Chapter 01. Obligations of Employers

“Administrative fee” means the fee due and owing on an employer's taxable wage base under §8-605.1 of the Unemployment Insurance Law.

“Contributor” means an employing unit liable for contributions on taxable wages for covered employment.

“Covered employment” means service performed for an employing unit that is subject to the Unemployment Insurance Law as determined by the Secretary.

“Department” means the Maryland Department of Labor.

“Reimburser” means a nonprofit organization or governmental unit, as defined in the Unemployment Insurance Law, that elects to finance its Unemployment Insurance liability through self-insurance.

“Secretary” means the Secretary of Labor or the Secretary's designee.

“Unemployment Insurance Law” means Labor and Employment Article, Title 8, Annotated Code of Maryland.

Additional or supplemental reports to determine liability shall be filed at the Secretary's request.

An employer that contends it is not liable under the Unemployment Insurance Law shall submit to the Secretary information to support that contention.

Benefit Payments Charged. Except as provided in §A(2) of this regulation or in the Unemployment Insurance Law, the earned-rate record of a contributor who is a base period employer shall be charged with all regular and work-sharing benefit payments, the appropriate share of extended benefit payments, and dependents' allowance.

Benefit Payments Not Chargeable. Benefit payments may not be charged against the earned-rate record of a contributor who is a base period employer when the claimant:

Continuous Part-Time Basis. For the purposes of this regulation, employment is on a continuous part-time basis under Labor and Employment Article, Title 8, Subtitle 6, Annotated Code of Maryland if:

When Charged.

Benefit Overpayment Credit. When an overpayment of benefits is established, the overpayment shall be credited to the contributor's earned-rate record in the calendar quarter in which the overpayment is established.

A reimburser who is a base period employer shall reimburse the Unemployment Insurance Trust Fund for all regular and work-sharing benefit payments, the appropriate share of extended benefit payments, and dependents' allowance.

A notice of benefit payments that must be reimbursed (Statement of Reimbursable Benefits) shall be sent to the reimburser at the end of each calendar quarter.

Reimbursers and Contributors.

Contributors. When all the claimant's base period employers are contributors, benefits paid to a claimant shall be allocated to each contributor in accordance with the Unemployment Insurance Law.

Reimbursers. When all the claimant's base period employers are reimbursers, benefits paid to a claimant shall be prorated to each reimburser in accordance with the Unemployment Insurance Law.

An employing unit shall record the Social Security number of each of its employees. If an employee does not have a Social Security number, the employing unit shall require the employee to execute the proper application form to acquire a Social Security number within 5 days of the first day of employment.

Employment Records.

The dates of each pay period;

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:

The method by which wages are computed;

Hire date, separation date, and reason for separation of each worker;

Name, address, and Social Security number of each worker; and

With respect to individuals who work less than full-time:

Nonprofit organizations that elect to make payments instead of contributions shall file collateral approved by the Secretary.

The Secretary shall review the sufficiency of the collateral annually based on the previous year's taxable wages or on any other basis the Secretary deems appropriate. If the amount of existing collateral is less than the employer's average annual benefit costs for the preceding 2 years, the amount of the collateral shall be increased to equal the average annual benefit costs. The amount of the collateral may not exceed the maximum State tax rate multiplied by that employer's taxable payroll for the prior year.

When the collateral is increased, the adjusted collateral shall be filed within 30 days of the Secretary's demand.

A corporation bond issued by a company licensed to issue surety-type bonds;

Cash deposit;

Treasury notes or other evidence of federal indebtedness;

Bonds or other evidence of indebtedness insured by the State that bind the full faith and credit of the State; or

Irrevocable and unconditional letters of credit.

Reimbursers are engaged in essentially the same industry, occupation, or activity; and

Secretary finds that the risk to the Unemployment Insurance Fund represented by each of the members of the group is approximately the same as the risk represented by other members of the group.

That is less than one-half cent shall be disregarded; and

That is one-half cent or more shall be increased to 1 cent.

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:

An assessment under this regulation is final unless:

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.

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.

May lose its reimburser status and become a contributor as of the next January 1st for a period of 2 years; and

Shall forfeit its collateral to the extent of the unpaid benefits.

Total quarterly wages paid by the contributor;

Taxable quarterly wages paid by the contributor;

Total wages in excess of $8,500 per year;

Computation of contributions and administrative fees due;

The employing unit's Maryland unemployment insurance account number;

The employing unit's tax rate applicable to the quarter filed;

The number of employees performing services for the employing unit in each month of the quarter;

If applicable, penalties or interest as set forth in the Unemployment Insurance Law;

The signature of the employing unit or authorized representative; and

Other information the Secretary may require.

An employing unit that transfers its business to another employer shall file a contribution report within 15 days from the date of discontinuation or transfer.

An employing unit who otherwise discontinues its business or whose status is changed by appointment of a receiver, trustee, trustee in bankruptcy, or other fiduciary, shall file a contribution report within 5 days from the date of this change in status.

Name and Social Security number of each employee;

The employing unit's Maryland unemployment insurance account number;

Total quarterly wages paid to each employee;

Total quarterly wages paid by the employing unit; and

Other information the Secretary may require.

An employing unit that transfers its business to another employer shall file an employment report within 15 days from the date of the discontinuation or transfer.

An employing unit that otherwise discontinues its business or whose status is changed by appointment of a receiver, trustee, trustee in bankruptcy, or other fiduciary, shall file an employment report within 5 days from the date of this change in status.

Wages to be reported on the quarterly employment report include:

Wages to be reported on the quarterly employment report do not include payments made by an employing unit:

Contribution Reports. An employing unit that fails to file a timely contribution report in the prescribed manner shall pay a penalty of $35.

Employment Reports. An employing unit that fails to file a timely employment report in the prescribed manner shall pay a penalty of $35.

Separation Reports. An employing unit that fails to file a timely separation report in the prescribed manner upon the Secretary's request shall pay a penalty of $15.

Earnings Reports. An employing unit that fails to file a timely earnings report in the prescribed manner upon the Secretary's request shall pay a penalty of $15.

An employing unit that submits a check or other negotiable instrument that is returned for insufficient funds shall pay a penalty of $25.

Automatic Refund. In each quarter when the Secretary determines that a refund due an employing unit is less than $100, the Secretary shall automatically issue a refund to that employing unit.

In each quarter when the Secretary determines that a refund due an employing unit is $100 or over, the refund may be applied to the employing unit's future indebtedness or refunded at the employing unit's request.

To overcome the employee presumption, an employing unit shall establish that the person performing services is an independent contractor.

The Secretary shall determine that an employing unit has established that the person performing services is an independent contractor when the conditions in §B(3)(a)—(c) of this regulation are clearly shown.

Circumstances evidencing the conditions mentioned in §B(2) of this regulation include, but are not limited to, the items listed after each condition:

Except as otherwise provided, a person performing services for wages for a sole proprietorship is engaged in covered employment.

The following persons employed by a sole proprietor are not engaged in covered employment:

A partner in a partnership is not engaged in covered employment.

If a partnership consists exclusively of spouses, then their children under 21 years old employed by the partnership are not engaged in covered employment.

When a corporate charter has been forfeited or revoked and the entity continues to operate, the entity shall be treated as a sole proprietorship or a partnership, as determined by the Secretary.

Persons determined by the Secretary to be sole proprietors or partners are not engaged in covered employment.

Any other employee of the entity is engaged in covered employment.

If a limited liability company is automatically classified as a corporation or elects to be classified as a corporation for federal tax purposes, the limited liability company is treated as a corporation for Maryland unemployment insurance purposes. All persons, including members who receive remuneration from the limited liability company for services performed, are engaged in covered employment.

If a limited liability company has a single member and is not classified as a corporation for federal tax purposes, the limited liability company is treated as a sole proprietorship for Maryland unemployment insurance purposes. The following persons employed by the single member limited liability company are not engaged in covered employment:

If a limited liability company consists of two or more members and is not classified as a corporation for federal tax purposes, the limited liability company is treated as a partnership for Maryland unemployment insurance purposes. The following persons employed by the limited liability company are not engaged in covered employment:

Extra Loving Care (“ELC”) is a Nursing Referral Service Agency (“NRSA”) licensed by the Maryland Department of Health (“MDH”) pursuant to COMAR 10.07.07. It has a registry of certified nursing assistants (“CNAs”), geriatric nursing assistants (“GNAs”) and licensed practical nurses (“LPNs”). The company verifies that all workers do not have a criminal background and are properly licensed before placing them on the registry.

Before placing a worker on its registry, ELC requires that the worker attend mandatory training and receive a list of rules and policies to follow in clients’ homes. ELC assigns available workers on its registry to clients. ELC sets the workers’ schedules and requires documentation of the work performed, such as time sheets or notes.

ELC determines the workers’ rates of pay and the workers cannot negotiate pay rates directly with ELC’s clients. Clients pay ELC and ELC deducts its fee and pays the workers. If a client is dissatisfied with a worker, the client contacts ELC directly. Each worker must sign an agreement with ELC that restricts his or her ability to enter into employment agreements with ELC’s clients, past or present.

The workers on ELC’s registry are employees of ELC.

Loving Care (“LC”) is a Nursing Referral Service Agency (“NRSA”) licensed by the Maryland Department of Health (“MDH”) pursuant to COMAR 10.07.07. It has a registry of certified nursing assistants (“CNAs”), geriatric nursing assistants (“GNAs”) and licensed practical nurses (“LPNs”). The company verifies that all workers do not have a criminal background and are properly licensed before placing them on the registry.

LC provides its clients with the names and contact information for available workers on its registry. Once contacted, a worker may then set and adjust their work hours and may negotiate their rates of pay directly with the client, unless otherwise established by a third party payor. The workers on LC’s registry, in conjunction with the client, determine the client’s needs and use their own tools and equipment to carry out their services. Workers are not required to report hours to LC, although some workers maintain notes for their own records.

Workers on LC’s registry carry their own workers’ compensation insurance and/or professional liability insurance coverage. Workers have their own independent businesses that are demonstrated by Federal Employer Identification Numbers (“FEINs”), tax returns, business cards, invoices, advertising and/or other indicia of operating an independently established business. Workers are responsible for maintaining necessary licensures and certifications, however, LC performs periodic credential checks to confirm that workers’ licenses and certifications are current.

The workers on LC’s registry invoice clients directly and are paid directly by the client. The workers are then responsible for remitting any referral fee directly to LC. LC only deviates from this payment system in limited circumstances when an alternative method of payment is necessitated by a third party payor or other legal arrangement established for the benefit of the care recipient. If dissatisfied with a worker, the client informs the worker directly. The workers are not bound by a non-solicitation provision.

The workers on LC’s registry are independent contractors.

Operated, supervised, controlled, or principally supported by a church or convention or association of churches; and

Operated primarily for religious purposes.

Interrelationship between affiliation with the church and institutional autonomy, including:

Extent of religious indoctrination, including:

Entirely within the State.

Both within and outside the State, but the service performed outside the State is incidental to the service performed within the State. Service is incidental if it is temporary or transitory in nature, or consists of isolated transactions.

Intention of the employing unit and employee as to whether the service is an isolated transaction or a regular part of the employee's work;

Intention as to whether the employee will return to the State upon completion of the work outside the State; and

Length of service with the employing unit within the State as compared to the length of service outside the State.

A person is engaged in covered employment in this State when the person's service is not localized in any state, but some services are performed in the State and the person's base of operations is in the State.

The base of operations is the place or fixed center, of more or less permanent nature, from which the employee starts work and to which he or she customarily returns in order to receive instructions from the employing unit or communications from customers or other persons, to replenish stocks and materials, to repair equipment, or to perform other functions necessary to the exercise of the employee's trade or profession.

The base of operations may be the employee's business office, or the employment contract may specify a particular place at which the employee is to receive directions and instructions.

A person is engaged in covered employment in this State when the person's service is not localized in any state and the person has no base of operations, or if the base of operations is in a state in which the employee performs no service, or if the base of operations moves from state to state, but the person's service is directed or controlled from this State.

The place from which a person's service is directed or controlled is the place at which the basic authority exists and from which the general control emanates.

When application of §§A—E of this regulation does not establish where the person's employment is covered, a person is engaged in covered employment in this State if the employing unit elects to cover in this State all the person's service either through an election of coverage or under a reciprocal coverage agreement.

Under the reciprocal coverage agreement the service may be covered in this State if:

Sole proprietor, which includes spouse, children, and parents of a sole proprietor;

Partner of a partnership;

Member of a limited liability company;

Chief Executive Officer;

Chief Financial Officer;

Any corporate officer; or

Any shareholder owning, directly or indirectly, more than 50 percent of a corporation's stock.

Has no common ownership, management, or control with the predecessor;

Acquires less than 50 percent of the payrolls or employees of the predecessor; and

Acquires less than 50 percent of the assets, business, organization, and trade of the predecessor.

Within 120 days of the transfer, written notice specifying the nature of the operations transferred and the state in which they were previously performed.

Within 60 days from the date of this notice, a certification from the unemployment insurance agency of the state from which the employer's operations were transferred certifying all information required by the Unemployment Insurance Law for calculating an earned rate in this State, and any other additional information required by the Secretary. The certificate shall include information identifying wages paid in the other state together with the employer's annual payrolls and benefit charges as defined in the Unemployment Insurance Law, for the 3 years immediately preceding this computation date as defined in the Unemployment Insurance Law.

Upon the request of the Secretary, a certification from the other state containing all the information that the Secretary requires relating to benefit charges for the 12 consecutive month period preceding each subsequent computation date on the basis of wages paid in the other state. When this information is required, the employer shall furnish it not later than 60 days after the Secretary's request.

For the purpose of this regulation, “related corporation” means a member of a controlled group of corporations as the term is defined in the Internal Revenue Code.

For purposes of this regulation, an individual is considered “concurrently employed” by two or more related corporations if the individual performs services for covered wages for the common paymaster for some portion of each calendar year.

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.

When two or more related corporations employ different individuals and compensate the individuals through a common paymaster, but the individual performs no service for the common paymaster during the calendar year, each corporation shall be considered to have paid only the remuneration it actually disburses to the individuals. The related corporations that pay the remuneration to the individuals shall each be responsible for filing the contribution reports and the employment reports.

Only the employing unit from which the claimant was discharged or suspended for reasons which are determined to constitute aggravated misconduct in connection with the work; and

Any benefit years beginning with and following the disqualification for discharge or suspension for reasons which constitute aggravated misconduct in connection with the work, except that if the benefit year has been established before the date of the discharge or suspension, the deletion takes effect beginning with the week of the disqualification.

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.

Scope. Sections B and C of this regulation apply to unemployment insurance tax preparers who file on behalf of 100 or more employing units.

An unemployment insurance tax preparer shall file the information required in Regulations .11 and .12 of this chapter by mail or electronic means.

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.

“Professional employer organization” means an employing unit which places all or part of a client company's workers on its payroll or payrolls and, by written agreement, assigns or leases the workers to the client company.

“Professional employer organization” does not mean a temporary help firm within the meaning of this subtitle.

A professional employer organization is subject to all of the rights and obligations of employing units under the Unemployment Insurance Law.

Acquisitions.

Notification.

Annual Report.