New Maryland Law Aimed at Further Restrictions on Definition of Contract Workers

Maryland House Bill 819 passed by a margin of 101-34 March 30, 2009 and tightens the definition of contract employees and establishes fines and penalties for misclassifying them. The bill has not yet passed the MD Senate but is expected to because it is being heavily pushed by Governor O’Malley. Should the law make it through to the Governor’s signature it will take its place next to the IRS’ 20-Question Test that is focused on the same issue. In the case of the IRS 20-Question Test, if you as an employer answer “yes” to any of the 20 questions in regard to a worker or group of workers you are paying, then the IRS considers them an employee and taxes must be withheld. The IRS imposes very stiff penalties on the employer (but not the “employee”) if it is determined that misclassification has occurred.

To see more about the latest news as of 3/30/09 on this Maryland law go to:

You can probably follow the progress of the law by contacting the Maryland Chamber of Commerce at (410) 269-0642.

If you want to review the IRS 20 Question Test, a pdf file is atteched to this blog.