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As you know, our Association, led by a small group including Chris Adams, Kurt Zanelotti, Chuck Bode, Charlie Vogel and Jerry Bush took on the State of Maryland last year and fought successfully to amend the Workplace Fraud Act. We thought we had won at least part of the battle, but in the past year we have seen DLLR continue to target the flooring industry with their aggressive, inappropriate and sometimes ILLEGAL enforcement efforts.
Let me give you an example of the ILLEGAL activities engaged in by DLLR’s Worker Classification Protection Unit (WCPU) since the Workplace Fraud Act was amended last year. One of the amendments to the law required DLLR to “issue a citation or close the case” within 90 days after receiving the requested information from a business. This 90 day rule was implemented to get a quick resolution and prevent open cases from lingering for a year or more, as they had in the past. But the WCPU chose to ignore the law and decided that they could take as much time as they wanted to process these cases.
In April of this year, the WCPU issued a citation for misclassification to a subcontractor engaged by one of the Association’s members. The citation held that 6 workers hired by the subcontractor were employees of the subcontractor. This could have resulted in a fine of $6,000 ($1,000 per misclassified employee) as well as thousands of dollars in past due income tax, workers’ compensation and unemployment tax for the subcontractor. Luckily for the subcontractor, the WCPU made a crucial mistake. They issued the citation on the 98th day. The subcontractor, assisted by the Association, filed an appeal on the grounds that the citation was issued illegally. And we WON. The WCPU was forced to revoke the citation that it had illegally issued and the subcontractor escaped all penalties. The WCPU was also forced to stop work on other cases that were more than 90 days old and were prohibited from issuing any other illegal citations.
The WCPU tried to get around the 90 day rule by asking businesses whose cases were more than 90 days old to enter into compliance agreements which would have required them to admit that their workers were misclassified, and would have resulted in those businesses paying at least several years’ worth of back taxes, late filing penalties and interest. We also put a stop to that illegal action by the WCPU.
Then they tried to get around the law AGAIN by forwarding their old cases in which they were unable to issue a citation, to other units within the State who were not bound by the 90 day rule including the Comptroller’s office and the Unemployment Insurance unit. We also put a stop to this illegal activity. The law is very clear and very simple on this point. The WCPU must issue a citation within 90 days or CLOSE the case. PERIOD. It’s as simple as that. No further action of any kind can be taken after 90 days.
This kind of egregious enforcement activity has made it clear that our fight is not over. If you have not yet been subjected to a “compliance review” by the WCPU, consider yourself lucky…. for the time being. The State is continuing to target the flooring industry and going after both commercial and retail dealers. The law allows the State to walk onto any jobsite in the state at any time to conduct an investigation. No one is immune from this.
Fighting the State on behalf of all our members is costly. And we can’t win these battles without the support of key legislators. That is why the Association continues to retain the services of Bruce Bereano, one of Maryland’s top lobbyists, and why several members of the Association formed their own political action committee earlier this year. Although the PAC is not directly affiliated with the Association, the goal of the PAC is to raise funds to support candidates who understand the needs of the members of the Association and who will support the Association in its battles in the State. The Association and the PAC can’t fight these battles without your financial support. Consider that the penalty for misclassifying just one worker would cost your company a minimum of $1,000 plus back taxes, other penalties and interest. Multiply that by 5 or 6 installers working for a small retailer and soon you could be facing $10,000, $20,000 or more in taxes, penalties and interest when the WCPU decides that the installers are suddenly no longer independent contractors. Can you afford to take that chance?
The PAC’s first fundraising event is being hosted by Charlie Vogel, Association member and owner of Arcade Floors Carpet One in Towson on Wednesday, October 23rd at 6:00pm. Senator Kathy Klausmeier, who represents part of Baltimore County, will be our special guest. There is still plenty of time to RSVP for this event and only requires a minimum contribution of $50. Sponsorships are available up to $500. You can RSVP by emailing, faxing or calling PAC Treasurer Kathy Sibbald no later than Monday, October 21st. Our second event is being hosted by Gil Stroup, Association member and owner of Stroup’s Flooring America in Frederick on Wednesday November 13th at 6:00pm. Delegate Kelly Schulz, who has been our strongest supporter, will be our special guest there. Please RSVP no later than November 11th. You can reach Kathy by email at kathysibbald@cbflooring.com, by fax at 410-381-7552, or by phone at 410-283-7129.
