Employee misclassification in Maryland is widespread, leaving hundreds of employees with out harm safety and depriving insurance coverage corporations of greater than $58 million in employees’ compensation premiums annually, in response to a brand new report from a state process power.
Maryland’s Joint Enforcement Process Drive on Office Fraud stated that its examination had discovered greater than 5,500 employees within the state in 2024 had been misclassified as impartial contractors, not workers. The true numbers could also be even greater. The report cited one other current evaluation, by The Century Basis, that discovered that greater than 23,700 building employees – about 11% of building employees within the state – are misclassified.
“The prevalence of office fraud erodes contracting and labor requirements, undermines labor markets, and makes it financially tough for accountable, law-abiding companies to compete with companies partaking in misclassification,” the duty power report concluded.
State officers echoed the considerations.
“Misclassifying employees will not be a suitable enterprise follow, and it’s alarming to see the speed at which some employers are engaged on this egregious habits,” Maryland Comptroller Brooke Lierman stated in a press release.
Lierman was one among eight state officers on the duty power, which was chaired by Portia Wu, secretary of labor for Maryland.
The considerations should not new. Insurers, massive contractors, and labor unions for years have raised alarms concerning the rampant downside of subcontractors and different companies that underreport payroll and keep away from employees’ compensation protection.
The report really helpful holding basic contractors accountable. That “would imply that these contractors who profit most from misclassifying employees share equally within the duty for penalties as effectively,” the duty power stated.
“At present, basic contractors don’t have any incentive to make sure compliance with the regulation. Contractors on the prime of the chain receive the monetary good thing about a lower-cost workforce when their subcontractors interact in office fraud, however bear no duty,” the report famous.
The duty power additionally steered that the state may create procurement preferences or incentives for companies that make sure that they and their subcontractors are complying with the regulation.
The complete report may be seen here.
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Maryland
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