A new report on workplace fraud in Maryland found that thousands of workers have been misclassified by employers, potentially costing those workers overtime pay, health insurance coverage, workers’ compensation, and more.
This harms not only workers, but businesses that follow the law, and the state of Maryland, according to a news release from Comptroller Brooke Lierman.
The Maryland Joint Enforcement Task Force on Workplace Fraud (JETF) released the new annual report, revealing the magnitude of worker misclassification in Maryland. The task force agencies discovered that in 2024, more than 5,500 workers were misclassified, and Unemployment Insurance audits found that over $36 million taxable wages went unreported.
Misclassified workers miss out on important workplace protections, including access to unemployment benefits, workers’ compensation, health insurance coverage, minimum wage, and overtime pay. The report details also how workplace fraud puts law-abiding businesses at a disadvantage. The employer/business misclassifying their workers end up reducing their costs, which end up being paid by the workers, taxpayers, and the community. If they pay less in taxes then they owe, state revenue suffers, which results in difficulty paying for critical public services.
“Misclassifying workers is not an acceptable business practice and it is alarming to see the rate at which some employers are engaged in this egregious behavior,” Lierman said. “I am committed to protecting workers and supporting an ethical and prosperous business environment in Maryland. The Office of the Comptroller will continue to partner with other agencies, unions, and anyone interested to aggressively pursue lawbreakers robbing workers and the state of much needed resources.”
“Workplace fraud hurts Maryland’s ability to create quality jobs and grow the middle class,” said Portia Wu, Maryland Secretary of Labor and Task Force Chair. “Combatting workplace fraud is critical to ensuring that pathways to work, wages, and wealth are available to all Marylanders.”
The JETF coordinates data sharing and enforcement of laws regarding workplace fraud across multiple Maryland State agencies. The task force was disbanded in December 2013 by then-Gov. Martin O’Malley after having been active for approximately four years. The group was restarted by Gov. Wes Moore in January 2024 and has nine members, chaired by Secretary Wu. It includes Lierman and Maryland Attorney General Anthony Brown.
“Hardworking Marylanders should be paid what they are owed and given the benefits to which they are entitled,” Brown said. “When they’re not, it hurts not just the victims of workplace fraud and the businesses that follow the rules, but the entire State of Maryland, which loses out on valuable tax dollars.”
The JETF report suggests actions to address workplace fraud, such as increasing education and outreach about the Workplace Fraud Act. Other recommendations are more specific to areas where worker misclassification is a particular issue, like construction, and ways to improve accountability in those industries.
Lierman’s release states, “Workers who have questions about their status—or believe they have been misclassified—can contact the Division of Labor & Industry at workrights@maryland.gov. Employers found to have committed workplace fraud can be investigated and cited by Task Force agencies, and will be required to come into compliance with their legal obligations, including payment of restitution, back taxes, and contributions to the unemployment insurance fund.”
The report is available at the Maryland Department of Labor’s website at this link.
One would assume that the reporter is referring to Davis-Bacon wage rates when describing the misclassification of workers. Most Public work requires minimum wage rates and benefits for the various construction trades. The reporter neglects to mention this. There are no such requirements for work in the private sector.