Hiring Employees in Maryland

Classifying Your Workers Correctly

Your company must distinguish properly between employees and independent contractors under IRS common law tests and Maryland wage laws. You should look at behavioral control, financial control, and the overall relationship to decide if a worker belongs on payroll. Maryland enforces its Wage Payment and Collection Law aggressively, and misclassification can lead to back wages, unpaid overtime, tax assessments, and civil penalties.

If you are unsure, you should review IRS guidance, Maryland Department of Labor resources, and independent contractor agreements carefully. For deeper background on risks and best practices, you can also review Playroll’s guide on misclassification at https://www.playroll.com/blog/employee-misclassification-guide.

Verify Employee Work Eligibility

For every new Maryland hire, you must complete federal Form I-9 within 3 business days of the employee’s start date. You must examine original identity and work authorization documents, such as a U.S. passport or a combination of driver’s license and Social Security card, and keep I-9s for the longer of 3 years after hire or 1 year after termination.

Maryland does not currently mandate E-Verify for most private employers, but you may choose to use it voluntarily if you apply it consistently. You should store I-9s separately from personnel files and be prepared to present them promptly if audited by federal immigration authorities.

Create an Employee Onboarding Process

When you hire in Maryland, you should issue a clear written offer letter outlining pay rate, pay schedule, exempt or nonexempt status, and key benefits. You will need to collect federal Form W-4, any applicable Maryland withholding form, direct deposit authorization if used, and signed acknowledgments for your employee handbook and required policies.

Maryland employers must also provide certain notices, such as wage information at hire and any later changes, and report new hires to the Maryland State Directory of New Hires within 20 days. Building a standardized onboarding checklist helps you keep documentation consistent and gives you better visibility into the true cost of each Maryland hire.

Pay Frequency & Methods

In Maryland, you must pay employees at least twice per month, with regular paydays established in advance and posted where employees can see them. Wages earned in a pay period must be paid no later than 2 weeks after the end of that period, unless you use a different, clearly communicated schedule that still meets state rules.

When an employee is terminated, you must pay all earned wages, including accrued but unpaid regular wages, by the next regular payday, and failure to pay can expose your company to claims for up to 3 times the unpaid amount plus attorneys’ fees. You should keep accurate time and payroll records for at least 3 years to defend against wage claims or audits.

Payment Methods (How You Can Pay)

You can choose among several payment methods in Maryland, but you must always ensure employees receive full wages on time and a clear written wage statement each payday.

• Payroll Check: You may pay by check drawn on a Maryland bank, and you must ensure employees can cash it at full face value without fees.
• Cash: You may pay wages in cash, but you must provide a detailed written pay stub showing hours, rates, deductions, and net pay.
• Direct Deposit (EFT): You can offer direct deposit as a convenience, but in Maryland you must obtain the employee’s voluntary written consent and provide an alternative if they decline.
• Paycards: You may use payroll cards only if employees can access their full wages at least once per pay period fee-free and you disclose all card terms in writing.
• Outsourced Payroll: You can outsource payroll to a third-party provider, but your company remains legally responsible for accurate wage payments, tax withholding, and timely filings.

When you hire employees in Maryland, you must withhold and remit federal and state payroll taxes and pay several employer-only contributions. You will register with the Maryland Comptroller and the Maryland Department of Labor to handle withholding, unemployment insurance, and related filings.

Employer Tax Contributions

As a Maryland employer, you are responsible for federal Social Security and Medicare contributions, federal unemployment tax, Maryland unemployment insurance, and any local obligations that apply. You must obtain a combined Maryland Central Registration number to report withholding and unemployment and file returns on the schedule assigned to your business.

Employee Payroll Tax Contributions

Your company must withhold federal income tax, Social Security and Medicare, and Maryland state and local income taxes from employee wages. You then remit these amounts to the IRS and the Maryland Comptroller on the required deposit schedule and report them on periodic and annual returns.

Minimum Wage in Maryland

As of January 1, 2025, Maryland’s statewide minimum wage is $15.00 per hour for most employers, and you must pay at least this rate unless an employee is specifically exempt under state or federal law. Tipped employees may be paid a lower cash wage if their tips bring them up to at least $15.00 per hour, and you must track tips carefully to avoid shortfalls.

Working Hours in Maryland

Maryland generally follows federal rules on hours worked, requiring you to pay nonexempt employees for all hours they are suffered or permitted to work, including certain travel and training time. While there is no daily maximum for adults in most industries, some retail employees are entitled to a nonworking day of rest each week and special rules apply to minors’ schedules.

Overtime in Maryland

For most nonexempt employees in Maryland, you must pay overtime at 1.5 times the regular rate for all hours worked over 40 in a workweek, consistent with the federal Fair Labor Standards Act. Certain occupations, such as some agricultural, executive, administrative, and professional roles, may be exempt, but you should confirm that employees truly meet the salary and duties tests before treating them as overtime-exempt.

In Maryland, you decide which benefits to offer beyond what federal and state law require, but competitive employers typically provide health insurance, retirement plans, and paid time off. If you average 50 or more full-time employees, the federal Affordable Care Act requires you to offer affordable, minimum-value health coverage or face potential penalties.

Mandatory Leave Policies in Maryland

Paid Time Off in Maryland

Maryland does not require general vacation or PTO, but once you promise it in a policy or contract, state wage laws treat accrued PTO as wages in many situations. Your company should adopt a clear written PTO policy that explains accrual rates, carryover limits, caps, and whether unused PTO is paid out at termination.

Because Maryland’s Healthy Working Families Act sets specific rules for sick and safe leave, you may choose to use a unified PTO bank that meets or exceeds those minimums. If you do, you must still track accruals and usage carefully to show that employees receive at least the required sick and safe leave hours.

Maternity & Paternity Leave in Maryland

New parents in Maryland may be eligible for unpaid, job-protected leave under the federal FMLA if your company has at least 50 employees and the employee meets service and hours thresholds. Maryland’s developing paid family and medical leave insurance program is designed to provide partial wage replacement for bonding with a new child once benefits begin.

Your company can go beyond the legal minimum by offering paid parental leave, flexible scheduling, or transitional return-to-work arrangements. You should coordinate any company-paid parental leave with FMLA and state paid leave so employees understand how their job protection and income replacement interact.

Sick Leave in Maryland

Under the Maryland Healthy Working Families Act, covered employees accrue sick and safe leave at a rate of at least 1 hour for every 30 hours worked, up to statutory annual and total caps. Employers with 15 or more employees must provide this leave as paid, while smaller employers may provide it unpaid but still job-protected.

Employees can use this leave for their own illness, to care for certain family members, or for reasons related to domestic violence, sexual assault, or stalking. Your company must provide a written policy explaining accrual, use, and any documentation requirements and must keep accurate records of hours worked and leave balances.

Military Leave in Maryland

Maryland employers must comply with federal USERRA, which provides job protection, continuation of benefits options, and reinstatement rights for employees on covered military duty. Maryland law also offers additional protections for members of the National Guard and organized militia when they are called to state active duty.

You should update your leave policies to reference military leave rights and train managers not to retaliate against employees who take time off for military service. Keeping documentation of orders and return dates will help you manage reinstatement and benefits correctly.

Jury Duty in Maryland

In Maryland, you must allow employees time off to serve on a jury and may not threaten, coerce, or fire them for complying with a jury summons. While state law does not require all private employers to pay for jury service time, you must follow any pay practices promised in your handbook or employment contracts.

You can ask employees to provide a copy of their jury summons and proof of service so you can track absences and apply your policy consistently. Clear communication before and after service helps you schedule around absences while supporting civic obligations.

Voting Leave in Maryland

Maryland law requires you to provide up to 2 hours of paid time off to vote in an election if an employee does not have 2 consecutive nonworking hours while the polls are open. You may request proof that the employee actually voted, such as a voting slip, before paying for the time.

Your company should explain in its policy how employees should request voting leave in advance so you can plan coverage. Encouraging early voting or mail-in ballots can also reduce scheduling disruptions while still meeting your legal obligations.

Bereavement Leave in Maryland

Maryland does not mandate bereavement leave, so whether time off is paid or unpaid is up to your company’s policy. Many employers provide several days of paid leave for the death of an immediate family member and may allow additional unpaid time as a reasonable accommodation when appropriate.

To avoid confusion, you should define who qualifies as a covered family member, how much leave is available, and what documentation, if any, is required. Thoughtful bereavement policies can support employees during difficult times and improve retention.

Termination Process

Maryland is an at-will employment state, so you may generally terminate employment at any time for any lawful reason, provided you do not violate anti-discrimination, retaliation, or contract laws. You should document performance issues, follow your disciplinary procedures consistently, and provide a written termination notice summarizing the effective date and final pay details.

Notice Period

Maryland law does not require a general notice period before termination or resignation, unless you have agreed to one in a contract or collective bargaining agreement. However, you must comply with federal WARN Act requirements if you conduct a covered mass layoff or plant closing, which can require 60 days’ advance notice to affected employees and government entities.

Severance

Severance pay is not required under Maryland law, but many employers offer it in exchange for a signed release of claims, especially in layoffs or negotiated separations. If you choose to offer severance, you should put the terms in a written agreement that complies with federal and state rules on waivers, age discrimination, and payment timing.