Payroll for Maryland employeesMaryland payroll and labor laws apply to any business registered in Maryland and Maryland employers with at least one employee. There are a few things for Maryland employers to consider, from minimum wage requirements to tax withholdings and employee benefits.
Understanding Maryland’s minimum wageThe Maryland Department of Labor has information on state wage and overtime laws. Information includes minimum wage rates for hourly workers, which are changing as a result of a 2019 law. Here’s some of what you need to know:
- As of January 2020, the Maryland minimum wage is $11 per hour.
- Maryland is in the process of raising its minimum wage. By July 2026, Maryland’s minimum wage will be $15 per hour for all businesses, with gradual increases until then, depending on the business’s size.
- Some employees are exempt from the minimum wage. Exempt workers include certain agricultural workers, direct family members of business owners, commissioned employees, and some apprentices or student employees.
- Tipped employees also have to earn the minimum wage. Employers are responsible for paying tipped employees at least $3.63 per hour. That amount, plus tips, has to equal the current hourly minimum wage.
Maryland income tax withholdingAs a Maryland employer, you have to withhold state taxes from employee wages. You need an Employer Identification Number (EIN) to register as an employer and pay taxes in most states. Maryland also requires a separate state tax ID number. You’ll use this number when you register with the Maryland comptroller.Money earned by a U.S. service member’s spouse may be exempt from Maryland’s income tax when the spouse isn’t a Maryland resident. There are also separate tax withholding rules for independent contractors who aren’t Maryland residents.
Maryland employee benefitsMaryland has a few required employee benefits and some notable exceptions.
- Sick time: An employer’s average number of workers employed each month for the previous year determines sick leave requirements in Maryland. Maryland requires employers with over 15 employees to provide paid sick and safe leave. Employers with fewer than 15 employees must provide sick leave, but it is unpaid.
- Vacation time: Maryland law doesn’t require employers to provide paid or unpaid vacation time. If a company decides to offer vacation leave, they may decide what happens to unused vacation time when they fire an employee or the employee leaves.
- Maryland’s Parental Leave Act: Maryland’s Parental Leave Act (MPLA) requires Maryland employers with 15-49 employees to give six weeks of unpaid parental leave during any 12-month period. Employees can take leave for the birth, adoption, or foster placement of a child.
- Workers’ comp: Maryland employers must have workers’ compensation insurance. But some exceptions apply to agricultural employers who pay less than $15,000 in annual payroll or have fewer than three employees. Business owners, including sole proprietors, do not need workers’ comp coverage.
- Family and Medical Leave Act: The Family and Medical Leave Act (FMLA) grants employees 12 weeks of unpaid leave in a 12-month period for specified family and medical reasons.
- Time off to vote: Maryland employers must give employees up to two hours of paid time off to vote. This applies to employees who don’t already have two consecutive hours free while polls are open.
- Disability insurance: Maryland employers may provide disability insurance but aren’t required to do so.
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State resourcesMaryland employers can find more information on labor laws, taxes, and business development via state government resources.
- The Maryland Department of Labor has information for employees and employers about minimum wage laws, resources from the Division of Unemployment Insurance, and guidance from the Maryland Occupational Safety and Health (MOSH).
- The Maryland comptroller provides tax forms, information on payroll taxes, tax credits, and withholding tax calculators.
- The Maryland Small Business Development Center (SBDC) offers free consulting and free or low-cost training programs for new or established businesses.