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SB909: Workplace Fraud Act of 2009

Senate Bill 909 - House Bill 819 (Chapter 188, Acts of 2009)

This Act establishes a presumption that work performed by an individual paid by an employer creates an employer-employee relationship, unless the employer can show that the individual is an exempt person or an independent contractor, as defined by the statute established under this Act and the classifying regulations that the Commissioner of Labor and Industry (the "Commissioner") of the Department of Labor, Licensing, and Regulation (DLLR) shall issue.

This Act specifically prohibits an employer in the construction services and landscaping services industries from:

  • improperly misclassifying an employee; or
  • knowingly misclassifying an employee.

This Act sets forth the procedures and penalties for employer noncompliance that three areas of State government-labor and industry, workers' compensation, and unemployment insurance-may enforce. Any one of these three government units may impose civil penalties on an employer who is found to have improperly or knowingly misclassified employees. But only one set of penalties may be assessed against an employer who violates any of the Act's provisions. Penalties are more severe for an employer who is guilty of knowingly misclassifying an employee.

The Commissioner is authorized to investigate and enforce compliance with this Act and the regulations thereunder. To overcome the presumption of an employer-employee relationship, an employer may show that an individual is an "independent contractor" pursuant to the DLLR's "ABC" test, which is found under 8-205 of the Labor and Employment Article, and Code of Maryland Regulations If the Commissioner determines that the employer is in violation for failing to properly classify an employee, the Commissioner shall notify the Comptroller, the Office of Unemployment Insurance, the Maryland Insurance Administration, and the Workers' Compensation Commission to enable these agencies to assure the employer's compliance with the agencies' laws, utilizing their own definitions, standards, and procedures.

Upon notice, the Comptroller shall take its own actions pursuant to its authorities under the Tax-General Article to ensure that income tax withholdings for wages, as defined under Tax-General Article 10-905(f), are recovered and credited to the affected employees, and that appropriate interest and penalties are assessed and collected.

A person who knowingly advises an employer to take action for the purpose of violating this Act is subject to a civil penalty of not more than $20,000. Under the provisions set forth for the DLLR's Labor and Industry Division, a person who holds a professional license as a lawyer or an accountant who commits such a violation is not subject to civil fines, but is subject to sanctions by the regulatory bodies in the State responsible for oversight of these professions. However, the penalty provisions for the DLLR's Division of Unemployment Insurance and the State Workers' Compensation Commission do not make this distinction, and thus a person who holds a professional license as a lawyer or an accountant and who commits such a violation may still be subject to civil fines.

This Act takes effect October 1, 2009.

Links for 2009
Tax Law and Regulations
State Regulations
Legislative Summaries
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