The 2023 Legislative Session of the Maryland General Assembly concluded with 2,275 bills introduced and 806 signed into law by Governor Moore; four were vetoed. Below is a brief synopsis of the new laws that may impact you, your business, or your community.
Recreational Cannabis (HB556/SB516)
Following a ballot referendum that passed with a majority in the November 2022 election, adults aged 21 and older may use and possess limited amounts of cannabis. This will have a significant impact on the workplace. Cannabis is added to the definition of ‘tobacco products’ and smoking such is limited to designated smoking areas out of the office. New legislation does not prevent employers from testing employees for cannabis in accordance with their drug testing policies. There is no law that protects cannabis users from disciplinary action in the workplace and no protection for discrimination under the ADA.
“The 2023 legislative session brought significant changes to employment law. Businesses and entrepreneurs should modify their policies and contracts to reflect these new laws now, as effective dates are quickly approaching.”
-Cheryl U. Brown, Partner, Labor & Employment Practice Group
Family and Medical Leave Insurance Program – Modifications (HB988/SB828)
The Family and Medical Insurance Program allows eligible employees to receive up to 12 weeks of certain paid family and medical benefits (24 weeks in certain circumstances) from the State. Employees who have worked a minimum of 680 hours over the preceding 12-month period are eligible. This bill clarifies and amends the previously passed Time to Care Act in numerous ways:
- contributions will now begin on October 1, 2024, and benefits will become available on January 1, 2026;
- contributions will now be shared evenly between the employee and employer (50/50);
- the total contribution will be capped at 1.2% of an employee’s wages up to the Social Security wage limit of $160,200;
- for employers subject to the Family Medical Leave Act, approved leave through the state insurance program can be run concurrently with approved federal family medical leave;
- employees will not be required to exhaust all employer-paid leave; and
- employers will have the right to manage benefits coordination with their company-provided paid leave benefits.
Fair Wage Act 2023 (HB549/SB555)
The current state minimum wage is $13.25/hour for employers with 15 or more employees and $12.80/hour for employers with 14 or fewer employees. Effective January 1, 2024, the State minimum wage will be $15.00/hour for all employers, regardless of the number of employees. This bill did not change the tip credit, which remains $3.63/hour. It is important to note that, in addition to state law, employers must comply with local county laws as well. For example, Howard County’s current minimum wage is $15.00/hour for employers with 15 or more employees and $13.25/hour for employers with less than 15 employees. Montgomery County’s minimum wage increased on July 1, 2023, to:
- $16.71/hour for employers with 51 or more employees
- $15.00/hour for employers with 11 to 50 employees
- $14.50/hour for employers with 10 or fewer employees
Noncompete Prohibition (SB591)
This legislation expands the ban on noncompetes to additional classifications of employees. Currently, noncompete provisions or agreements are banned in Maryland for employees who earn $15.00/hour or less. This new law increases the wages an employee must earn to have a valid non-compete to 150% of the State minimum wage. Effective October 1, 2023, the threshold amount for employers with 15 or more employees will be $19.88/hour or approximately $41,350 annually. On January 1, 2024, with the increased minimum wage, the wage threshold amount will be $22.50/hour or approximately $46,800 annually.
Health Care Law
Behavioral Health Care – Treatment and Access (SB582/HB1148)
This legislation establishes the Commission on Behavioral Health Care Treatment and Access to make recommendations to provide appropriate, accessible, and comprehensive behavioral health services to individuals in the state. The bill also establishes the Behavioral Health Care Coordination Value-Based Purchasing Pilot Program within the Maryland Department of Health, which requires the Department to submit a state plan amendment to the Centers for Medicare and Medicaid Services to establish certified community behavioral health clinics on or before December 1, 2023.
“This legislation creates behavioral health infrastructure across the state, addressing gaps in the current behavioral health care system and making treatment more accessible.”
-Hugh W. Farrell, Partner, Health Care Law Practice Group
Abortion Rights (HB705, SB859/HB808, SB341, SB786)
These bills protect abortion rights in numerous ways, including:
- adding a constitutional amendment to enshrine the right to abortion in the Maryland Constitution to the November 2024 ballot;
- protecting patients and providers from criminal, civil and administrative penalties relating to abortion bans or restrictions in other states;
- protecting medical and insurance records on reproductive healthcare in electronic health information exchanges that can be shared across state lines; and
- ensuring public colleges and universities in Maryland have a plan for student access near campuses to birth control, including emergency contraception and abortion pills.
Gender-Affirming Treatment (Trans Health Equity Act) (SB460)
This legislation expands procedures relating to gender-affirming care that are covered by the State’s Medicaid program. Coverage will expand to cover:
- procedures that include hair alteration, voice modification surgery and therapy, alterations to the abdomen, trunk, face and neck;
- fertility preservation services; and
- revisions and reversal of prior treatments.
Preserve Telehealth Access Act of 2023 (SB534)
This bill extends coverage of telehealth by the Maryland Medical Assistance Program and certain insurers, nonprofit health services plans and health maintenance organizations (HMOs) until June 30, 2025.
Procurement of Construction Materials (Buy Clean Maryland Act)(HB261)
This legislation seeks to reduce greenhouse gas emissions by producers of concrete and cement materials utilized on certain projects. When procuring a construction project that utilizes these materials. Beginning on July 1, 2026, the State may include a requirement for the successful bidder or offeror to submit an environmental product declaration relating to the global warming potential and emissions for the material. The law prohibits a contractor from installing project materials until the environmental product declaration has been provided; however, the State can waive this requirement. Beginning in 2025, the Department of General Services must submit an annual report to the General Assembly detailing what the Department has learned about how to identify and quantify embodied carbon in building materials, including life cycle costs and obstacles encountered.
“The Buy Clean Maryland Act directly impacts commercial construction, as businesses must incorporate these requirements into their systems. This legislation sets standards for environmental protections, serving to create effective and measurable processes that will combat pollution, climate change, and more.”
-Lucas F. Webster, Partner, Commercial Litigation Practice Group
Sediment Control Plans, Discharge Permits for Stormwater Associated With Construction Activity, and Notice and Comment Requirements (SB471)
This bill requires the Department of the Environment to review and update specifications for sediment control plans including public comment on the proposed updates. The review must occur on or before December 1, 2023, and every 5 years thereafter. The standards are to take into account the most recent precipitation data available, any updates and revisions that are designed to protect the waters of the state from pollution, and consultation with experts. The new requirements are not retroactively applied. Any project underway on December 1, 2025 with an approved sediment and erosion control permit and plan will not be affected by the new updates.
Public School Construction – Programs, Approvals, and Administration – Alterations (HB458)
This legislation changes the dollar value for remodeling a school for which approval of the State Superintendent or their designee is required from $500,000 to $1 million. The approval threshold for change orders associated with those projects also increased from $25,000 to $50,000. Additional components of this bill include:
- during the design phase of a project, a County Board of Education must evaluate the cost and efficiency over a 50-year period of using available alternative energy systems such as geothermal, solar, wind and energy storage compared to traditional energy systems. The Board must report to the Interagency Commission on School Construction (IAC) if they find that no alternative energy systems are appropriate for the planned construction. The IAC must provide an annual report to the General Assembly identifying construction and renovation projects utilizing alternative energy systems;
- language is provided for the removal of an appointed member of the IAC for incompetence, misconduct, or failure to perform their duties; and
- $127 million in annual funding for the Built to Learn Program will begin in fiscal year 2025.
Sports Entertainment Facilities – Financing and Construction (SB442)
This legislation increases the amount of taxable or tax-exempt bonds that the Maryland Stadium Authority (MSA) may issue for sports entertainment facilities, from $200 million to $220 million. The MSA may issue bonds to finance sports entertainment facility construction to nonprofit organizations that will own or operate the facility.
Grounds for Divorce (HB014)
Currently, parties may file for limited divorce, meaning the parties were separated and some issues (e.g., custody and financials) were resolved, but the marriage was not completely ended. As of October 1, 2023, limited divorce will no longer be an option, and the requirements for obtaining an absolute divorce will be simplified. An absolute divorce effectively ends a marriage and resolves all issues including assets and property. Currently, a party may file for absolute divorce on the grounds of: 12-month separation; mutual consent; adultery; desertion; cruelty of treatment; conviction of a crime; or insanity. As of October 1, many of these grounds will no longer exist. Under the new bill, an absolute divorce may be granted in the presence of a 6-month separation, irreconcilable differences, or a mutual consent between the parties resolving all issues.
“Getting a divorce in Maryland is becoming faster and easier – and the ways of doing so are changing as well. One significant change is in the terms of separation. While the parties are currently required to live in separate households, the new bill will acknowledge separation even if parties reside under the same roof. This may be helpful for parties struggling to relocate or having issues with children during the separation period.”
-Alisa G. Cummins, Attorney, Family Law Practice Group
Child in Need of Assistance – Cannabis Use (HB232)
The circumstances defining neglect will change with this new legislation. The use of cannabis by a child’s caregiver will not qualify as neglect, except in situations with a child in need of assistance (CINA). A CINA child will be defined as one who has been neglected or abused, has a developmental disability, or has a mental disorder for which the guardian fails to provide proper care. In addition to the updated CINA circumstances, the use of cannabis will not qualify as neglect, unless the child’s health or welfare suffers as a result or the child has suffered, or been placed at substantial risk of, mental injury as a result.
Maryland Child Abduction Prevention Act (HB267)
Effective October 1, 2023, the court will define abduction as the wrongful removal or wrongful retention of a child. This definition will include taking, keeping, or concealing a child in situations that breach previously established rights of custody or visitation. For an order to be obtained, the court must find evidence that establishes a credible risk of abduction. This legislation allows for an individual to file a petition with the court requesting these measures. In addition to preventative orders, this act will allow the court to issue a warrant for physical custody. This will allow for the safe, temporary placement of a child where the court finds imminent risk of abduction. This legislation will enhance the court’s ability to protect children and ensure their safety.
Child Custody – Relocation of Child – Expedited Hearing (HB440)
As of October 1, 2023, if one party files a petition proposing relocation that would significantly interfere with the other party’s ability to maintain the regular custody schedule, the court will ensure an expedited hearing. This change will be beneficial in split custody situations, as it will ensure one parent is unable to impact another parent’s child access without being heard by the court.
Register of Wills E-Filing and Signatures (SB253/HB244)
The Register of Wills (the county offices that oversee the administration of estates) currently requires that all document submissions have the original signature and are filed in (paper) hard copy. The new law provides for electronic signatures and electronic filing.
General and Limited Power of Attorney Act (SB851/HB18)
Maryland is one of many states to adopt a statutory power of attorney (POA). This legislation updates the statutory POA by adding the following options:
- allow the agent to appoint his/her successors;
- allow the agent to be compensated;
- provide that the agent may take actions with respect to tangible personal property;
- perform acts to allow the principal to qualify for certain governmental benefits;
- take actions with respect to certain trust and estate matters;
- allow the agent to make gifts on the principal’s behalf;
- allow the agent to open joint accounts;
- allow the agent to change survivorship rights (such as updating beneficiary designation forms); and
- allow the agent to make a qualified disclaimer on the principal’s behalf.
Additionally, this legislation provides two statutory Power of Attorney (POA) forms that, if used, financial institutions are prohibited from rejecting, or they will be subject to paying the legal cost of enforcement.
Estate Tax – Portability – Time Period for Election (SB55/HB179)
The Maryland Estate Tax states that if a Maryland resident dies with assets in excess of $5 million (with the exception of certain out of state property), the amount over $5 million will be taxed at a rate of 16%. However, transfers to spouses and charities are exempt from the tax. When one spouse dies, they often leave all of their assets to their partner. However, this in effect wastes their $5 million exemption. Legislation in 2018 allowed for the Maryland Estate Tax exemption to be “portable” between spouses, meaning the surviving spouse could file a (Maryland and Federal) tax return and port, or transfer, their deceased spouse’s unused exemption.
For example, a married couple has three children and $7 million in assets, with $3.5 million in each spouse’s name. On the death of the first spouse, all assets are transferred to the survivor, and no tax is due. On the death of the second spouse, $7 million is transferred to their children. Theoretically, there would be tax due on $2 million, which, at the rate of 16%, would be $320,000. If the Estate Tax exemption was ported between spouses, however, the total exemption amount would be $10 million and no taxes would be due.
This bill extends the deadline to file a Maryland return (if the return is only to elect portability) to five years following a death and applies to decedents who died after January 1, 2019.
“Portability is often missed in the difficult time following a death. This new law extending the deadline to file will allow greater use of the Estate Tax exemption and lessen the tax burden for many families.”
-Christopher B. Walter, Attorney, Estate Planning Practice Group
Registered Domestic Partnerships (SB792)
This legislation expands the benefits available to domestic partners and requires partners to register to be eligible for those benefits. Under the new law, registered domestic partners will be treated like spouses with respect to intestacy (who inherits if someone dies without a Will), the spousal allowance, priority of appointment (who is entitled to serve as personal representative of a decedent’s estate), and for inheritance tax purposes. Additional detail is provided below.
Intestacy is the law that determines who inherits if someone dies without a Will. Under this law, a registered domestic partner will inherit under intestacy as if they were a spouse. This law made structural changes to the intestacy law;
- if all children are adults and are children of both partners/spouses, the surviving partner/spouse now inherits the entire estate (as opposed to the first $40,000 plus one-half of the balance);
- if the decedent had adult children from another relationship, the survivor is now entitled to the first $100,000 plus one-half of the balance (as opposed to the first $40,000 plus one-half of the balance);
- if there are no children of the decedent, the survivor now inherits the entire estate, regardless of the duration of the partnership/marriage; and
- in the absence of a spouse or children, under the old law, the priority of takers would go (1) parents and their issue, (2) grandparents and their issue, (3) great-grandparents and their issue, (4) step-children. The new law removes (3) great-grandparents and their issue, removing the burden of having to identify and locate remote cousins.
A spouse is entitled to a family allowance of $10,000 from the estate of the deceased spouse. The new law extends that right to registered domestic partners. For example, if a domestic partner leaves his or her entire estate to their children, the survivor would be entitled to the first $10,000, and the children would be entitled to the balance.
Priority of Appointment
There is a priority list in the law of who is entitled to serve as personal representative of a decedent’s estate. First on the priority list is someone nominated in a Will or under an authority granted in a Will. After that is a surviving spouse. The new law puts a registered domestic partner on the same level as a surviving spouse.
Maryland is the only state to impose both an estate tax and an inheritance tax. Unlike the estate tax, the Maryland inheritance tax is based on the relationship of the person a decedent leaves assets to. While close relatives are exempt from the 10% tax, more distant relatives and unrelated parties are not.
Under the prior law, domestic partners were only exempt with respect to a primary residence owned jointly between them if certain conditions were met. However, registered domestic partners are fully exempt from the tax under the new law.
Maryland Trust Decanting Act (SB446/HB687)
Decanting is the process of distributing the assets of one trust into another trust held on similar terms. This can be useful in many circumstances; for example, when a change in the law makes the terms of an irrevocable trust unwanted or unworkable, or if a beneficiary develops special needs and requires a special needs trust to qualify for benefits. This legislation allows for decanting under certain circumstances. In all cases, the interest of the beneficiary must be substantially similar under both trusts.
Questions about the specific requirements of any of these new laws, or any other
legal or regulatory changes? Please contact an attorney at our firm so we can assist you.