EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*hb1261*
HOUSE BILL 1261
K3, P2, Q3 3lr3048
CF SB 838
By: Delegate Valderrama
Introduced and read first time: February 17, 2023
Assigned to: Rules and Executive Nominations
A BILL ENTITLED
AN ACT concerning 1
Workplace Fraud and Prevailing Wage – Violations – Penalties and Referrals 2
FOR the purpose of establishing certain criminal penalties for employers knowingly failing 3
to properly classify individuals as employees and contractors and subcontractors 4
knowingly violating State prevailing wage laws; requiring the Commissioner of 5
Labor and Industry to refer to the Comptroller certain complaints that allege a 6
violation of certain tax laws under certain circumstances; and generally relating to 7
violations of the workplace fraud and State prevailing wage laws. 8
BY repealing and reenacting, with amendments, 9
Article – Labor and Employment 10
Section 3–909 and 3–910 11
Annotated Code of Maryland 12
(2016 Replacement Volume and 2022 Supplement) 13
BY adding to 14
Article – State Finance and Procurement 15
Section 17–227 16
Annotated Code of Maryland 17
(2021 Replacement Volume and 2022 Supplement) 18
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 19
That the Laws of Maryland read as follows: 20
Article – Labor and Employment 21
3–909. 22
(a) An employer found to have knowingly failed to properly classify an individual 23
in violation of § 3–904 of this subtitle: 24 2 HOUSE BILL 1261
(1) shall be assessed a civil penalty of up to $5,000 for each employee who 1
was not properly classified; AND 2
(2) IS GUILTY OF A MISDE MEANOR AND ON CONVIC TION IS SUBJECT 3
TO A FINE NOT TO EXC EED $5,000 OR IMPRISONMENT NOT EXCEEDING 60 DAYS OR 4
BOTH FOR EACH EMPLOY EE WHO WAS NOT PROPE RLY CLASSIFIED . 5
(b) In determining the amount of the penalty TO BE ASSESSED UNDER 6
SUBSECTION (A)(1) OF THIS SECTION, the Commissioner or the administrative law judge 7
shall consider: 8
(1) the gravity of the violation; 9
(2) the size of the employer’s business; 10
(3) the employer’s good faith; 11
(4) the employer’s history of violations under this subtitle; and 12
(5) whether the employer: 13
(i) has been found, by a court or an administrative unit, to have 14
deprived the employee of any rights to which the employee would have been entitled under 15
a State protective labor law, including but not limited to: 16
1. any provision of this article; 17
2. the State prevailing wage law, under §§ 17–221 and 18
17–222 of the State Finance and Procurement Article; or 19
3. the living wage law, under § 18–108 of the State Finance 20
and Procurement Article; and 21
(ii) has made restitution and come into compliance with all such 22
State protective labor laws with respect to the employee. 23
(c) If the court or an administrative unit determines that an individual or class 24
of individuals is entitled to restitution as a result of the employer’s violation of § 3–904 of 25
this subtitle, the court or administrative unit: 26
(1) shall award each individual any restitution to which the individual may 27
be entitled; and 28
(2) may award each individual an additional amount up to three times the 29
amount of such restitution. 30 HOUSE BILL 1261 3
(d) An employer in violation of § 3–904 of this subtitle may be assessed double the 1
administrative penalties set forth in subsection [(a)] (A)(1) of this section if the employer 2
has been found previously to have violated this subtitle by a final order of a court or an 3
administrative unit. 4
(e) An employer who has been found by a final order of a court or an 5
administrative unit to have violated § 3–904 of this subtitle three or more times may be 6
assessed an administrative penalty of up to $20,000 for each employee. 7
(f) (1) An employer may be assessed civil penalties under this section or § 8
8–201.1 or § 9–402.1 of this article by only one final order of a court or administrative unit 9
for the same actions constituting a violation of this subtitle. 10
(2) Notwithstanding paragraph (1) of this subsection, an employer may be 11
ordered to make restitution, pay any interest due, and otherwise comply with all applicable 12
laws and regulations by orders of a court and all relevant administrative units, including 13
the Comptroller, the Office of Unemployment Insurance, the Insurance Administration, 14
and the Workers’ Compensation Commission. 15
(g) Any penalty issued under SUBSECTION (A)(1) OF this section against an 16
employer shall be in effect against any successor corporation or business entity that: 17
(1) has one or more of the same principals or officers as the employer 18
against whom the penalty was assessed, unless the principal or officer did not or with the 19
exercise of reasonable diligence could not know of the violation for which the penalty was 20
imposed; and 21
(2) is engaged in the same or equivalent trade or activity. 22
3–910. 23
(A) As authorized by State and federal law, units within the Maryland 24
Department of Labor and the Department of Budget and Management, the Secretary of 25
State, the Comptroller, the Maryland Insurance Administration, and other State agencies 26
shall cooperate and share information concerning any suspected failure to properly classify 27
an individual as an employee. 28
(B) ON A SHOWING BY CLEAR AND CONVINCING EVIDE NCE THAT A 29
VIOLATION OF § 3–904 OF THIS SUBTITLE HAS OCCURRED AND AS AUTH ORIZED BY 30
FEDERAL AND STATE LAW , THE COMMISSIONER SHALL RE FER TO THE 31
COMPTROLLER ANY COMPL AINT THAT ALLEGES A VIOLATION OF § 13–1007 OR § 32
13–1024 OF THE TAX – GENERAL ARTICLE. 33
Article – State Finance and Procurement 34
4 HOUSE BILL 1261
17–227. 1
(A) IN ADDITION TO ANY OT HER PENALTIES AUTHOR IZED UNDER THIS 2
SUBTITLE, A CONTRACTOR OR SUBC ONTRACTOR FOUND TO H AVE KNOWINGLY 3
VIOLATED THIS SUBTIT LE IS GUILTY OF A MI SDEMEANOR AND ON CONVIC TION IS 4
SUBJECT TO A FINE NO T TO EXCEED $5,000 OR IMPRISONMENT NOT EXCEEDING 60 5
DAYS OR BOTH FOR EAC H VIOLATION. 6
(B) ON A SHOWING BY CLEAR AND CONVINCING EVIDE NCE THAT A 7
VIOLATION OF THIS SU BTITLE HAS OCCURRED , THE COMMISSIONER SHALL REFER 8
TO THE COMPTROLLER ANY COMPL AINT THAT ALLEGES A VIOLATION OF § 13–1007 9
OR § 13–1024 OF THE TAX – GENERAL ARTICLE. 10
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 11
October 1, 2023. 12