Examining the effect of labor legislation on Maryland's small businesses
Maryland delegate Kelly Schulz is looking into the effect of payroll-related labor laws on the state's small businesses in the flooring sector, according to the Gazette.
The Workplace Fraud Act, which was passed in 2009, targets companies that inaccurately classify workers as independent contractors or fail to 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," a state Department of Labor, Licensing and Regulation news release explains.
However, local business owner Gil Stroup noted that the flooring industry often uses subcontractors because it would not be "economically feasible" to keep experts in each type of flooring on the payroll full-time.
According to Schulz, confusion over the legislation has contributed to a high misclassification rate in the state - 25 percent in 2009. The resulting fines and penalties are having a crippling effect on small businesses in Maryland.
When Maryland governor Martin O'Malley signed the legislation in 2009, he said it would help identify "employers who attempt to cheat the system." However, well-meaning businesses may be swept up in its wake.
The Workplace Fraud Act, which was passed in 2009, targets companies that inaccurately classify workers as independent contractors or fail to 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," a state Department of Labor, Licensing and Regulation news release explains.
However, local business owner Gil Stroup noted that the flooring industry often uses subcontractors because it would not be "economically feasible" to keep experts in each type of flooring on the payroll full-time.
According to Schulz, confusion over the legislation has contributed to a high misclassification rate in the state - 25 percent in 2009. The resulting fines and penalties are having a crippling effect on small businesses in Maryland.
When Maryland governor Martin O'Malley signed the legislation in 2009, he said it would help identify "employers who attempt to cheat the system." However, well-meaning businesses may be swept up in its wake.
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