The Maryland General Assembly opened its 2020 session on January 8th. This year, 2,745 bills were filed and a total of 600 bills were passed. The session was set to end on April 6th but was cut short due to the worldwide COVID-19 outbreak. Consequently, the session concluded on March 18th. Below is a summary of some of the bills that passed which may be meaningful to you.
Labor & Employment
In light of the COVID-19 pandemic, labor and employment issues are at the forefront of the minds of business owners. Understanding how these laws could impact your business and your obligations to your employees is critical. Below are some of the most significant new state laws.
As you review them, please do consider the impact that some of these may have on existing relationships and employment documentation used by you, including your employment handbook policies, recruiting and trainings.
Economic Stabilization Act (HB1018/SB780)
What was once voluntary, will become mandatory. Effective October 1, 2020, Maryland’s “mini-WARN Act” will require employers with at least 50 employees operating an industrial, commercial or business enterprise in the State for more than one year to provide 60 day written notice prior to a reduction in operations. A “reduction in operations” means either:
- the relocation of part of its operations from one workplace to another; or
- the shutting down of a workplace or a portion of its operations that reduces the number of employees by the greater of at least 25% or 15 employees over a 3-month period (not counting employees working less than an average of 20 hours per week or who have worked less than six of the preceding 12 months).
This new law is significant as businesses will be making employment and operational decisions well into the fall and the upcoming year.
Salary History Ban (HB123)
Effective October 1, 2020, this bill imposes a number of obligations and prohibitions on the employer regarding an applicant’s wage history:
- It requires an employer to provide the wage range for the position in question upon an applicant’s request.
- It prohibits an employer from relying upon an applicant’s wage history in screening, hiring, or determining wages.
- It prohibits an employer from asking for wage history, whether orally, in writing, or through an employee or agent, or from a current or former employer.
- It prohibits an employer from retaliating against, or refusing to interview, hire, or employ an applicant who did not provide their wage history or who requested the wage range for the position in question.
- It acknowledges that an applicant may voluntarily provide their wage history.
- After a conditional offer of employment is made, it permits the employer to confirm and to rely on voluntarily-provided wage history to support a higher wage offer than initially offered, as long as the higher wage does not create an unlawful pay differential based on sex or gender identity.
Employers should review their hiring processes to ensure they do not request salary/wage history information from applicants.
Hair Textures and Hairstyle Discrimination Ban (HB1444/SB531)
This bill adds “protective hairstyle” including braids, twists, and locks to the list of characteristics that are protected from race discrimination under state law. This bill amends the Maryland Fair Employment Practices Act’s (“FEPA”) prohibition against race discrimination to include discrimination on the basis of hairstyles; “traits associated with race, including hair texture, afro hairstyles, and protective hairstyles.” This amendment is effective October 1, 2020.
Facial Recognition Technology for Applicants (HB1202)
This bill prohibits an employer’s use of facial recognition technology during an applicant’s interview unless the applicant consents by signing a written waiver. “Facial Recognition Service” is technology that analyzes facial features and is used for recognition or persistent tracking of individuals in still or video images. This bill becomes effective October 1, 2020.
Apprenticeship Start-Up Act of 2020 (SB751)
As the skills gap continues to grow in industries such as building and construction, health care, and information technology, employers are revisiting apprenticeships as an effective means to train workers in skilled occupations that do not require a bachelor’s degree. Effective June 1, 2020, this legislation extends the state income tax credit for employers who hire apprentices, increases the amount of credit per apprentice from $1,000 to $3,000 per tax year, and expands the eligibility of the program to include youth apprentices.
Minimum Wage Update
Maryland joined 21 states that increased their minimum wage rates on January 1, 2020, to $11.00 per hour. The District of Columbia and Montgomery County, Maryland will increase rates beginning on July 1, 2020. On January 1, 2021, minimum wage increases to $11.75 per hour.
Despite a shortened legislative session this year, a number of bills related to real estate were passed, many of which reflect a greater emphasis on consumer protection.
Ground Lease Bills: The General Assembly passed several new bills related to ground leases.
- Past Due Ground Rent (SB170/HB241) This bill clarifies that a ground lease holder may not bring any suit, action, or proceeding against a current or former leasehold tenant to recover any ground rent that was due and owing before the date the current leasehold tenant acquired title to the leasehold interest if the ground lease was not registered with SDAT prior to the date the current leasehold tenant acquired title.
- Redemption or Extinguishment of Ground Rents (SB806/HB1182) This bill alters the current provision relating to the effect of a redemption or extinguishment of ground rent to provide that recording the certificate of redemption or extinguishment in the land records of the county in which the property is located is effective to conclusively divest the ground lease holder of its reversion rights and to vest the reversion in the leasehold tenant, and eliminate certain rights, title, or interest of certain individuals.
- Ground Lease Required Notifications - Private Transaction Redemptions (HB149) The requirement that a ground lease holder notify the SDAT of a change in the leasehold tenant’s name and address was repealed by this bill. The bill also authorizes the leasehold tenant or an interested party to submit documentation of the redemption of a ground lease to SDAT if the ground lease was redeemed in a private transaction and the ground lease holder fails to notify SDAT of the redemption.
- Repeal of Registration Fees, Ground Leases (HB172) The current fees for registering a ground lease with SDAT have now been repealed.
Home Builder Guaranty Fund - Award Limitations (SB164)
The total amount of awards that the Consumer Protection Division of the Office of the Attorney General is authorized to pay to claimants for acts or omissions of one registered home builder from the Home Builder Guaranty Fund has now been increased from $300,000 to $500,000.
Lien Priority of Refinance Mortgages - Exception for Government Junior Mortgages (HB314)
This bill requires those who refinance first lien residential mortgages to seek the approval of any government agency that holds a lien securing a 0% interest loan on the same property prior to refinancing the indebtedness, even if the government lien is subordinate to the mortgage being refinanced, or else the refinance lien loses its priority to the government indebtedness.
Howard County - Transfer Tax - Rate Increase Authorization (HB1454)
Howard County has been authorized to increase the local transfer tax above the 1% required rate, provided that the additional revenue must be used for certain specified purposes, including capital projects for the Howard County Public School System, Department of Recreation and Parks, low-income housing programs, and fire house needs. In addition, the bill exempts the conveyance of moderate income housing units from the County transfer tax.
Deletion of Unlawful Ownership Restrictions – Exemption from Fees and Surcharges (HB1077)
Although covenants that restrict the ownership of real property based on race, religious belief, or national origin are unenforceable, many of these still exist in the land records. This bill provides that certain fees and surcharges do not apply to a modification or amendment of the common area deeds or other declarations of a homeowners association that deletes these covenants or restrictions.
The following bills impacting Maryland cooperatives, condominiums and homeowner associations were passed by the General Assembly, were not vetoed by Governor Hogan and, therefore, will become effective on October 1, 2020.
Condominiums-Responsibility for Property Insurance Deductibles (HB108/SB175)
With the passage of these bills, condominiums may shift up to $10,000 of the master policy’s deductible to the unit owner if the cause of damage or destruction to any portion of the condominium originates from a unit. Previously, only up to $5,000.00 of the deductible could be shifted to the unit owner under these circumstances. If the cause of any damage or destruction originates from the common elements, then the master policy’s deductible is a common expense. In addition, if the loss originates outside a unit or a common element, the law will now provide that the deductible is a common expense.
Condominiums and Homeowners Associations-Amendments to Declarations and Governing Documents (HB25/SB293)
Some condominium and homeowner association declarations require the approval of a certain percentage of the holders of mortgagees or deeds of trust on a unit in order to amend the declaration. The law will now provide that if the declaration of a condominium or a homeowners association contains a provision requiring any action on the part of a holder of a mortgage or deed of trust on a unit in a condominium or a lot within a homeowners association to amend the declaration, that provision is deemed satisfied if the following procedures are followed: (i) notice is sent to each holder with a copy of the proposed amendment; and (ii) if the holder fails to object, in writing, to the proposed amendment within 60 days after the date of actual receipt of the proposed amendment, the holder is deemed to have consented to the proposed amendment. These procedures for obtaining the approval of holders for declaration amendments do not apply if the amendments: (i) alter the priority of the lien of the mortgage or deed of trust; (ii) materially impairs or affects the unit or lot as collateral; or (iii) materially impairs or affects the right of the holder to exercise any rights under the mortgage, the deed of trust or applicable law.
Prince George’s County-Cooperative Housing Corporation, Condominiums, and Homeowners Associations-Reserve Studies (HB254)
Cooperatives, condominiums and homeowner associations located in Prince George’s County will be required to perform a reserve study every 5 years for future major repairs and replacements of common elements of a cooperative and condominium and common areas of a homeowners association. The annual budgets of cooperatives, condominiums and homeowner associations must include funds equal to at least 80% of the funding amount recommended in the most reserve study and assessments can be increased to cover the reserve funding amount notwithstanding any provision in a condominium or homeowners association articles of incorporation, bylaws or declaration or any provision in a cooperative’s articles of incorporation, bylaws or proprietary lease. This law applies to condominiums and cooperatives in Prince George County with more than 50 units and to homeowner associations in Prince George’s County with more than 50 dwelling units and that have responsibility in the declaration for maintaining and repairing common areas.
Homeowner Associations-Adopted Annual Budget-Submission to Lot Owners (SB472)
Currently, the board of directors, or other governing body of a homeowners association, is required to submit to the lot owners an annual proposed budget at least 30 days before the budget is adopted at an open meeting of the homeowners association or any other body to which the homeowners association delegates responsibility for preparing and adopting the budget. The law will now require the board of directors or other governing body of a homeowners association to submit the adopted annual budget to the lot owners not more than 30 days after the meeting at which the budget is adopted. The adopted annual budget may be sent to each lot owner by electronic transmission, by posting on the association’s home page or inclusion in the association’s newsletter.
Child Support – Shared Physical Custody (SB579/HB269)
For purposes of calculating child support, shared physical custody means that each parent keeps the child overnight for more than 25% of the year and that both parents contribute to the expenses of the child in addition to the payment of child support. This was decreased from 35% of the year. The law implements a “shared physical custody adjustment” when calculating child support, which applies when a parent keeps the child overnight for more than 25% (at least 92 overnights) but less than 30% (not more than 109 overnights) of the year.
When a parent with shared physical custody keeps the child overnight for more than 25% but less than 30% of the year, that parent’s theoretical basic child support obligation is increased by the amount of the shared physical custody adjustment as specified:
- 0.10 when the parent keeps the child for more than 25% but less than 26% of the year (at least 92 but not more than 94 overnights)
- 0.08 when the parent keeps the child for more than 26% but less than 27% of the year (at least 95 but not more than 98 overnights)
- 0.06 when the parent keeps the child for more than 27% but less than 28% of the year (at least 99 but not more than 102 overnights)
- 0.04 when the parent keeps the child for more than 28% but less than 29% of the year (at least 103 but not more than 105 overnights)
- 0.02 when the parent keeps the child for more than 29% but less than 30% of the year (at least 106 but not more than 109 overnights)
This bill takes effect October 1, 2020 and applies only to cases filed on or after that date.
Remote Notarization (SB678)
Effective March 30, 2020, Governor Hogan temporarily waived the requirement that documents be notarized in person during the COVID-19 crisis. To remotely notarize documents, the notary must use a technology vendor that allows the notary to view the remotely located individual and compare for consistency the information and photos presented as identification credentials. Senate Bill 678, which is scheduled to take effect October 1, 2020, authorizes the remote notarization of documents moving forward, irrespective of the state of emergency related to the COVID-19 pandemic.
Child Support – Guidelines (HB946/SB 847)
House Bill 946 / Senate Bill 847 takes effect October 1, 2021, and applies to cases filed on or after that date. This law modifies the child support guidelines matrix – the table used to calculate child support – by extending it to apply to combined monthly income levels of $30,000. Previously, the table extended only to combined income of $15,000 per month. The law also introduces a “self-support reserve” adjustment to child support: the presumption that the amount of child support calculated based upon the guidelines is correct may be rebutted if an obligor’s monthly child support obligation would leave the obligor with a monthly actual income below 110% of the 2019 federal poverty level for an individual.
There were seven estate planning and related bills passed by the General Assembly during the 2020 Session that were allowed to become law by Governor Hogan. Five of these bills constituted fine-tuning of existing laws, and two represented an enhanced interest in protecting vulnerable adults and elderly persons from exploitation or injury.
Two of the bills that provided fine-tuning of existing law may be important in your estate planning considerations. One bill (SB528/HB1229) now allows you to state in a document, such as a Will or Advance Medical Directive, or by entering into a pre-need contract with a funeral home, your wishes regarding funeral arrangements. If you designate someone to fulfill these wishes, this person, called an authorizing agent, is obligated to follow your stated wishes. The other bill of note (HB219) clarifies the process to be followed by the Comptroller’s Office when trying to assess whether any Maryland Estate Tax may be due upon the death of the second spouse to die.
The bills that address the exploitation of vulnerable adults and elderly persons will provide powerful tools to reduce incidences of such exploitation. One bill (HB33/SB153) adds “severe emotional distress” to the definition of abuse or neglect, thereby addressing those cases where a vulnerable adult is harmed, psychologically, “as a result of cruel or inhumane treatment or as a result of a malicious act under circumstances that indicate that the vulnerable adult’s health or welfare is harmed or threatened.” The other bill (HB304) provides that any exploitation of a vulnerable adult or elderly person by a “merchant” also constitutes a violation of the Consumer Protection Act of Maryland. In other words, this bill clearly creates a civil cause of action against merchants who exploit elderly persons or vulnerable adults with remedies that include treble damages and attorneys’ fees.
If you have any questions about the specific requirements of any of this legislation or want to learn more about any other legal or regulatory changes that may take effect later this year, please contact an attorney at our firm so we can assist you.