Division of Labor and Industry


Employee or Independent Contractor? - The Maryland Guide to Wage Payment and Employment Standards


Maryland wage and employment laws do not apply to "Independent Contractors".

The question of who is an employee and who is an independent contractor is important and often complex. Moreover, the financial consequences in making this determination are significant for both workers and employers. For workers, these consequences include entitlements to minimum wage and overtime pay, unemployment benefits, workers' compensation benefits, Social Security employer contributions, federal and state tax withholdings, protections against illegal employment discrimination, etc. At stake for employers are the financial and legal obligations in complying with these federal and state requirements.

For individuals in landscaping and construction, please refer to the Workplace Fraud Act.

For all other individuals, a signed agreement declaring that a worker is an independent contractor is not, by itself, enough to establish the fact. The "economic reality" of the work relationship determines the worker's status. Thus, if two individuals in fact stand in the relation of employer and employee to each other, it is irrelevant that the worker has agreed to be called an independent contractor. The measurement, method, or designation of compensation is also of lesser importance, if the relationship of employer and employee in fact exists.

Many government agencies have their own criteria for making the employee versus independent contractor distinction. These criteria often are established under separate laws.