Employee versus Independent Contractor Classification

The Maryland Department of Labor, Licensing and Regulation (DLLR) has been charged with enforcing the Maryland Workplace Fraud Act (MDWFA), which was enacted in 2009. With a particular focus on the construction industry, the MDWFA makes it unlawful for an employer to classify a worker as an independent contractor instead of an employee.   The MDWFA presumes that a worker is an employee unless the employer can prove that: (1) the employer does not control or direct the individual’s performance; (2) the individual is independently engaged in the same type of business as the work involved; and (3) the work is outside the usual business of the employer or the work is performed outside of any of the employer’s places of business.   If audited by DLLR, a company will be asked to provide specific information about projects performed and the employees and/or independent contractors who worked on those projects. Additional factors, such as the use of written independent contractor agreements; provision of tools, materials and equipment; and discretion in business management, employment and operation decision-making, will also be considered when determining the correct classification of workers.