New Maryland Legislation to Affect Construction Industry – The Maryland General Assembly recently passed several bills affecting the construction industry during its 2022 session.
By Patrick Kearney
Partner at Selzer Gurvitch
Law Allowing Department of Labor to Stop Public Projects for Prevailing Wage Violations
On April 13, 2022, the Maryland General Assembly passed a new law which permits the Commissioner of Labor and Industry to stop work on a public project where any contractor working on the project fails to pay employees in accordance with Maryland’s prevailing wage laws. The new law (codified at Section 17-221 of the State Finance and Procurement Article) is notable, and met resistance from contractor organizations, because it allows the state to stop an entire project, including the work of contractors that did not violate prevailing wage laws. The law also permits stop work orders based on prevailing wage violations by contractors of any tier, including subcontractors.
The law does include protections to reduce the penal effects of the law on innocent or cooperating contractors. The law requires the state to notify the offending contractor of the basis for the violation, meet with the offending contractor within 48 hours of issuing the stop work order, and to “provide the contractor or subcontractor a reasonable timeframe … to resolve the violation.” If the stop work order is due to a wage violation of a subcontractor, the law also allows the general contractor on the project to terminate the contract of the offending subcontractor without incurring any liability. Although the law does not expressly so provide, it appears the termination of the offending subcontractor’s contract would result in a lifting of the stop work order and allow non-offending contractors to resume work. The law also includes provisions allowing for an appeal and a hearing.
It bears watching how this new law will be used by the Maryland Department of Labor going forward. In recent years, prevailing wage violations are often resolved without a hearing and formal action beyond the initial notice of violation. However, any new administration replacing Governor Larry Hogan may take a different view of responding to prevailing wage violations. The law takes effect on October 1, 2022.
Maryland Electricians Act
This new law, passed on April 11, 2022, makes certain changes to the state’s requirements for obtaining an electrician’s license. First, the law requires the State Board of Electricians to credit a license applicant’s work as part of certain apprenticeships towards the experience required for electrician licenses. Second, the law requires the State Board to waive the examination requirements for certain applicants for a journeyperson electrician license. Finally, the law requires applicants for certain local permits have an electrician’s license to provide electrical services. The law takes effect on July 1, 2022.
Expansion of Prevailing Wage Law to HVAC Service Contracts
On April 9, 2022, the Maryland General Assembly passed a new law requiring HVAC contractors to comply with prevailing wage laws on service contracts in excess of $2,500. Given that many service contracts would likely exceed the $2,500-dollar threshold for application of the law, this legislation could have far-reaching effects for HVAC contractors servicing HVAC systems on public buildings. The Commissioner of Labor and Industry will establish regulations to implement the act which are expected to further refine the scope of the act and what contracts will be covered. The law takes effect on October 1, 2022.
Family and Medical Leave Insurance Program
On April 9, 2022, the Maryland General Assembly passed a new law governing family and medical leave. The law requires employers to provide up to 12 weeks of paid leave based on certain family or medical events including the birth of a new child, military deployment, and serious health conditions of family members of an employee or the employee. Under certain conditions the leave can be extended to 24 weeks.
Payments to employees on leave under the new law will range from $50 to $1000 per week, based on the income of the employee. The law will be funded by contributions of employees and employers with 15 or more employees. Contributions to the fund will begin on October 1, 2023. Employees will be eligible to make a claim for benefits beginning in January 2025. The law also provides for the Maryland Department of Labor to issue regulations implementing the new law. Finally, provisions of the law require “restor[ing] the covered individual to an equivalent position of employment” at the conclusion of leave.
The new law will require construction companies to take steps to ensure compliance and implement a new state-level leave program.
Contractors should seek legal advice on the application of these new laws to their work.