Maryland’s FAMLI Brings New Costs, Challenges for Contractors

Maryland construction companies are facing a new expense that could affect everything from employee paychecks and labor rates to project bids and workforce availability.

For one Baltimore-area contractor, the anticipated cost could reach $100,000 annually. Ted Bowes, president of Excell Concrete, says the additional expense will force his company to raise labor rates and adjust its contract bids.

Beginning in January, the state’s new Family and Medical Leave Insurance (FAMLI) program will require payroll contributions to fund paid, job-protected leave for eligible employees. While the program will provide important financial protection for workers facing serious medical or family needs, it also presents new costs and staffing challenges for employers.

With a November 15 deadline approaching for companies considering private insurance plans, employers need to start making decisions now.

Under FAMLI, eligible employees will be able to take up to 12 weeks of paid leave annually to care for themselves or a family member, receive up to $1,000 a week and return to their jobs when their leave ends. Employees who have worked at least 680 hours in Maryland during the qualifying period will be eligible for benefits.

Although payroll contributions from employers and employees begin in January 2027, benefits will not become available until January 2028. In the meantime, employers must identify eligible employees, evaluate insurance options, register with the state and prepare their payroll and benefits systems.

Choosing Insurance

Maryland employers can participate in the state-run FAMLI program or select an approved private insurance plan.

“The state plan is a simpler compliance path,” said Nicole Fender, Compliance Manager/Employee Benefits with RCM&D. “There is lower administrative burden, meaning the state is going to handle the eligibility, claims, appeals and benefit payments.”

However, employers will still have some compliance obligations, such as filing quarterly wage and hour reports to the state, and handling employee-facing notice requirements.

Before defaulting to the state plan, employers should consider getting quotes for private FAMLI insurance coverage spanning multiple years to evaluate potential cost savings, Fender said.

Some private insurers are containing the cost of FAMLI plans, in part, by building smaller reserves than the state plan.

“By using the same carrier that handles your other employee benefits, namely short-term disability (STD), you will have better integration of benefits and you may be able to negotiate some service guarantees, such as turnaround times on claims,” Fender said.

Bundling FAMLI and disability policies under one carrier could generate savings since some FAMLI claims will not become short-term disability claims, and potentially reduce disability insurance premiums.

Given the “war for talent in the construction industry, the employee experience dealing with this new program will be important,” said Lindsay Walker, Vice President of Alera Group, an insurance and financial services firm.

Walker noted that private insurers experienced with similar programs in other states may offer better service, particularly for shift workers and employees whose first language is not English.

Implementing FAMLI

For employers, integrating FAMLI into their financial and HR systems “is a big lift,” Walker said.

In addition to identifying eligible employees and adjusting payroll systems, employers will also need to assess how the new program impacts employee benefits and take-home pay, and make necessary adjustments.

Walker recommends beginning employee education in the fourth quarter of 2026. With construction workers spread across multiple jobsites, she suggests using a combination of manager briefings, multilingual information sheets, short videos and text messages to ensure employees understand the program.

Anticipating Costs

Bowes estimates the state FAMLI program would have cost the company and its employees $47,859 each, based on January 2026 payroll figures. A private insurance plan would cost slightly less.

“But our workforce has doubled since January,” Bowes said. “That means next year, I will have to pay an additional $100,000 in taxes for that plan.”

That company expense and the added deductions from workers’ pay would force Excell to raise its labor rates and its contract bids accordingly, he said.

While Bowes acknowledges the need to support workers dealing with serious medical issues, he said the program also presents employers with the challenge of how they will backfill for employees out on 12-weeks leave.

“This could be an HR nightmare,” he said.

Featured companies: RCM&D, Alera Group, Excell Concrete Construction