunderstax.com or call us at 301-714-2071. Open Monday – Thursday, 9 am to 5 pm. Awarded the Hagerstown Hot List 2026 and Hagerstown Chamber of Commerce “2023 Small Business of the Year” — providing a Less Taxing Life and More Prosperous Solutions since 1984!
