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Sponsors seek to expand Maryland's Workplace Fraud Act to all private employers
Summary
Delegate Matthew Schindler and labor advocates urged the committee to expand anti-misclassification protections beyond construction and landscaping; business groups warned of enforcement and resource challenges and cited limited complaint counts in recent state reports.
Delegate Matthew Schindler told the Economic Matters Committee that House Bill 632 would extend Maryland's Workplace Fraud Act so that employers in all industries are prohibited from misclassifying employees as independent contractors.
"Employee misclassification is a deliberate tactic used by some employers to cut labor costs and evade state and federal tax obligations," Schindler said, adding the change would protect workers' wage, benefit and tax rights and prevent unfair competition against law-abiding employers.
Witnesses supporting the bill included Elizabeth Bobo, legislative director for the Maryland State and DC AFL'00CIO; Amy Galatley, an attorney at the Public Justice Center; and Mario Maurizio, political representative for 32BJ SEIU. Proponents described misclassification across health care, janitorial, delivery, childcare, food service and other sectors and said the state may lose tax revenue when workers are misclassified. Schindler told the committee the attorney general has included a similar expansion in HB 1096.
Schindler and panelists said the bill would clarify application of the existing ABC/employee test and extend presumptions beyond construction and landscaping. Elizabeth Bobo cited a study (presented by proponents) that found wage-theft concerns in Maryland; Amy Galatley said true independent contractors would not be affected but that misclassification erodes unemployment insurance and workers' compensation contributions.
Opponents included representatives of the National Federation of Independent Business and the Maryland Chamber of Commerce, who raised enforcement, resource and false-accusation concerns. Grace Williamson of the Chamber said the Department of Labor's 2023 report recorded six complaints on worker classification and questioned whether the department currently has resources to enforce an expansion covering many more establishments; she also compared aspects of the proposal to California's prior AB 5 debate.
Schindler noted the bill includes an updated fiscal note: testimony in committee said the final FY26 net effect in the fiscal note was $295,000. He and proponents urged a favorable report; opponents urged caution about enforcement capacity and possible unintended consequences for small businesses.
No committee vote appears in the provided transcript excerpt.
