A recent report from Maryland’s Joint Enforcement Task Force on Workplace Fraud (JETF) reveals that more than 5,500 workers were misclassified as independent contractors in 2024. This misclassification not only deprives workers of essential benefits—it also exposes employers to serious financial and legal risk, and creates unfair competition for businesses that play by the rules.
Why This Matters to Maryland Employers
Misclassifying workers can lead to significant consequences:
- Financial Penalties: The Maryland Division of Unemployment Insurance uncovered over $36 million in unreported taxable wages in 2024. The Comptroller’s Office alone issued more than $3 million in tax, interest, and penalty assessments.
- Legal Risks: Employers who misclassify workers may be subject to investigations, citations, back taxes, restitution, and penalties under Maryland’s Workplace Fraud Act.
- Reputational Harm: Companies caught engaging in workplace fraud risk damage to their brand, employee trust, and client relationships.
Industries Under Scrutiny
While worker misclassification can happen in any sector, the report identifies the most commonly affected industries:
- Construction
- Landscaping
- Home Health Care
- Janitorial Services
- Security
- Transportation
For example, in Maryland’s construction industry alone, an estimated 11% of workers are misclassified, depriving the state of vital unemployment insurance and tax contributions.
How Employers Can Stay Compliant
Maryland’s enforcement activity is ramping up—now is the time to take a close look at your workforce. Key steps include:
- Review Worker Classifications: Ensure your independent contractors aren’t actually employees under the law.
- Understand the Rules: Learn the standards under Maryland’s Workplace Fraud Act and federal law.
- Get Legal Guidance: When in doubt, consult with counsel—especially for gray areas or unique arrangements.
- Maintain Documentation: Keep detailed records of work arrangements, job responsibilities, and payment methods.
Final Takeaway
The growing focus on workplace fraud in Maryland is a reminder that worker classification is not just an HR issue—it’s a legal and financial one. Proper classification protects your business, your workers, and your bottom line.
Need help reviewing your workforce classification policies? Contact Luchansky Law to speak with an attorney.
References
- Maryland Department of Labor. “New Report on Workplace Fraud in Maryland Finds Thousands of Misclassified Workers” (February 20, 2025)
- Joint Enforcement Task Force Annual Report (2024). Download PDF
