Proposed Administrative Fee for Employers - Unemployment Insurance

See below for information about a proposed rule to incorporate a new unemployment insurance administrative fee for employers. This information was originally posted in the Maryland Register.

Title 09
MARYLAND DEPARTMENT OF LABOR

Subtitle 32 UNEMPLOYMENT INSURANCE

09.32.01 Obligations of Employers

Authority: Labor and Employment Article, §§8-101, 8-206, 8-305, 8-421, 8-601, 8-602, 8-605.1, 8-613, 8-614, 8-625, 8-626, 8-1002.1, and 8-1005, Annotated Code of Maryland

Notice of Proposed Action

[25-152-P]
The Maryland Department of Labor, Division of Unemployment Insurance, proposes to amend Regulations .02, .03, .05, .06, .09, .11, .12, .16, .17, .23, .25, and .26, and adopt new Regulations .09-1 and .16-1 under COMAR 09.32.01 Obligations of Employers.

Statement of Purpose

The purpose of this action is to implement the administrative fee as authorized under Labor and Employment Article, §§8-421 and 8-605.1, Annotated Code of Maryland. It details the obligations of employers subject to the fee, the consequences of nonpayment, including the imposition of interest charges, the means of collection, and the order in which payment by an employing unit is to be applied. The action includes amendments to address the untimely submission of contributions reports, as well as provisions specific to common paymasters, unemployment insurance tax preparers, and professional employer organizations. The action also corrects certain legal references on seeking review determinations, and it removes portions of regulations referencing outdated media.

Estimate of Economic Impact

I. Summary of Economic Impact. There will likely be minimal economic impact as a result of the imposition of the administrative fee. Generally, a contributory employer will pay an annual administrative fee of .15 percent of its taxable wage base, but the contribution rate assigned to each employer, exclusive of any penalties, fines, or interest imposed, will be adjusted by subtracting .15 percent from each rate. While a new employer is required to pay contributions at a rate of a least 1 percent of its taxable wage base, the contribution rate for new employers has been above 2 percent since 2005 and above 1 percent since 1998.

II. Types of Economic Impact.

III. Assumptions. (Identified by Impact Letter and Number from Section II.)
A. By adding an administrative fee, the Division will collect funds that it can use to administer and improve the UI program.

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 Sabrina Steel, Director for Unemployment Insurance Policy, Maryland Department of Labor, 100 South Charles Street, Tower 1, Suite 3100, Baltimore, MD 21201, or call (410) 767-2434, or email to sabrina.steel@maryland.gov. Comments will be accepted through August 25, 2025. A public hearing has not been scheduled.

.02 Definitions.
A. (text unchanged)
B. Terms Defined.
(1) "Administrative fee" means the fee due and owing on an employer's taxable wage base under §8-605.1 of the Unemployment Insurance Law.
[(1)](2)—[(6)](7) (text unchanged)
C. (text unchanged)

.03. Reports to Determine Liability.
A.—C. (text unchanged)
D. Review. An employing unit that disputes the liability determination may seek review of the determination pursuant to [COMAR 09.32.06.06] Labor and Employment Article, §8-604, Annotated Code of Maryland.

.05 Charging of Benefit Payments.
A.—D. (text unchanged)
E. Review. An employer who disputes the charging determination may seek review of the determination pursuant to [COMAR 09.32.06.07] Labor and Employment Article, §8-604, Annotated Code of Maryland.

.06 Records.
A. Responsibility of Employing Unit.
(1) (text unchanged)
(2) Employment Records.
(a)—(d) (text unchanged)
[(e) An employing unit that maintains, or has a third party maintain, its employment records on nine-track magnetic tape, floppy disk, or other magnetic storage formats shall retain the records in the original magnetic storage format for a period of 5 years from the last day of the calendar quarter to which those records relate.]

B. Specific Contents of Wage Records. An employing unit shall include in its wage records:
(1) (text unchanged)
(2) All of the wages paid to each worker for each pay period and the total amount of wages paid for employment in the pay period, showing separately the amount of wages paid: (a) In cash[,]; and
(b) (text unchanged)
(3)—(5) (text unchanged)
(6) With respect to individuals who work less than full-time:
(a) The wage rate[,];
(b) The number of hours worked each day[,];
(c) Wages earned by calendar week[,];
(d) Whether the individual worked less than full-time during the week[,]; and
(e) (text unchanged)
[C. Magnetic Media.
(1) Employing units that maintain computerized employment records on nine-track magnetic tape, floppy disk, or other magnetic storage formats shall retain the records in the original magnetic storage format for a period of 5 years from the last day of the calendar quarter to which those records relate, in accordance with §A(2) of this regulation.
(2) Employing units whose employment records are maintained by a third party in a computerized format shall maintain their employment records in the original magnetic storage format in accordance with §A(2) of this regulation.]

.09 Contributions and Administrative Fees.
A. Contributions and administrative fees are due and shall be paid on or before the last day of the month immediately following each calendar quarter.
B. Contributions and administrative fees from an employer whose status is changed by cessation of business, or appointment of a receiver, trustee, trustee in bankruptcy, or other fiduciary are due and shall be paid within 5 days of the change in status.
C. For payment of administrative fees, a fractional part of a cent:
(1) That is less than one-half cent shall be disregarded; and
(2) That is one-half cent or more shall be increased to 1 cent.
[C.] D. Failure to pay the required contributions in the prescribed manner shall result in the imposition of interest charges as [set forth] provided in [of the Unemployment Insurance Law] Labor and Employment Article, §8-628, Annotated Code of Maryland. E. Failure to pay the required administrative fees in the prescribed manner shall result in the imposition of interest charges as provided in Labor and Employment Article §8-628, Annotated Code of Maryland, for the nonpayment of contributions. F. The Secretary shall pay interest collected on administrative fees into the Special Administrative Expense Fund established under Labor and Employment Article, §8-419, Annotated Code of Maryland.

.09-1 Collection of Administrative Fees and Interest.
A. Collection by Assessment.
(1) If an employing unit fails to pay administrative fees or related interest due based on information the employing unit provided in a contribution report, the Secretary:
(a) May assess the amount of the payment or interest due as prescribed under Labor and Employment Article, §8-629, Annotated Code of Maryland, for the nonpayment of contributions; and
(b) Notwithstanding §(2) of this regulation, may make an additional assessment if the contribution report is later determined to be incorrect.
(2) An assessment under this regulation is final unless:
(a) An employing unit requests a review determination under Labor and Employment Article, §8-604, Annotated Code of Maryland; or
(b) On its own motion, the Board of Appeals grants a hearing to consider whether the amount should be reduced.
(3) Except in the case of a fraudulent contribution report or the failure to file a contribution report, written notice of an assessment under this regulation shall be sent to an employing unit within 3 years of the last day of the period at issue in the notice.
(4) If an employing unit fails to pay an assessment under this regulation, the Secretary may file a notice of lien in the circuit court of the county where the employing unit’s principal place of business is located, or a notice of lien in any other county that includes the information set forth in Labor and Employment Article, §8-629, Annotated Code of Maryland.
B. If, after an assessment, an employing unit fails to pay administrative fees or interest, the Secretary may collect the amount due by filing a civil action or pursuing any other available legal means.

.11 Contribution Reports.
A. A contributor shall file with the Secretary, on or before the contribution payment date, a complete and correct contribution report containing:
(1)—(2) (text unchanged)
(3) Total wages in excess of $8,500 per year [(through 1992 the amount is $7,000)];
(4) Computation of contributions and administrative fees due;
(5)—(10) (text unchanged)
B.—C. (text unchanged)

.12 Employment Reports.
A.—B. (text unchanged)
[C. Magnetic Media Reporting.
(1) Magnetic Media. Employing units reporting more than 100 employees shall file the information required on the employment report on magnetic tape or, if approved by the Secretary, on other magnetic media.
(2) Format.
(a) The magnetic media report shall conform to the format prescribed by the Secretary.
(b) Employing units may obtain the prescribed format for magnetic media reporting by contacting the Department's Office of Unemployment Insurance.
(3) Waiver.
(a) For not more than four consecutive reporting periods, employing units required to report on magnetic media may request, at least 30 days before the due date of the employment report, that the Secretary waive the requirement for that quarter.
(b) The Secretary may waive the requirement, if the requirement would result in hardship to the employing unit. In determining whether a hardship would result, the Secretary shall consider, among relevant factors, the ability of the employing unit to report by magnetic media at a reasonable cost.
(4) Alternative. The Secretary may approve a request of an employing unit required to report on magnetic media to report on computer diskette in a format acceptable to the Secretary.
(5) Other Employing Units. The Secretary may approve a request of an employing unit not required to report by magnetic media to report on magnetic media or computer diskette.]

.16 Penalties and Interest Assessments.
A. (text unchanged)
B. Interest on Past Due Contributions and Administrative Fees. An employing unit that fails to file a timely contribution report shall pay interest on contributions and administrative fees then due and unpaid at [the] a rate in accordance with Regulation .09 of this chapter [of 1 percent per month or fraction of a month] until the contribution report and payment is received. [C. Application of Payment of Penalties and Interest. Payments made shall be applied to the amount due from the employer as follows:
(1) First, to the total amount of any penalty imposed;
(2) Next, to interest due and owing to date of payment; and
(3) Finally, to the amount of any contribution due and owing at date of payment.]
[D.] C.(text unchanged).

.16-1 Order of Payments.
A payment made by an employing unit shall be applied in the following order to an amount due and owing at the time of payment:
A. To any penalty imposed;
B. To any interest due and owing on administrative fees;
C. To any interest due and owing on contributions and reimbursement payments;
D. To administrative fees; and
E. To contributions or reimbursement payments.

.17 Refunds and Adjustments.
A. Application for refunds and adjustments of contributions, reimbursement payments, or related interest shall be processed in accordance with the Unemployment Insurance Law.
B. Application for refunds and adjustments of administrative fees or related interest shall be processed in the manner set forth in the Unemployment Insurance Law for refunds and adjustments of contributions, except that the Secretary shall refund any such amounts erroneously collected from the Special Administrative Expense Fund.
[B.] C. (text unchanged)

.23 Common Paymasters.
A. (text unchanged)
B. Payment through Common Paymaster.
(1) When two or more related corporations concurrently employ the same individual and compensate that individual through a common paymaster, and when the common paymaster is one of the related corporations that employs the individual, each corporation shall be considered to have paid only the remuneration it actually disburses to that individual. If all the remuneration to the individual from the related corporations is disbursed through the common paymaster, the total amount of wages disbursed by the common paymaster shall be deemed wages subject to contribution and administrative fees. The common paymaster shall be responsible for filing the contribution report and the employment report.
(2) (text unchanged)
C. (text unchanged)
D. If the common paymaster fails to remit contributions and administrative fees due, the common paymaster and each of the other related corporations shall be jointly and severally liable for the full amount of the unpaid portion of the contributions and administrative fees.

.25 Unemployment Insurance Tax Preparers.
A. Definition and Scope.
(1) Definition. “Unemployment insurance tax preparer” means a person who files quarterly unemployment insurance contribution reports or employment reports on behalf of employing units for compensation.
(2) Scope. Sections [B-----D] B and C of this regulation apply to unemployment insurance tax preparers who file on behalf of 100 or more employing units.
B. Method of Filing Contribution Reports and Employment Reports.
(1) [Contribution Reports and Employment Reports.] An unemployment insurance tax preparer shall file the information required in Regulations .11 and .12 of this chapter [on magnetic tape] by mail or electronic means [or, if approved by the Secretary, on other magnetic media.
(2) The magnetic media report shall conform to the format prescribed by the Secretary.
(3) An unemployment insurance tax preparer shall obtain the prescribed format for magnetic media reporting by contacting the Department's Office of Unemployment Insurance].
(2) A contribution report or an employment report is deemed returned when it is either received by the Division of Unemployment Insurance or postmarked by the United States Post Office.
C. Method of Payment. An unemployment insurance tax preparer shall remit unemployment insurance contributions and administrative fees on behalf of employing units in one lump sum payment that covers in full the total contribution payments and administrative fees due for all the employing units that the preparer represents.
[D. Waiver.
(1) An unemployment insurance tax preparer required to report on magnetic media may request, at least 30 days before the due date of the contribution reports or employment reports, that the Secretary waive the requirement for that quarter.
(2) The Secretary may waive the requirement for any quarterly filing if the requirement will result in undue hardship to the unemployment insurance tax preparer.]
[E.] D. Penalty and Interest. An employing unit whose unemployment insurance tax preparer fails to file the contribution reports, employment reports, or pay [the] contributions or administrative fees [payments] in the prescribed manner is subject to the penalties and interest set forth in [Regulation .16A(1)] Regulations .09 and .16 of this chapter and the Unemployment Insurance Law.

.26 Professional Employer Organizations.
A. (text unchanged)
B. Obligations of a Professional Employer Organization.
(1) (text unchanged)
(2) Acquisitions.
(a) Upon the acquisition of all or part of a client company’s workers:
(i) A professional employer organization is initially classified as a successor employer for purposes of assigning a contribution rate, assessing administrative fees and tax liability, and transferring the taxable wage base of the workers who were placed on the professional employer organization's payroll; and
(ii) (text unchanged).
(b) (text unchanged)
(3)—(4) (text unchanged)

PORTIA WU
Secretary of Labor