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09.32.01 - Division of Unemployment Insurance - Proposed Regulations

PROPOSED ACTION ON REGULATIONS
MARYLAND REGISTER, VOLUME 44, ISSUE 3,
FRIDAY, FEBRUARY 3, 2017

Title 09 DEPARTMENT OF LABOR, LICENSING, AND REGULATION

Subtitle 32 Unemployment Insurance

09.32.01 Obligations of Employers

Authority: Labor and Employment Article, §§8-101, 8-305, 8-601, 8-602, 8-613, and 8-614, Annotated Code of Maryland

Notice of Proposed Action
[17-079-P]

The Secretary of Labor, Licensing, and Regulation proposes to amend Regulation .18 under COMAR 09.32.01 Obligations of Employers.

Statement of Purpose

The purpose of this action is to clarify the factors to be considered by the Secretary when determining whether a worker is classified as an independent contractor or is working in covered employment for the purpose of unemployment insurance coverage. The proper classification of workers impacts a business’s tax obligations and a worker’s eligibility for unemployment insurance benefits. The proposal removes certain out of date considerations, such as the specific reference to an independent contractor maintaining a listing in a telephone directory. The proposed regulation reflects the statutory requirement that the Secretary must determine that each of the three conditions found in Labor and Employment Article, §8-205(a), Annotated Code of Maryland, must be satisfied by the employer before an independent contractor relationship will be found to exist. The proposed regulation revises and expands upon the current factors that may be considered by the Secretary in making the three required determinations and clarifies that each determination is based on the totality of the circumstances. The proposed regulation amends the order of the paragraphs in COMAR 09.32.01.18 so that the regulation addresses the three required determinations in the same order in which they appear in the statute.

Comparison to Federal Standards

There is no corresponding federal standard to this proposed action.

Estimate of Economic Impact

The proposed action has no economic impact.

Economic Impact on Small Businesses

The proposed action has minimal or no economic impact on small businesses.

Impact on Individuals with Disabilities

The proposed action has no impact on individuals with disabilities.

Opportunity for Public Comment

Comments may be sent to Jared Murphy, Director, UI Legal Services, Department of Labor, Licensing, and Regulation, 1100 North Eutaw St., Baltimore, MD 21201, or call 410-767-2409, or email to jared.murphy@maryland.gov, or fax to 410-333-7099. Comments will be accepted through March 6, 2017. A public hearing has not been scheduled.

.18 Presumption of Employee Status and Determinations of Worker Classification.
  A. (text unchanged)
  B. Independent Contractor.
    (1) To overcome the [employee] presumption of employee status, an employing unit shall bear the burden of proof to establish, by a preponderance of the evidence, that the person performing services is an independent contractor.
    (2) The Secretary shall determine [that] if an employing unit has established that [the] a person performing services is an independent contractor [when the conditions] by considering, for each paragraph of Labor and Employment Article, § 8-205(a), Annotated Code of Maryland, the factors in §B(3)(a)–(c) of this regulation [are clearly shown]. The Secretary shall consider the totality of the circumstances for each of the three paragraphs found in Labor and Employment Article, § 8-205(a), Annotated Code of Maryland. Each determination is considered based on the specific facts of the relationship between the employing unit and the worker. The Secretary may consider a relevant prior determination by a taxing authority regarding the proper classification of the worker.
    (3) [Circumstances evidencing the conditions mentioned in §B(2) of this regulation include, but are not limited to, the items listed after each condition] When assessing the totality of the circumstances to determine the proper worker classification under each paragraph of § 8-205(a), the Secretary shall consider the following factors:
      (a) [The person has been and will continue to be free from the employing unit’s control or direction] To determine whether there is a right to control or direct how the worker performed the task for which the worker is hired and the absence of control in practice, relevant facts include but are not limited to:
        (i) [The employing unit does not require the person to comply with detailed instructions about when, where, and how the person is to work,] The extent of instruction provided to the worker by the employing unit;
        (ii) [The employing unit does not train the person to perform the service in a particular manner or using a particular method determined by the employing unit,] The extent and type of training provided to the worker by the employing unit;
        (iii) [The employing unit does not establish set hours of work for the person performing the services,] Whether the worker or the employing unit determines how work results are achieved;
        (iv) [The employing unit does not establish a schedule or routine for the person performing the service,] Whether the worker or the employing unit determines the order or sequence to follow in performing the work;
        (v) [The employing unit may not discharge the person for failure to obey the employing unit’s specific instructions on how the service is to be performed;] Whether the worker is hired and discharged under specific terms of an agreement or at-will;
        (vi) Who determines and provides the supplies, tools, and equipment used to perform the task;
        (vii) Whether the work must be performed personally by the worker;
        (viii) The extent to which the worker is subjected to pre-employment testing, credentialing, resume verification, background checks, and/or pre-employment physicals;
        (ix) Whether the worker is required to devote substantially full time to the employing unit; and
        (x) Whether the worker is required to submit regular or written reports to the employing unit.
      [(b) The service is outside the usual course of business of the employing unit:
        (i) The person performs the work off the employing unit’s premises,
        (ii) The person performs work that is not integrated into the employing unit’s operation,
        (iii) The service performed is unrelated to the employing unit’s business;]
      [(c)] (b) [The person performing the service] To determine whether the worker is customarily engaged in an independently established business, relevant facts include but are not limited to:
        (i) [Maintains a business listing in the telephone directory,] The extent to which the worker makes services available to the relevant market;
        (ii) [Has] Whether the worker has his or her own place of business[,];
        (iii) [Has a financial investment in a related business and can incur a loss in the performance of the service,] The extent of the worker’s investment beyond the worker’s own time;
        (iv) [Has his or her own equipment needed to perform the service,] The extent to which the worker has unreimbursed business expenses;
        (v) [Determines the price of the service to be performed,] The extent to which the worker realizes a profit or loss;
        (vi) [Employs others to perform the service,] Whether the worker hires other workers to assist with the work;
        (vii) [Carries his or her own liability or workers’ compensation insurance, or both,] Whether the worker is provided with coverage under the employing unit’s liability or workers’ compensation insurance or is provided with employee-type benefits, such as health insurance, a pension, retirement plan, or vacation pay;
        (viii) [Performs] Whether the worker performs the service for [more than one] an unrelated employer at the same time[,];
        (ix) [Sets] Whether the worker sets his or her own hours[,]; and
        (x) [Is] Whether the worker is paid by the job.
      (c) To determine whether the work is outside the usual course of business of the employing unit for which the work is performed, relevant facts include but are not limited to:
        (i) Whether the person performs the work off the employing unit’s premises;
        (ii) Whether the person performs work that is not integrated into the employing unit’s operation;
        (iii) The extent to which the services performed by the worker are similar to the duties of other employees;
        (iv) The type of relationship intended to be established by the parties’ contractual agreement; and
        (v) Whether the relationship is of a definite term.

KELLY M. SCHULZ
Secretary of Labor, Licensing, and Regulation