During the 2009 legislative session, the Maryland General Assembly passed a
number of bills relating to labor and employment. The Governor has signed a
number of these bills and is expected to sign all the remaining legislation.
This article gives a brief summary of the key provisions of these bills.
Workplace Fraud Act Passed By General Assembly
The Maryland Workplace Fraud Act of 2009 establishes severe penalties upon
Maryland employers in construction services and landscaping services for
misclassifying individuals as independent contractors. Claims can be filed with
the Maryland Commissioner of Labor and Industry (“Commissioner”) and pursued
through procedures set forth in the statute and the State Administrative
Procedures Act. Alternatively, individuals may sue on their own if no award has
been issued in an administrative proceeding.
Employers who misclassify individuals must pay restitution to those not
properly classified. Employers must also come into compliance with all
applicable labor laws, including those related to income tax withholding,
unemployment insurance and workers’ compensation payments. These requirements
must be met within 45 days or a civil penalty of up to $1,000 per affected
employee may be assessed.
Employers who knowingly (as defined by the statute) fail to properly classify
individuals must also pay restitution and satisfy other labor law obligations.
Additionally, these employers may be required to pay up to three times the
restitution owed to each affected person and a civil penalty of up to $5,000 for
each employee who is not properly classified. Employers who are guilty of
knowingly committing a second offense can be assessed a civil money penalty of
up to $10,000 per employee, and subsequent knowing violations can result in
civil money penalties of up to $20,000 per employee.
The statute also covers a wide variety of additional topics. For example, the
- Defines certain individuals as being exempt from
- Contains a test to determine whether a person is an independent
- Contains a provision that creates a presumption of an employer-employee
- Provides the Commissioner with broad powers of investigation, including
the right to enter worksites, interview employees and copy documents.
- Requires employers to attest to the truthfulness of documents provided
or provide a written statement about the classification of each employee.
- Provides that failure to produce documents or written statements within
15 days of a request can result in a fine of up to $500 per day.
- Grants subpoena power to the Commission for use against alleged
The statute further requires employers to provide independent contractors and
others not classified as employees with written statements of their
classifications, the implications of the classification, and other information
to be set forth in proposed regulations. Records must be kept for at least three
(3) years detailing such items as: the occupation and classification of each
employee and independent contractor; the rates or methods of pay; the amounts
paid each pay period; the hours worked each day and each period; “evidence” that
each person so classified is an exempt person or independent contractor; and
whatever else the Commissioner may require by regulation.
The statute contains anti-discrimination and anti-retaliation provisions.
Further, it prohibits the creation of new entities to avoid the requirements of
the Act. It even contains a provision for reporting attorneys and accountants
who provide advice leading to a finding that the law has been violated to
licensing and regulatory bodies.
The effective date of the statute is October 1, 2009 (assuming it is signed
into law by the Governor, which appears likely). Employers in Maryland in the
construction and landscaping industries who employ independent contractors are
well advised to be sure that counsel reviews their arrangements before October
1. Failure to do so could have devastating consequences.
Flexible Leave Act Clarified
Last year, the Maryland General Assembly passed the Flexible Leave Act, which
became effective October 1, 2008. (See
WorkCite). In short, the law allows employees to use leave with pay for
the illness of the employee’s child, spouse or parent. The General Assembly
amended the law to make certain clarifications during the 2009 session. These
amendments are effective immediately.
In addition to defining “child” and “parent,” and clarifying the employees
and employers to whom the law applies, the amendments significantly clarify the
definition of leave with pay. The revised Act provides that leave with pay means
paid time away from work that is earned and available to an employee based on
hours worked or as an annual grant of a fixed number of hours or days of leave
for performance of service. Leave with pay does not include benefits provided
under an employee welfare benefits plan subject to ERISA, an insurance benefit,
workers’ compensation, unemployment compensation, a disability benefit or a
The General Assembly also added a subsection that provides “the purpose of
this section is to allow an employee of an employer to use leave with pay to
care for an immediate family member who is ill under the same conditions and
policy rules that would apply if the employee took leave for the employee’s own
Lilly Ledbetter Civil Rights Restoration Act Adopted
On April 14, 2009, the Governor signed the Maryland Lilly Ledbetter Civil
Rights Restoration Act of 2009. This act essentially mirrors the federal Lilly
Ledbetter Fair Pay Act of 2009. (See
WorkCite). Thus, it provides that an unlawful employment practice occurs
with respect to discrimination in compensation when: (1) a discriminatory
compensation decision or other practice is adopted; (2) an individual becomes
subject to a discriminatory compensation decision or other practice; or (3) an
individual is affected by application of a discriminatory compensation decision
or other practice, including each time wages, benefits or other compensation is
paid, resulting wholly or partly from the discriminatory compensation or other
practice. The Maryland law also provides that an aggrieved individual may be
awarded back pay for up to two years before the filing of a charge of
discrimination where the unlawful employment practice that occurred during the
limitations period is similar or related to an unlawful employment practice with
regard to discrimination in compensation that occurred outside the limitations
period. The Maryland law’s provisions are effective October 1, 2009, in contrast
to the federal law that has retroactive effect.
Maryland State Disability Discrimination Provision Expanded
The General Assembly expanded the Maryland provision on disability
discrimination in employment to bring it into alignment with its federal
equivalent, the Americans with Disabilities Act. The definition of disability is
expanded to include not only physical and mental impairments, but also being
“regarded as” having a physical or mental impairment, and having a record of a
physical or mental impairment. The expansion further requires that employers
provide reasonable accommodation to their employees with disabilities, unless
such accommodation would constitute an undue hardship. The expansion also
prohibits employers and labor unions from retaliating against any of their
employees or members for exercising their rights under the anti-discrimination
law. Assuming that the revised statute is signed into law by the Governor, the
changes will take effect on October 1, 2009.
Unemployment Insurance / Worker’s Compensation Benefits Expanded
Finally, the General Assembly expanded unemployment insurance benefits.
Unemployment insurance benefits are now available to part-time workers who
worked at least 20 hours per week, under certain circumstances, effective
The General Assembly passed a law requiring that all severance payments or
wages in lieu of notice be used to offset or delay unemployment insurance
benefits for a period of weeks equal to the number of weeks of the severance
payment, regardless of whether such severance payment resulted from a job
elimination. Previously, severance payments resulting from the elimination of a
position would not reduce or delay the beginning of unemployment insurance
benefits, whereas severance benefits resulting from other terminations would. If
signed into law by the Governor, this change is effective July 1, 2009.
The General Assembly also increased the maximum benefit for unemployment
insurance from $380.00 to $410.00 for claims establishing a new benefit year on
or after October 4, 2009, and increased the maximum to $430.00 for claims
arising after October 3, 2010. These provisions will be effective on October 1,
2009, again if signed into law.
Finally, the General Assembly increased the workers’ compensation death
benefits payable to partial dependants to $75,000.00 for unmarried and remarried
dependants. If signed into law by the Governor, this change is effective July 1,
For further information regarding any of these new laws or any other state
employment law compliance issues, please contact the authors or any member of the McGuireWoods
Labor & Employment or