New amendments to Maryland’s Workplace Fraud Act go into effect

HomeInside FCNewsNew amendments to Maryland's Workplace Fraud Act go into effect

Fredericksburg, Va.—The new amendments to the Workplace Fraud Act of 2009 went into effect in Maryland on July 1. In preparation for the changes in the law, the Maryland Northern Virginia Floor Covering Association (MDNVAFCA) held a number of meetings to keep members informed and help them determine what they need to do in order to ensure that the subcontractors they utilize are properly classified as independent contractors.

Charlie Vogel of Arcade Floors Carpet One in Towson, Md., and Scott Roy of J.J. Haines hosted the initial meeting at Haines’ facility in Glen Burnie, Md. Nearly 35 dealers and installers attended, along with special guests state senator Kathy Klausmeier (D-Baltimore County) and Acting Secretary of Labor Scott Jensen. Klausmeier has been a strong supporter of the Workplace Fraud Act.

According to Vogel, the original state law could have had “devastating” effects on the industry. It was estimated as many as one third of all the flooring companies in Maryland would have gone out of business if this law remained unchanged.

“MDNVAFCA took up the challenge,” he explained. “A legislative committee was formed, a legal fund was established, a top lobbyist was hired, and members of the committee made eight trips to Annapolis, Md. While we would have preferred for the law to just go away, we knew this was not going to happen. What we did was affect change to make the law something we can live with. The bottom line is we were successful.”

The following are some highlights of the changes to the law:

• Companies are to receive a minimum of 30 days notice of an impending audit and, if necessary, can negotiate a longer period. Previously, a company received 15 days notice. “When we were audited in April 2011,” Vogel said, “it took two people almost two weeks to assemble the requested documents.”

• Companies will usually be given an option of assembling the requested documents and mailing them to the agency or having a auditor visit the site. The law still allows the auditor the right to visit if it is deemed necessary.

• The state must render a finding within 90 days from the date of the audit or the audit will be considered closed.  Previously there was no set time. “We did not receive the results of our 2011 audit until May 2012,” Vogel said.

Among some of the regulations used to enforce the law are the following, which must be met in order to classify a worker as an independent contractor:

• A written contract between the independent contractor and the company must exist. The contract must state what is required of each party and clearly define it is an independent contractor relationship. In the contract, the contractor must acknowledge if he hires help, he must withhold, report, and remit payroll taxes, pay unemployment insurance taxes, and provide worker’s compensation. The contractor further acknowledges if licenses are required for the type of work he performs, he will secure and keep them current.

• The contractor must sign a notarized affidaviate stating he is independent and has the right to work for other companies.

• The contractor must provide each company for whom he performs work certificates of liability and worker’s compensation insurance, and an employer identification number (EIN).

According to Vogel, “If you don’t become compliant, you could be in for a great deal of grief. MDNVAFCA has spent thousands of dollars and countless man hours creating and publishing a Compliance Guideline Package. It explains in detail where we started with the original Act and where we are today.”

It also contains legal forms, frequently asked questions concerning doing business in Maryland and sample contracts in addition to much more invaluable information, he added.

“Our industry was blindsided by the Workplace Fraud Act,” Vogel said. “We don’t want that to happen again. We’re keeping our lobbyist on retainer so he can continue to represent us and keep us informed of anything that might affect the floor covering industry.”

Due to the cost of producing the package, MDNVAFCA is offering it to non-members for $999. Members have an opportunity to receive it with a minimum donation of $250 to its legal fund.

For more on MDNVAFCA, the Act and its amendments and guidelines, call 877.896.3605.

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