Maryland Labor Department Officials Update Business Owners and Local Officials on Workplace Fraud Regulations


Workplace Fraud Unit maintains level playing field, protects business owners and employees

Labor Commissioner, Assistant Secretary for Unemployment Insurance pledge to work with business owners to ensure compliance and understanding of regulations

Officials point to M&T Bank study: Maryland among best states for business

FREDERICK, MD (November 15, 2011) – Senior officials from the Maryland Department of Labor (DLLR), including Maryland Labor Commissioner Ron DeJuliis and Assistant Secretary for Unemployment Insurance Julie Squire, met with business owners, labor leaders, elected officials and working Marylanders this evening in Frederick to discuss Maryland’s workplace fraud regulations and actions taken by DLLR’s Workplace Fraud Unit. The Workplace Fraud Act, passed with bipartisan support during the 2009 legislative session, protects workers and creates a level playing field for law-abiding employers.

“We understand that some business owners and some elected officials feel that our department is targeting certain businesses and that we are burdening them with multiple audits and endless investigations. We’re sympathetic to that perception, but it’s not the reality,” said Maryland Labor Commissioner Ron DeJuliis. “The only business models that find the state’s and the federal government’s workplace fraud regulations difficult are business models that are playing by a different set of rules than all other businesses. We’re in Frederick tonight to provide information and pledge our support to ensure that all businesses in Maryland are in compliance with state and federal regulations.”

There are a quarter million businesses in Maryland, 140,000 of which have active unemployment insurance accounts. Of those 140,000 businesses, fewer than 2,600 have been audited by DLLR and only 660 have been audited for workplace classification complaints. And of those 660, only 12 – less than two percent of all firms investigated for worker misclassification – have been audited by more than one office.

DeJuliis and others also touted recent reports showing Maryland’s strong standing as a great state to do business, including an M&T Bank report listing the state as the 11th best state for business, a national study showing that Maryland has the highest per capita population of millionaires in the country and a study by the Center on Budget and Policy Priorities disputing the false charges that Maryland’s regulations and statutes have resulted in families and companies moving to other states.

“We are determined to protect a safety net for all working families and committed to building a level playing field for law-abiding business owners. That commitment drives our efforts to combat workplace fraud,” said Assistant Secretary for Unemployment Insurance Julie Squire. “Our office conducts industry-directed audits to ensure that all employees have access to worker protections, including unemployment insurance benefits”

The Workplace Fraud Act provides the state with tools to crack down on workplace fraud, which involves employers who wrongly classify their employees as independent contractors or do not classify them at all. This illegal practice allows employers to cut payroll costs significantly, leaving workers unprotected by critical workplace protection laws and creating a competitive disadvantage for those employers who play by the rules. Workers who are misclassified as independent contractors are denied access to unemployment insurance, workers’ compensation and other protections. Additionally, taxpayers are deprived of millions of dollars to the Unemployment Insurance Trust fund and the State General Fund.

The Workplace Fraud Act makes it a violation of law to fail to properly classify workers as employees, and it imposes penalties on those employers who knowingly misclassify their workers. The law also clarifies the definition of an independent contractor, protecting workers and creating a level playing field for all law-abiding business owners. In September, the Maryland and 10 other states signed a memorandum of understanding with the U.S. Department of Labor and the Internal Revenue Service to share information and coordinate law enforcement with the IRS and participating states in order to level the playing field for law-abiding employers and ensure that employees receive the protections to which they are entitled under federal and state law.

DLLR officials will host similar information sessions in Easton on November 29 and Salisbury on November 30. For additional information on the Workplace Fraud Act, visit the Frequently Asked Questions section on DLLR’s website.

The Department of Labor, Licensing and Regulation protects and empowers Marylanders by safeguarding workers, protecting consumers, providing a safety net and cultivating a thriving workforce that can meet the demands of Maryland’s dynamic economy. Follow DLLR on Twitter (@MD_DLLR) and Facebook.