Moore Administration Addresses Maryland Employment and Economic Development Issues

During his campaign for Governor of Maryland, Wes Moore’s platform emphasized raising the minimum wage, addressing other employment-related policies, and pledging to foster economic innovation in the state. Since taking office in January, Governor Moore has moved quickly to implement aspects of his platform, signing several new bills into law. Some of these laws significantly affect companies and their employees in the state, while others, and a new executive order, aim to attract new industries to Maryland. On the economic development front, it remains to be seen whether the Governor’s action will bolster Maryland’s business climate and if such changes will come at the expense of other states.

Labor & Employment
Last month, Governor Moore signed into law Senate Bill 555, titled the Fair Wage Act of 2023. The most significant provision accelerates an increased $15.00 minimum wage for all employers, regardless of size (compared to the current state minimum wage based on an employer’s size). Once the law takes effect on January 1, 2024, Maryland will join the ranks as one of the states with the highest minimum wage (although Washington and California remain the highest at $15.74 and $15.50, respectively). Maryland’s new law will not affect Maryland counties that mandate a higher minimum wage. The increased minimum wage is good news for employees in Maryland since an increase in the federal minimum wage this year (which has been stagnant at $7.25 since 2009) is unlikely.

The Governor has also signed Senate Bill 828, which amends Maryland’s Time to Care Act—the state’s family medical leave insurance program enacted just last year (over a veto by then-Governor Larry Hogan). The Time to Care Act provides covered employees up to twelve weeks of partially paid leave (or, in certain circumstances, twenty-four weeks) funded by employee and employer contributions. Senate Bill 828 makes numerous changes, including delaying the start date for several provisions by a year or more: employers (and employees) will not need to contribute to the program until October 1, 2024, nor manage benefit payments until January 1, 2026.

Following (loosely) in the footsteps of the Federal Trade Commission, which proposed in January a federal rule that would effectively ban all employee non-compete agreements (although a final rule, if any, is not likely any time soon), the Governor recently signed Senate Bill 591. While not a complete ban, Maryland’s new law does increase the salary threshold at which an employer can require an employee to sign a non-compete agreement. The current threshold is over $15.00 per hour ($31,200 per year). Effective October 1, 2023, Senate Bill 591 increases the threshold to 150 percent of the state minimum wage. Thus, as of the state’s January 1, 2024, minimum wage increase, employers cannot require employees making equal to or less than $22.50 per hour ($46,800 per year) to sign a non-compete agreement.

Economic Development
Earlier this month, Governor Moore also signed several bills and an executive order promoting economic development in Maryland.

House Bill 552, the Innovation Economy Infrastructure Act, establishes a pilot program in the state Department of Commerce. The Build Our Future Grant Pilot Program will provide funding for infrastructure projects in eligible technology sectors, including advanced manufacturing, aerospace, agriculture, artificial intelligence, biotechnology, blue technology, cybersecurity, defense, energy and sustainability, life sciences, quantum, and sensor and robotics. Grantees must provide matching funds, demonstrate suitability for the projects, and report to the Governor and the General Assembly by July 1, 2026.

Governor Moore also signed an executive order establishing the Maryland Council on Innovation and Impact. According to the order, the council will focus on promoting “innovative social sector organizations.” The newly established council will “find ways for state government to work alongside social sector organizations, including foundations, businesses, and philanthropies, to make Maryland healthier, stronger, and more equitable.” The council’s membership will include a “broad and diverse range of innovative and impactful organizations from all sectors,” along with representatives from state entities and the offices of the Governor and Lieutenant Governor.

Finally, Governor Moore signed Senate Bill 452, the Film Production Activity Income Tax Credit. This law expands eligibility for state income tax credits to documentaries and talk, reality, and game shows. It also increases the percentage of total direct costs that qualify for the tax credit, increases the number of tax credit certificates that the Secretary of Commerce may issue, and establishes the Maryland Entertainment Council to study and make recommendations regarding the state’s film, television, and entertainment industry. During fiscal year 2024, the tax credit will be limited to $15 million industry-wide. Because this limit is significantly lower than other states that support tax credits, such as California and New York—not to mention Georgia’s unlimited tax credit (resulting in the issuance of over $1.3 billion in credits in 2022)—the tangible benefits of such a tax credit to Maryland’s economy remain uncertain.