Maryland Joint Enforcement Task Force on Workplace Fraud issued its annual report detailing the magnitude of worker misclassification in Maryland. The Task Force reported that Unemployment Insurance uncovered over $36 million in unreported taxable wages paid to workers due to workplace fraud, and the Comptroller assessed $3.5 million in tax, interest, and penalties on businesses for misclassifying workers. The Task Force reports:
Workplace fraud occurs when businesses misclassify workers who should be employees as independent contractors or pay workers outside of formal payroll (i.e., off the books).
The prevalence of workplace fraud erodes contracting and labor standards, undermines labor markets, and makes it financially difficult for responsible, law-abiding businesses to compete with businesses engaging in misclassification. Workplace fraud hurts Maryland’s ability to create quality jobs and grow the middle class. Combatting workplace fraud is critical to ensuring that pathways to work, wages, and wealth are available to all Marylanders.
Workplace fraud is widespread in many Maryland industries, including construction, landscaping, home health care and assisted living, temporary staffing, commercial and residential cleaning, security, and transportation. To address this harmful business practice, in 2009, the Maryland General Assembly passed the Workplace Fraud Act. The Workplace Fraud Act creates a separate violation for worker misclassification in construction and landscaping services—two industries where misclassification is common.
In January 2024, Governor Wes Moore signed the Re-establishing the Joint Enforcement Task Force on Workplace Fraud Executive Order, reactivating the Joint Enforcement Task Force on Workplace Fraud (Task Force). The Task Force is charged with coordinating the investigations and enforcement of workplace fraud in the State.
Over the past year, the Task Force has engaged in a series of discussions, fact finding, and enforcement coordination efforts. Members have shared information about how each member agency encounters misclassification in its work and cataloged the authorities and tools each agency currently possesses to combat misclassification. They also identified agency data that could assist other Task Force agencies in carrying out their work.
Collectively, in 2024, Task Force agencies discovered 5,595 misclassified workers through their enforcement actions. The Division of Unemployment Insurance uncovered over $36 million in unreported taxable wages paid to workers due to workplace fraud, and the Comptroller assessed $3.5 million in tax, interest, and penalties on businesses for misclassifying workers.
The Task Force heard from researchers, businesses—including women- and minority-owned businesses—workers, labor unions, and community-based organizations about the barriers
to tackling workplace fraud. Stakeholders shared recommendations to help deter and reduce workplace fraud. Based on the information gathered both from those stakeholders and from its own activities, the Task Force identified several barriers to effectively combating workplace fraud and discussed and formulated solutions to address those problems.
Source: Maryland Joint Enforcement Task Force on Workplace Fraud – Maryland Department of Labor
