Code of Maryland Regulations › Title 09 - MARYLAND DEPARTMENT OF LABOR › Subtitle 12 - DIVISION OF LABOR AND INDUSTRY › Chapter 09.12.40 - Workplace Fraud › Section 09.12.40.06 - Construction Illustrations

Current through Register Vol. 51, No. 14, July 12, 2024
A. The
				illustrations in this regulation provide guidance under the Workplace Fraud Act
				only and do not apply to any other State or federal law.
B. The illustrations in §§C-J of
				this regulation provide guidance for the construction services industry in the
				application of Labor and Employment Article, §
									3-903(c),
				Annotated Code of Maryland.
C. John
				Brown has an oral agreement with ACE Building Company (ACE) to do carpentry
				work on houses in a development designated by ACE. John Brown supplies his own
				hand tools. ACE supplies the material for each job. He has to do the work
				himself and he works on a full time basis for the company. For some work he is
				paid on a piecework basis and for some work he is paid on an hourly basis. He
				does not have assistants, does not have an office, and does not advertise in
				newspapers or otherwise hold himself out to the public as being in the
				carpentry business. ACE can fire him any time before he finishes a job without
				contractual liability. John Brown is an employee of ACE.
D. HVAC, Inc. (HVAC) is the mechanical
				subcontractor on a large hospital construction contract. There is so much work
				to perform that HVAC contracts with two other companies, Air Supply, Inc. (Air
				Supply) and Kool and the Gang, Inc. (Kool), to assist with the work. Air Supply
				and Kool each have their own employees. HVAC retains some supervisory control
				over the employees of the other companies to make sure that the job is being
				done to the specifications of the overall mechanical contract. Air Supply and
				Kool exercise supervision over the installation methods of their respective
				workforces. Even though the two subcontractors are in the same business as HVAC
				and they perform the same type of work at the same location as HVAC, there is
				no employer-employee relationship between the contracting companies, and there
				is no employee-employer relationship between the subcontractors' employees and
				HVAC.
E. Sarah Green is a painting
				subcontractor who has contracted with XYZ General Contracting, Inc. (XYZ) to
				paint 264 houses. She hired 40 painters to do the work for her, although only
				about 15 are on the job at any one time. She supplies all the paint, brushes,
				and ladders. She designates the house to be painted and either pays the
				painters per house or by the hour. Detailed instructions about the work are not
				necessary because of the painters' skill in their trade. Sarah Green inspects
				the work and requires them to repaint any unsatisfactory work. The painters
				cannot engage helpers without her consent. She can discharge them for any
				reason, and they are free to resign at any time. The painters assume no
				business risks and have no capital investment. None of them has an established
				business. The painters are employees of Sarah Green, not XYZ, and Sarah Green
				is an independent contractor, not an employee of XYZ.
F. Milton Manning, an experienced tile and
				terrazzo journeyman, orally agreed with MEGA, Inc. (MEGA) to perform full-time
				services at construction sites. He uses his own tools and performs services in
				the order designated by MEGA and according to its specifications. MEGA supplies
				all materials, makes frequent inspections of his work, pays him on a piecework
				basis, and carries workers' compensation insurance on him. He does not have a
				place of business or hold himself out to perform similar services for others.
				Either party can end the services at any time. Milton Manning is an employee of
				MEGA.
G. Wallace Black agreed with
				the Sawdust Company (Sawdust) to supply the construction labor for a group of
				houses. The company agreed to pay all construction costs. However, Wallace
				Black supplies all the tools and the equipment. He performs personal services
				as a carpenter and mechanic for an hourly wage. He also acts as superintendent
				and foreman, and engages other individuals to assist him. Sawdust has the right
				to select, approve, or discharge any helper. A company representative makes
				frequent inspections of the construction site. When a house is finished,
				Wallace Black is paid a certain percentage of its costs. He is not responsible
				for faults, defects of construction, or wasteful operation. At the end of each
				week, he presents the company with a statement of the amount he has spent,
				including the payroll. Sawdust gives him a check for that amount from which he
				pays the assistants, two of whom are day laborers although he is not personally
				liable for their wages. Wallace Black and all of his assistants are employees
				of Sawdust.
H. Trisha Gold;
				Pristine; Painters.
(1) Trisha Gold is a
				painting contractor who has been subcontracted by Pristine Construction, Inc.
				(Pristine), the general contractor responsible for painting 20 individual
				cottages. Prior to entering the contract, Pristine seeks and obtains proof from
				Trisha Gold of payroll withholdings, payment of unemployment insurance and
				workers' compensation with respect to Trisha Gold's employees. Pristine also
				provides Trisha Gold with a written notice of her status as an independent
				contractor and the rights and obligations pursuant to that status. Per the
				terms of their written contract, Trisha Gold is to complete ten
				cottages.
(2) Trisha Gold hires
				Painters, LLC (Painters) to assist in the completion of this contract. Painters
				is responsible for delivery of five completed cottages. In order to ensure that
				the cottages are completed with matching colors, Pristine provides all of the
				paint. However, Trisha Gold and Painters each provide their own ladders and
				brushes. Painters work under Trisha Gold's direction and control and she sets
				the work hours for the job. Trisha Gold inspects Painters' work to ensure
				satisfactory performance and she is responsible for paying for any repairs for
				inadequate work. Trisha Gold is an independent contractor of Pristine.
				Painters' workers are employees of Trisha Gold. Painters and their workers are
				not employees of Pristine.