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DLLR News

 

Governor O’Malley Signs Workplace Fraud Act of 2009

 

The Act and other new laws protect and empower Maryland workers

BALTIMORE (May 7, 2009) – Department of Labor, Licensing and Regulation Secretary Thomas E. Perez applauded Governor Martin O’Malley’s signing today of new laws to protect and empower Maryland workers and level the playing field for employers who play by the rules.

The Workplace Fraud Act of 2009 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 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, and the taxpayers are deprived of millions of dollars to the Unemployment Insurance Trust fund and the State General Fund.

The Fair Share Act, meanwhile, allows labor unions representing state employees to bargain for service fees from all members of the bargaining unit. Currently, those state employees who are members of unions are footing the bill for representing all employees. This new law ensures that unions have the option to ask all workers who benefit from negotiated union contracts to pay their fair share.

Another new law increases the maximum weekly benefit that an unemployment insurance recipient can receive. Beginning October 4, 2009, the maximum benefit will increase from $380 to $410. The following year, the maximum will increase to $430. This new law recognizes the need to adjust the benefit amount for inflation, and acknowledges that unemployment insurance is a critical social safety net, particularly during times of economic distress, that allows unemployed workers to continue paying their expenses while also putting money back into the local economy.

“Protecting Maryland’s workers and their families is always our most important responsibility, but even more so as we work together to weather the current economic storm,” Governor O’Malley said. “These new laws should illustrate the state’s commitment to Maryland’s working families, and to protecting their rights.”

Governor O’Malley sponsored the Workplace Fraud Act of 2009, which was the product of an inclusive work group process led by Secretary Perez beginning in the fall of 2008 and continuing throughout the legislative session. The process brought together stakeholders from labor, business and government.

The new law 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. The law takes effect October 1, 2009.

“This new law will ensure that employers who attempt to cheat the system, their workers and their competitors, will pay a steep price for their actions,” Secretary Perez said. “It should send a message that we will be fair to those employers who are trying to play by the rules, but we will not tolerate flagrant and intentional violations of the law for personal gain.”

The Fair Share Act, which takes effect July 1, 2009, is enabling legislation that allows the unions to negotiate a service fee that will then be voted on by all members of the bargaining unit. The state has approximately 30,000 employees covered by collective bargaining.

Also today, Governor O’Malley signed a new law to create the Maryland Workforce Corporation, a quasi-governmental entity that will allow Maryland to more quickly and innovatively respond to the workforce needs of the State and its employers, and to attract additional resources for programs that will better prepare Maryland’s workers for the jobs of tomorrow.