March 11, 2025 | JacobiJournal.com — A Maryland state task force has revealed that worker misclassification is costing insurers over $58 million annually in workers’ compensation premiums, while leaving thousands of workers without injury protection.
The Joint Enforcement Task Force on Workplace Fraud reported that over 5,500 workers were misclassified as independent contractors in 2024. However, a separate analysis by The Century Foundation estimated 23,700 construction workers — or 11% of the state’s construction workforce — were misclassified.
Impact on Businesses and Workers
The report warned that misclassification:
- Deprives workers of proper workers’ compensation coverage.
- Allows unlawful businesses to cut costs, undermining fair competition.
- Hurts insurers by avoiding premium payments.
“Misclassifying workers is unacceptable and must be addressed,” said Maryland Comptroller Brooke Lierman.
Holding General Contractors Accountable
The task force recommended:
- Holding general contractors accountable for misclassifications by their subcontractors.
- Creating procurement incentives for businesses that comply with employment laws.
Currently, general contractors have little incentive to enforce compliance, allowing fraudulent payroll practices to continue.
Broader Implications
Worker Misclassification has long been a concern for insurers, labor unions, and legitimate contractors, who face unfair competition from non-compliant businesses.
The task force called for stronger enforcement to protect workers’ rights and ensure proper workers’ compensation coverage.
Source: Maryland.gov
FAQs: Worker Misclassification Maryland
How much does worker misclassification cost Maryland each year?
Worker misclassification Maryland losses are estimated at $59 million annually in unpaid workers’ compensation premiums.
Why is worker misclassification a problem for contractors?
It allows non-compliant contractors to undercut legitimate businesses by avoiding workers’ compensation costs.
What steps are being taken to address worker misclassification cases?
A state task force has recommended holding general contractors accountable and creating incentives for compliance.
How does worker misclassification affect workers?
It leaves thousands without proper workers’ compensation coverage and undermines workplace protections.
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