Maryland workers’ compensation benefits are only available to an injured worker who qualifies as a “covered employee.”  If you are not a covered employee, you are an independent contractor and not entitled to benefits.

In order to cut costs and improve their bottomline, some employers mischaracterize their employees as independent contractors.  This is illegal, and effective October 1, 2016, the penalties for such mischaracterization is going to increase.

The Maryland legislature has amended the Recovery of Benefits and Penalties for Fraud Act to provide stiff civil penalties against employers for the knowing misclassification of employees.  For first time violations, an employer is subject to fines of up to $5,000 for each misclassified employee.  For future violations, the penalties double, with max fines of $10,000 per misclassified employee.  These assessments are issued by the Maryland Department of Labor, Licensing and Regulation (“DLLR”).  The Maryland Workers’ Compensation Commission will also be notified when the DLLR determines that an employer has knowingly misclassified an employee.

Classifying covered employees as independent contractors has most certainly prevented some injured workers from collecting benefits that they are legally entitled to.  Hopefully, the amended Recovery of Benefits and Penalties for Fraud Act will further the State legislature’s goal of preventing such harmful and illegal practices.