Making businesses pay

Today I received my monthly propaganda from Tom Perez at Maryland's Department of Labor, Licensing, and Regulation. Aside from the usual pat on the back for itself as they figure out how to create more red tape, they trumpeted Secretary Perez's recent appearance before the House Economic Matters Committee on a bill they advocated, HB1590. In the way DLLR describes the bill, it's an effort to keep businesses from cheating by declaring their employees to be independent contractors and perhaps it's a pretty good idea. But part of his testimony really bothered me:

House Bill 1590 prohibits employers from misclassifying employees in order to avoid compliance with a host of labor-related laws. The Act includes a statutory presumption that a worker is an employee and places the burden of proof on the employer. The Act requires DLLR, DBM, the Comptroller of Maryland, the Workers' Compensation Commission and other state agencies to cooperate by sharing information concerning suspected misclassification of employees. (Emphasis mine.)

In other words, businesses are guilty of the offense before being proven innocent. Other items which caught my attention are the mandates for record-keeping and the 2% monthly interest rate for reimbursing the state for misclassified employees, along with the fines.

The fiscal note also provides some interesting reading, as the state would gain over $1 million in estimated revenue if the bill were to pass, but DLLR is chided for assuming the effect on small business would not be meaningful. It is noted that much of the intention of the bill is to crack down on those who illegally misclassify employees, with much of the attention paid to those in the construction industry.

So there may have been a strange coalition that combined to defeat the bill in committee last week despite Secretary Perez's testimony. While Republicans would generally not have liked the onerous penalties and compliance costs for recordkeeping that HB1590 would have placed on small businesses, immigration advocates may have seen this as an attmpt to dry up the burgeoning labor market for illegals in the construction industry - after all, illegals certainly not going to complain about being misclassified as independent contractors as long as the cash they get is green and spendable. But don't be surprised if this bill doesn't make repeat appearances in subsequent General Assembly sessions. Like a bad penny, a lot of bad ideas make return visits to Annapolis until they finally get passed.