by Deb Hebb, Vice President
Maryland Legislation 2020 – Three Proposed Regulations Affecting Local Businesses
Maryland Legislative Session runs through April 6, 2020 and has turned into a very busy year for proposed legislation. Currently three have the potential to be extremely impactful for Maryland businesses.
HB1628 Sales and Use Tax – Rate Reduction and Services
The proposal is called a Rate Reduction Bill because it reduces the Maryland sales and use tax from 6% to 5%. However, it expands the sales tax to certain labors and services not currently subject to the tax such as insurance, legal services, accounting services, realtor services, home improvement, gym memberships and auto services. The bill will result in Maryland consumers paying ~$2.6 billion more in sales taxes according to the Maryland Chamber Of Commerce. Business owners are concerned the added cost will further reduce their competitiveness against similar businesses in other states who are not subject to the tax.
HB 0839 Family and Medical Leave Insurance Program
HB0839 requires all employers in Maryland who have at least one W-2 employee to offer FMLA coverage for their employees. This may have significant ramifications for your business as it requires the following:
- A payroll tax of 0.5% to fund a state FMLA pool with employers and employees each paying 0.25%
- Up to 12 weeks of protected job coverage for qualified employees while on FMLA
- Payment of income based on the employee’s average wage but no less than $50 per week and no more than $1000 per week
- Continued benefits coverage during the FMLA period
To be eligible for benefits, an employee must work at least 680 hours over the preceding 12 months prior to claim. The benefit period is 12 weeks/year. Additionally, the employer is not permitted to discharge or demote the employee who is out on leave and must restore the individual to a position of employment equivalent to the one the employee had prior to leave. This provides significant protections to employees but may also present financial hardships for small businesses, especially those that may not be able to afford to hire additional staff.
HB0930 – Maryland Health Benefit Exchange – Funding for Small Business Insurance Subsidies and Outreach
The Maryland Small Employer Subsidy Program, more commonly known as SHOP, provides subsidies to employers for the purchase of health benefit plans. This aid in the form of an end of year tax credit reimburses employers for up to 50% of the premiums they contribute towards employee health coverage provided they meet the plan requirements. Today, only approximately 140 employers participate in the program due to program requirements.
To receive the most credit, an employer must have less than 10 employees with an average income of $25,800 or less. As the number of employees increase (maximum of 25 employees) and/or the wages increase (maximum average of $51,600) the amount of the credit goes down. There are drawbacks to the program. First, the credit isn’t received until the end of the year so you still have to be able to afford the premiums during the year. Second, an employer can only take the credit for two years. Third, the employer cannot claim any premiums paid for himself or family members with family member expanding all the way to nieces, nephews, uncles and aunts.
The HB0930 legislation will provide an incremental $17 million in funding as a way to revamp the program. HB1329 introduces legislation that rebrands the program. At this point, there is no mention if any of the drawbacks listed above will be changed to enhance participation.
To learn more about the regulations above or other proposed regulations, visit the Maryland General Assembly website at www.mgaleg.maryland.gov