~DLLR DEPARTMENT OF LABOR, LICENSING AND REGULATION

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1 STATE OF MARYLAND OFFICE OF THE SECRETARY 500 NORTH CALVERT ST., SUITE 400 BALTIMORE, MD ~DLLR October 13, 2016 The Honorable Thomas V. "Mike" Miller President of the Senate State House H State Circle Annapolis, Maryland The Honorable Michael E. Busch Speaker of the House State House H State Circle Annapolis, Maryland Dear President Miller and Speaker Busch: I respectfully submit the information requested in the 2016 Joint Chairman's Report regarding minimum wage, prevailing wage and worker classification complaints If you have any questions about this, please do not hesitate to contact me. You may also contact Thomas Meighen, Commissioner of the Division of Labor and Industry, at or Thomas.Meighen@maryland.gov. Best Regards, ~'*11~ Kelly M. Schulz Secretary KMS/jt cc: Chris Shank, Chief Legislative Officer, Office of the Governor Jeff Tosi, Director of Legislative and Regulatory Affairs, DLLR Thomas Meighen, Commissioner, Division of Labor and Industry, DLLR PHON E: jeff.tosi@maryland.gov INTERNET: LARRY H OGAN, GOVERNOR BOYD K. RUTHERFORD, LT. GOVERNOR KELLY M. SCHULZ, SECRETARY

2 Introduction The Joint Chairmen's Report (JCR) has requested that the Maryland Department of Labor provide the Committees with the following information: 1. the number of minimum wage, prevailing wage, and worker classification complaints; 2. the demography of complainants and; 3. enforcement measures or actions taken for misclassifications and wage complaints, including wages recovered. In addition, the JCR requested that the Department report on the actions that the Department has taken to protect workers from misclassifications and underpayment, to inform Maryland employees of their rights, and the number and roles of fulltime stall in facilitating these actions. Data should be provided for fiscal years 2014, 2015, and Background U.nder Governor Hogan's leadership, beginning in September 2015, the Division of Labor and Industry within the Maryland Department of Labor began a comprehensive outreach program across the State in order to foster better coalitions with our business partners throughout the State. At each of these events, Division stall provide employers with an overview of the current laws and how to remain in compliance, and contact information should they have questions. As a result these units have seen a significant increase in employer cooperation in resolving disputes over previous fiscal years. Additionally, posters are to be hanging in every company advising them of them of the current minimum wage and their rights as an employee. The information requested in the Joint Chairmen's Report covers three separate units, all of which fall under the Division of Labor and Industry. Each unit enforces the law a little differently, because different factors come into play. Prevailing Wage The Prevailing Wage Unit is responsible for enforcing the State's Prevailing Wage law. Violations are the result of site checks, reviews of certified payroll records, or referrals from other units or agencies. There is a pre-construction conference prior to the start of any prevailing wage project. Following the conference, Prevailing Wage Unit staff will spot check to make sure the proper rates are being paid to workers, and, at the end of construction a "close out" is also conducted for a final evaluation. Total Prevailing Wage Projects (Per Fiscal Year) 2014: : 1, : 1,833 Total Wages Collected (Per Fiscal Year) 2014: $756, : $161, : $499, 140 Complaints (Per Fiscal Year) 2014: : : 32 There is no way to delineate the amount of wages collected independent of investigations and complaints. Making the required changes to the systems collecting this data would require a significant financial investment, and would best be done in conjunction with other future changes.

3 Prevailing Wage Staff The Prevailing Wage Unit is staffed by eight full-time staff: Three office staff: Program Manager, Program Administrator, Administrative Assistant. Five Investigators: conduct jobsite meetings, survey reviews and investigations. Prevailing Wage Demographics The Prevailing Wage unit collects the following information regarding Prevailing Wage complainants: the name and address of the complainant, the name and address of the employer, and the address of the work site where work is being performed. The Unit does not collect demographic information beyond this information. Adding certain demographic information would require changes to the Prevailing Wage system. Since this system is antiquated and the Department does not have in-house IT personnel to perform these upgrades, the cost associated with performing these system upgrades is substantial. Minimum Wage The Employment Standards Service (ESS) unit is mostly complaint driven. However, ESS will also conduct random compliance reviews with employers. In addition, prior to FY 16 there was little effort to conduct outreach - one or two events per year. During FY 16, ESS stepped up outreach efforts by participating in a total of eight outreach events. With the increase of opportunities around Maryland and inquiries from organizations, this number will grow. Minimum wage complaints are handled by the ESS Wage and Hour Unit. This Unit does not delineate a claim by "minimum wage". Rather, ESS has three categories: "Wage and Hour" (underpayment of wages), "Wage Payment" (unpaid wages), or "Both." For the purposes of this report, the total number of Wage and Hour complaints is listed below. This also includes other complaints, such as failure to pay overtime. Wage and Hour Complaints (Per Fiscal Year) 2014: : : 162 Monies Collected (Per Fiscal Year) 2014: $63, : $97, : $57, ESS Wage and Hour Unit collects some demographic information, however, this information is not collected for every complaint as this information is not required to complete the complaint form. Because of this, the numbers do not match the totals reflected in the below chart. Complainants by Gender (Per Fiscal Year) Year Male Female Unknown

4 Complainants by Ethnicity Per Fiscal Year Hispanic African Caucasian Other Asian American Indian or Native Hawaiian or other Unknown American Alaska Native. Pacific Island Complainants By County Per Fiscal Year Name Allegany County Anne Arundel County Baltimore City Baltimore County Calvert County Caroline County Carroll County Cecil County Charles County Dorchester County Frederick County Garrett County Harford County Howard County Kent County Montgomery County Prince George's County Queen Anne's County St Mary's County Somerset County Talbot County Washington County Wicomico County Worcester County Out of State Total

5 Wage and Hour Unit Staff The Employment Standards Service (ESS) Unit has eleven full-time staff: Three office staff: Program Manager, Program Administrator, Administrative Assistant. Eight Investigators: work both in the field and in the office to research and to make determinations on complaints. Wage and Hour Unit - Prevailing Wage Demographic Data Similar to Prevailing Wage, although some demographic information is collected, we do not collect demographic information for every complaint. In order to begin doing this, the minimum wage IT system would require similar upgrades at significant cost. Wage and Hour Unit Enforcement On the written request of an employee, the Commissioner may (1) take an assignment in trust for the employee; (2) ask the Attorney General to bring action on behalf of the employee which could result in an additional amount equal to the difference the wage paid to the employee and the wage required as liquidated damages; and reasonable counsel fees and other costs. Worker Classification Under Maryland's Workplace Fraud Act, workers in the construction and landscaping industries are presumed to be employees of the person or business for whom they perform services. Because of this, the vast majority of co"mplaints received fall within these two industries. The Worker Classification Protection Unit (WCPU) is not necessarily a complaint driven unit. Violations are primarily identified by investigators who work in the field and spot check ongoing projects. Educational efforts are essential to the success of this unit. Educational and outreach efforts includes, but are not limited to, outreach events around the State, information provided on the DLLR website, and participation in Prevailing Wage pre-construction conferences. During FY 2016, this unit participated in three outreach events and that number continues to grow via new opportunities and inquiries from Maryland employers who want to learn more so they remain compliant. Number of Complaints Per Fiscal Year 2014: : : 97 WCPU Staff The WCPU is staffed by eight full-time staff: Four office staff: Program Manager, Program Administrator, Two Administrative Assistants. Three Investigators: work both in the field and in the office to research and to make determinations on complaints. One analyst for the entire unit to assist with background research and collections. WCPU Demographic Data Unlike prevailing wage and wage and hour complaints, the overwhelming majority of Worker Classification complaints are submitted by entities or individuals representing a "third party." Demographic information is not part of the information collected in the process of submitting a complaint (whether it is filed by the worker, or a third party on behalf of a worker or workers). WCPU Enforcement When misclassification of workers is found by an employer the Commissioner has the authority to issue a citation in the amount of up to $1, for every employee on an employer's first offense. If an employer is found to still not be classifying their employees correctly an employer can receive a citation for up to $5, per employee for the 2nd offense and up to $20, per employee for the 3rd and subsequent violations. The information requested to file a complaint itself pertains to the identity of the business/possible employer and the

6 business entity or person's contact information including, address and phone number, if that information is known to the complainant. The WCPU also asks for the type of business (construction, landscaping or other) and the location of the site where the business is performing work.