MARYLAND: An Introduction to Labor & Employment

The Business Environment 

Maryland is a progressive state in terms of employment legislation. Democratic voters outnumber Republicans almost 2:1 and the state legislative body, the General Assembly, reflects that ratio. After two terms with a pro-business Republican governor, a Democrat has taken his place. As a result, there has been further emphasis on pro-worker legislation, such as the recent expedited increase to a USD15 minimum wage rate and a forthcoming paid family and medical leave insurance benefits programme.

In part responding to social movements like #MeToo and #BlackLivesMatter, Maryland has passed laws that greatly expand harassment and discrimination protections, such as lowering the standard for establishing illegal harassment and extending the time periods for filing complaints of discrimination with the Maryland Commission on Civil Rights as well as filing discrimination and harassment lawsuits. Maryland also expanded its Equal Pay Act to include wage transparency provisions and a salary history ban. Further, it limited the use of criminal history in the application process.

Maryland has experienced an increased and well-publicised interest in union membership, arising in large part out of workplace challenges from the COVID-19 pandemic and the #BlackLivesMatter movement. Within the past few years, there have been high-profile and successful union organising campaigns in this state, across many industries and entities. Given the Biden administration’s support for unions, it is expected that union membership in Maryland will continue to grow.

The Employment Relationship 

In Maryland, the employment relationship is presumed to be at-will. This means that either the employer or employee may terminate the relationship at any time with or without cause or notice, as long as the termination is not prohibited by law, by an individual contract or by a collective bargaining agreement. As to the legal limitation on the at-will doctrine, in addition to applicable federal laws, numerous Maryland laws contain protections against termination from employment for exercising rights under those laws. In addition, Maryland recognises a cause of action for “abusive discharge” in violation of public policy as an exception to at-will employment.

Maryland employers and employees can also enter into agreements that govern other aspects of the employment relationship. Although employers are prohibited by law from including a non-compete or conflict of interest provision in an employment contract with lower-wage employees, restrictive covenants (such as non-compete or non-solicitation agreements) may be enforceable against higher-wage employees in Maryland. Arbitration agreements also may be enforced in Maryland. Additionally, Maryland employers may protect confidential and proprietary business information, including trade secrets, through the use of a confidentiality agreement.

Discrimination, Harassment and Retaliation 

Maryland law protects employees, independent contractors, and interns from employment discrimination and harassment on the basis of race, protective hairstyles, color, religion, sex, age, pregnancy, national origin, marital status, sexual orientation, gender identity, disability, or genetic information or because of the individual’s refusal to submit to a genetic test or make available the results of a genetic test. In addition, individuals are protected from retaliation for asserting rights under the law. The law further requires employers to provide reasonable accommodations for disabilities – specifically, including those caused or contributed to by pregnancy – as well as to applicants for employment.

This anti-discrimination law applies to employers with 15 or more employees – apart from where a harassment claim is involved, when it applies to employers with a single employee. Previously, Maryland law was consistent with federal law in requiring conduct to be “severe or pervasive”, among other things, in order to constitute unlawful harassment. A 2022 revision, however, specifically removed that requirement, making harassment claims easier to establish under state law.

Maryland has also enacted an Equal Pay for Equal Work Statute, which prohibits discriminatory pay practices based on sex or gender identity. The law further contains pay transparency provisions that protect employees’ rights to discuss their pay and requires employers to disclose pay ranges to applicants upon request.

Compensation and Benefits 

With regard to compensation, employees are designated as either “exempt” or “non-exempt” from the requirements to pay the minimum wage rate and overtime premiums under the Maryland Wage and Hour Law, as well as the Federal Fair Labor Standards Act (FLSA). Maryland law generally follows the FLSA but sets a higher state minimum wage (currently USD15 per hour).

The payment of wages and any deductions therefrom are governed by the Maryland Wage Payment and Collection Law. Employers must comply with certain notice requirements upon hiring and with each pay cheque. Wages must be paid at least every two weeks or twice a month, by cash or cheque or – with the employee’s consent – by direct deposit or to a debit card. Upon termination of employment, the final pay cheque must be issued by the next regular payday following the termination.

Certain benefits are required by law. Among the more significant, the Maryland Healthy Working Families Act requires employers to provide earned sick and safe leave to their eligible employees. In addition, Maryland has passed legislation to create a paid family medical and leave insurance benefits programme. It will provide eligible employees with 12 weeks of paid family and medical leave, with the possibility of an additional 12 weeks of paid parental leave. This programme will be administered by the State and funded by contributions from employers and employees. Contributions are currently scheduled to begin on 1 October 2024, with benefits starting 1 January 2026 – although there is legislation pending to further delay these dates. The Maryland Department of Labor will issue regulations to implement the provisions of the law.

Other types of statutory leaves include parental leave (applicable to employers with 15–49 employees), organ and bone marrow donation leave, day of deployment leave, jury and witness duty leave, crime victim leave, voting leave, civil air patrol leave, and emergency volunteer leave.

Maryland employers are not required to provide paid vacation or paid time off. If they choose to do so, they should state in the policy document whether accrued, unused vacation or Paid Time Off will be paid out upon termination or not; the failure expressly to so state will make such payment mandatory.

As regards retirement benefits, Maryland has created the Maryland Small Business Retirement Savings Program and Trust for smaller employers. All employers that use an automatic payroll system and do not have an employer-sponsored retirement plan may participate in this programme.

Maryland does not require employees to provide healthcare insurance to employees, but those who choose or are required by federal law to do so should be aware of state coverage requirements (eg, mammograms, in vitro fertilization, home healthcare services and hospice benefits). Maryland employers are required to provide workers’ compensation insurance, which provides compensation and healthcare benefits for employees who suffer an on-the-job injury or illness.