In 2022, Maryland passed the Time to Care Act to establish a state-mandated family and medical leave insurance program which would provide eligible employees with job-protected paid leave to care for themselves or a family member with a serious health condition, to bond with a child, or to make arrangements for a family member’s military deployment. Under the Paid Family and Medical Leave (PFML) program, eligible employees will be paid up to $1,000 a week for up to 12 weeks (or 24 weeks under certain circumstances) of covered leave. The program will be funded through employer and employee contributions, although employers with fewer than 15 employees are not required to contribute to the program. Contributions to the program fund are scheduled to begin on July 1, 2025, with benefits becoming available starting July 1, 2026. Employers cannot outright refuse to provide paid family and medical leave but may choose between the state’s program or state approved commercial or self-insurance plan. Who are the Mandated Employers; Are There Exceptions? All employers with at least one worker in Maryland will be required to offer paid family and medical leave insurance. However, a sole owner of a sole proprietorship, LLC, C- or S-Corp who is also the only employee of that entity is not required to provide PFML; such employers may opt into the program. Who are the Eligible Employees? Employees who worked at least 680 hours in Maryland during the 12-month period before the leave is to begin are eligible for PFML. How Much Must Employees and Employers Contribute to the State Program? The rate of contributions for the state’s program will depend on the employer’s payroll size; the rate will be 0.90% of covered wages up to the Social Security cap and employers may withhold up to 0.45% of the contribution rate from the employees’ pay. Employers with less than 15 employees will have a rate of 0.45% and may withhold up to the full amount from paychecks. Private plans will set their own rates. What is the Effective Date of the PFML? Contributions are scheduled to begin in July, 2026. However, in February 2025, the Maryland Department of Labor proposed a new timeline for implementation of the PFML program, with Maryland Labor Secretary Portia Wu citing instability and uncertainties of the times; under the proposed timeline, contributions to the fund would begin on January 1, 2027 and benefits would become available as of January 1, 2028. The Maryland General Assembly has yet to take legislative action regarding the proposed timeline. Notification of Employees Employers must notify their employees of PFML when the employee is hired, once a year, and when the employer knows that an employee's leave request may qualify for PFML. What are the Penalties for Non-compliance? The Maryland Department of Labor may order employees to pay the contributions plus interest, twice the amount of contributions withheld, penalties of up to $1,000 per violation, etc. Business To-Dos Review payroll to determine which employees are eligible for PFML Determine whether to opt into the state program or a private program Set up payroll systems to manage applicable employer and employee deductions Submit wage and hour reports each quarter as required by the Maryland Department of Labor Ensure PFML eligibility is properly communicated to employees upon hire and at other required times; consider making changes to employee handbooks if applicable Stay updated on PFML changes, especially regarding dates of contribution and benefit availability

This tax season, an IRS rule change may require many freelancers, contractors, gig workers, and small business owners who use third party payment platforms or online marketplaces like Cash App, Paypal, Venmo, Stripe to comply with new tax reporting requirements. The IRS’ rule, which requires third party payment platforms to issue 1099-K forms to certain users for tax reporting, was supposed to go into effect in 2021 but was postponed through 2023 and is now being implemented in phases. Originally, the rule required third party payment platforms to issue 1099-K forms for users who had 200 transactions totaling more than $20,000 within a year. The new rule eliminates the number of transactions and lowers the dollar amount threshold per year. For instance, the dollar amount threshold for the 2024 calendar year is $5,000. In 2025, the threshold amount will be further reduced to $2,500, and in 2026, the threshold amount will be $600. With this new rule change, small businesses who previously did not receive 1099-K forms can expect to receive them and to report them on their tax returns. To small businesses in states like Maryland and Virginia, which already have a $600 reporting threshold, this IRS rule change comes as no surprise. It is important to note that third party payment platforms are only required to issue 1099-K forms for business transactions—payment for goods or services, including tips, and rent payments—amounting to the dollar threshold on that particular platform; the rule does not apply to personal transactions. Further, businesses should know that business transactions on the Zelle payment platform are not subject to 1099-K reporting requirements since the platform doesn’t hold money in an account like other payment platforms. However, Zelle business transactions should be reported on Schedule C of Form 1040 for tax compliance. Due to the nature of third party payment platforms, it is imperative to ensure that your business’ 1099-K form is accurate. Small businesses should consider setting up multiple accounts to keep reportable transactions separate from personal transactions. Additionally, businesses should promptly contact their payment platform if the platform issues an incorrect 1099-K to ask for a corrected form. Note that this rule change does not alter businesses’ tax obligations in any way. The SJS Law Firm can help your small business navigate these new regulatory changes. For a complimentary consultation, please contact us at (202) 505-5309.