The Maryland legislature is considering legislation to address the business community’s concerns about the Workplace Fraud Act (“WFA”). The WFA applies exclusively to the construction and landscaping industries. Under the current WFA, there is a presumption that all workers are employees unless an employer can demonstrate that they satisfy the ABC test. The ABC test makes it nearly impossible for any landscaping or construction worker to qualify as an independent contractor under Maryland law.

Senate Bill 272 would repeal the presumption that an employee-employer relationship exists when payment is made for work performed and revise how the term “independent contractor” is defined within the Workplace Fraud Act. It would use the IRS independent contractor test which is more balanced than the ABC test for determining independent contractor status. Adopting the IRS test would also create consistency among the statutes thereby avoiding the situation where a worker qualifies as an independent contractor for federal tax purposes but is an employee for Maryland unemployment insurance, workers’ compensation insurance and other state purposes.