ABC Contends with Bills on Cannabis, Union-Only, and Force Majeure

Ally WetheraldLegislative Alerts

An ABC Maryland Legislative Update
Each Monday from January through the end of the Legislative session in mid-April, ABC’s legislative team, comprised of our lobbyists, members, and staff review, deliberate, and strategize on how to best advance and protect the interests of our members.

The following are bills under consideration by the Maryland General Assembly:

Bill to Criminalize Employee Misclassification Resurfaces
Workplace Fraud and Prevailing Wage – Violations HB 465 SB 436

This bill establishes criminal penalties for employers who “knowingly” fail to properly classify individuals as employees. This same bill was introduced last year and ABC was able to persuade enough legislators to oppose it.

The new legislation severely punishes employers for misclassifying company employees as independent contractors since those types of workers are paid and taxed differently.

Among the many problems with this bill is the frequent lack of clarity in determining whether a contractor meets all the criteria to be legally considered an independent contractor. This is further complicated by the reality that Independent Contractors can be several layers downstream from the general contractor, where they may be on the project for a matter of hours v. days and weeks.

There are already remedies in current law for addressing misclassification, including a $5,000 civil penalty to be paid by the employer for each employee.

This new legislation would pull a contractor into the criminal justice system. And if found guilty, they could be penalized with 60 days in jail as well as the $5,000 fine.

“We have to also acknowledge this bill is being driven by organized labor. Quite simply, the legal use of independent contractors is not part of their model for staffing job sites,” said ABC’s Mike Henderson. “This bill could end the legit practice of a staffing model employed by the overwhelming majority of the industry, simply because it creates competitive challenges for 10 percent of the industry.” Defeating this bill is one of ABC’s top legislative priorities this session.

New Cannabis Legislation Hinders Employer’s Ability to Safe-Guard Employees and Public
(HB 525 SB 513)

This proposed legislation would prohibit an employer from discriminating against an individual because of that person’s use of cannabis products under certain circumstances. Under this bill, an employer would not be allowed to refuse to hire or retire or discriminate based on the fact that an individual consumes legal cannabis.

Given the contractors need to assure the safety of their employees and the public, ABC would like to see clear amendments that would continue to give employers the power they need to enforce policies that prohibit impairment caused by any chemical substance, legal or otherwise, on the job site.

And since many government projects have a zero-tolerance clause in their contracts, ABC is advocating an amendment that would exempt safety-sensitive positions from this new legislation.

One-Size-Fits-All Legislation Would Create New Burdensome Regs for Employers
Employment Standards, Prevailing Wage, and Living Wage – Employer Adverse Actions –
Prohibition HB 136 SB 233 

Under our labor laws, there exists a series of statutes governing how employees are paid. The Maryland Department of Labor believes provisions in some of these statutes fail to protect employees who report violations.

But, instead of crafting new provisions that safeguard the employee in those specific statutes where protection is lacking, this new legislation attempts to create a burdensome uniform mechanism that regulates every statute.

ABC believes that will increase penalties within all of the other acts. Further, the department has not demonstrated any evidence that the current laws as written are not working to protect employees. “It’s a classic example of a solution searching for a problem,” said Henderson. ABC’s position is that this bill conflicts with existing laws and regulations and is completely unnecessary.

ABC Seeks to Amend Bill that Caps Costs Due to “Force Majeure”
Procurement – Construction Contingency Fund and Contract Modification SB 556

This bill would require a procurement contract for construction to include a clause providing for contract modification when there is a substantial increase or decrease in the price of materials required to complete the contract.

The legislation essentially caps contract modifications at 10 percent in instances related to “Acts of God” also called “Force Majeure.” ABC believes that violent acts of nature are so far out of the control of a contractor that the reparation for damages should not be capped.

ABC does, however, support the portion of the bill that allows for price adjustments for material price fluctuations of identified materials.

Climate Control Bill is Really a Union-Only PLA in Disguise
Energy Generation Projects – Labor and Minority Business Enterprise Requirements HB 682/SB

Because of the move to more electrification, more generating stations will be needed to meet the legislature’s climate change goals. HB 862 would require that a union labor agreement cover most of those projects.

ABC is opposed to the entire bill because the project labor agreement is ingrained within. It would force merit shops to become signatories to a union contract. And that would force contractors to hire only from a union hall and prohibit the hiring of the contractor’s own trusted workers.

“The unions comprise less than ten percent of Maryland’s construction workforce,” says Henderson. “While we completely support the union’s right to compete fairly and openly for these or any projects, we are completely opposed to any effort by the legislature to prop up one sector of the market at the expense of the other.”