• Maryland, Virginia, and the National Labor Relations Board all Impose New Stiff Penalties for Misclassification of Employees
  • October 5, 2016 | Authors: Meredith Merry Campbell; Joy C. Einstein; Gregory D. Grant
  • Law Firm: Shulman, Rogers, Gandal, Pordy & Ecker, P.A. - Potomac Office
  • Many employers are aware of possible wage and hour lawsuits resulting from misclassification of independent contractors. In addition to federal wage and hour lawsuits, and potential audits by the IRS and the state taxing authorities, here are three more reasons to be careful about independent contractor classifications:

    Maryland - Maryland’s Recovery of Benefits and Penalties for Fraud Act becomes effective October 1, 2016. Penalties under this new law include up to $5,000 per knowingly misclassified employee, and up to $10,000 per future violation.

    Virginia - Virginia recently signed a partnership agreement with the Department of Labor agreeing to joint investigations, exchange of information with federal agencies, coordination with DOL on enforcement, and referral of potential violations to the appropriate federal agency. (Maryland had already signed a similar agreement.)

    NLRB - Finally, last month the National Labor Relations Board (NLRB) joined the fun by issuing an advice memorandum asserting that misclassification as an independent contractor also violates Section 8(a)(1) of the National Labor Relations Act (NLRA) because it strips employees of the right to form a union. Penalties for this violation range from a notice posting to imposition of a union on your workforce.

    Now is probably a good time to review your current independent contractor relationships to confirm that your people are properly classified!