New Employers

Covered employment is any service performed for payment, whether full-time or part-time, that creates eligibility for unemployment insurance benefits. This includes paid corporate officers who are employees of the corporation (including close and subchapter S corporations).

When an individual performs a service for an employer in return for wages, the individual is likely covered for unemployment insurance purposes. If an employee is in covered employment, their employer is required to:

1. Have an unemployment insurance employer account assigned by the Division of Unemployment Insurance. Learn how to open an employer account. 
2. Report the employee’s wages to the Maryland Division of Unemployment Insurance. Find out how to report wages. 
3. Pay quarterly unemployment insurance taxes on those wages (or, in the case for some not-for-profit and government entities, reimburse benefits charged to their accounts). Learn how to pay quarterly unemployment insurance taxes or learn about payment plans.

Some work is not considered “covered employment.” The most common exclusion is work as an independent contractor. The criteria for independent contractor status are:

1. The individual who performs the work is free from control and direction over its performance both in fact and under the contract
   AND
2. The individual customarily is engaged in an independent business or occupation of the same nature as that involved in the work
   AND
3. The work is outside of the usual course of business of the person for whom the work is performed, or performed outside of any place of business of the person for whom the work is performed

When independent contractor status is in question, employers must establish that all 3 of the criteria above are satisfied.

Individuals who work in the positions listed below are exempt from covered employment (under Title 8 of the Labor and Employment Article of the Maryland Annotated Code) when specific criteria are met:

• Barbers and beauticians
• Taxicab drivers
• Owner operated tractor drivers in certain E & F classifications
• Maritime employment
• Election workers
• Church employees
• Clergy
• Certain governmental employees
• Railroad employment
• Newspaper delivery
• Insurance sales
• Real estate sales
• Messenger service
• Direct sellers
• Foreign employment
• Other state unemployment insurance programs
• Work-relief and work-training
• Family members
• Hospital patients
• Student nurses or interns
• Yacht salespersons who work for a licensed trader on solely a commission basis
• Services of aliens who are students, scholars, trainees, teachers, etc., who enter the U.S. solely to pursue a full course of study at certain vocational and other non-academic institutions
• Recreational sports officials
• Home workers
• Casual labor

Casual Labor is work that an individual performs that is not in the course of the trade or business of the individual’s employer and which is occasional, incidental or irregular. Do not confuse casual labor with temporary or part-time employment, which is taxable. If the following are true, work is not casual labor and is considered covered employment, which is taxable:

1. The individual receives cash payment of $50 or more during a calendar quarter
2. The work is performed by an individual who is regularly employed by the employer (on some portion of 24 days during the calendar quarter or the preceding calendar quarter)

An agricultural employer is liable to pay unemployment insurance taxes if, during any calendar quarter of the current or preceding year, the employer:

• Paid $20,000 or more to individuals performing agricultural labor
  OR
• Employed 10 or more individuals for a portion of a day in any 20 weeks in the current or preceding calendar year

A domestic employer is a person who has a worker in their home that works part- or full-time. A domestic employer is liable to pay unemployment insurance taxes if during any calendar quarter of the current or preceding calendar year, there is a total payroll of $1,000 or more to an individual(s) performing domestic service. 

A farm crew leader is liable to pay unemployment insuranceI taxes for an individual employed in agricultural work and who does not work for another employer if:

• The crew leader holds a valid certificate of registration under the federal Migrant and Seasonal Agricultural Worker Protection Act
• The crew leader provides mechanized equipment which substantially all the individuals operate or maintain (provided the individuals are not employees of another employer)
  OR
• The individual performs custom poultry work and is not required to be away from their permanent place of residence other than during normal working hours 

Agricultural employers, domestic employers, and farm crew leaders are required to meet Maryland’s unemployment insurance obligations for employers as described on this page.

In advance of a mass layoff, employers must notify the Maryland Department of Labor.

• Employers with advance knowledge of a mass layoff (even temporary) that impacts 25 or more workers must submit a list of affected workers to the Division of Unemployment Insurance by completing the Dislocation Event Form. The list must be submitted at least 48 hours before the beginning of the layoff. If an employer does not have advance knowledge of the layoff, the employer must submit a list of affected workers (ordered alphabetically or by Social Security numbers) to the Division within 48 hours of the commencement of the mass layoff.
• Employers with 50 or 100 or more employees who are anticipating layoffs must comply with Maryland’s Economic Stabilization Act or the federal Worker Adjustment and Retraining Notification (WARN) Act as applicable and provide advance notice to the Dislocation Services Unit.  Learn more about these requirements. 

The Division of Unemployment Insurance recommends you:

• Be available to provide information about issues related to a former employee who filed an unemployment insurance claim, when requested by the Division.
• Participate in appeal hearings that affect a former employee’s eligibility for benefits.
• If you (the employer) fail to participate in an appeal hearing that you requested, it will result in a dismissal, meaning that the determination will stand unchanged.

• If you do not participate in an appeal hearing that the claimant (individual who applied for UI benefits) requested, a decision may be made solely on the claimant’s testimony. Your participation is critical to properly determine the claimant’s eligibility for benefits.

Learn more about appeals. 

The Maryland unemployment insurance law prohibits the Division of Unemployment Insurance of Maryland from publishing or allowing public inspection of information obtained in the

administration of the unemployment insurance program in any manner that reveals the identity of the employer except to public employees in the performance of their public duties. For your protection, the Division requires that you file a power of attorney before it will release confidential tax information to your Agent. The POA will also allow your Agent to act on your behalf to the extent you indicate. The Agent of the Employer/Taxpayer is an individual authorized by the Employer to act on its behalf to establish a Third-Party relationship.

Filing the POA

You must file a photocopy of the signed POA with the Maryland Division of Unemployment Insurance through the Maryland Unemployment Insurance Portal (BEACON) for employers. 

Completing the Form

• Employer/Taxpayer Information: For a corporation, partnership, or association provide the Maryland Unemployment Insurance Employer Account Number, federal employer identification number, employer name, business address, telephone number, and email address.
• Reporting Agent: Enter the Maryland UI Agent Account Number, the name, business address, telephone number, and email address of the Agent you appoint.
• Authorization: Identify the type(s) of authorization for which the power is granted. Your signature on this Form authorizes the Agent you designate (your representative or “attorney-in-fact”) to perform any act you authorize. The authority does not include the power to substitute another representative or the power to receive refund checks.
• Communication Preference: Indicate the way in which you would like to receive information.
• Details: Provide information about the communication preference selected. For example, if you selected U.S. Mail, please provide your mailing address. 
• Revoking a POA: If you want to revoke a previously executed POA and do not want to name a new representative, you must check the option to, “Revoke a previous Power of Attorney authorization”. If you previously filed a POA and you want to revoke it, you may use this form to change your representatives or alter the powers granted to them by filing the form with the Division. The new POA will revoke the earlier one for the same matters and tax periods unless you specifically state otherwise. Submit the new POA through the employerMaryland Unemployment Insurance Portal (BEACON) portal by following the instructions below in the “Submission of Form” section.
• Effective Date of Authorization: The date in which the POA becomes effective.
• End Date of Authorization: The date in which the POA will be terminated, if applicable.

Signature of Employer/Taxpayer/Partner

• For corporations or associations: An officer having authority to bind the Employer/Taxpayer must sign.
• For a partnership: All partners must sign unless one partner is authorized to act in the name of the partnership. Attach additional sheets as necessary. A partner is authorized to act in the name of the partnership if, under state law, the partner has authority to bind the partnership.

Submission of Form

You can submit this form through the Maryland Unemployment Insurance Portal (BEACON) for employers. 

For more information about POA matters, call 410-949-0033, Monday to Friday, 8 a.m. – 4 p.m.  or you can email: DLUITaxEmployerStatus-DLLR@maryland.gov. 

How to upload your POA form intoMaryland Unemployment Insurance Portal (BEACON)

The employer or the agent can upload the completed POA form through the Maryland Unemployment Insurance Portal (BEACON) for employers or for third-party agents. 

Employers

Note: You must have the Agent ID in order to add the Agent as an authorized representative.

Log in to the Maryland Unemployment Insurance Portal (BEACON) for employers. 

1. Select Account Maintenance from the menu options.
2. Select the Agent Assignment Icon and the Agent Assignment page will display.
3. Select the Add Agent tab to enter the Agent’s account number (ID) in the Search Agent field and select the search button. The Agent Employer Relation Details field will populate with the Agent information.
4. Upload the POA document intoMaryland Unemployment Insurance Portal (BEACON). You may select the respective roles to be assigned to the Agent. Enter the Access Begin and Access End dates where appropriate.
5. Once the roles have been assigned you must select the Save button to complete the assignment.
6. Once the assignment is approved by agency staff, the POA status will change to Active, and the Agent will be able to act on the employer’s behalf.

Third-Party Agents

Log in to the Maryland Unemployment Insurance Portal (BEACON) for third-party agents.

1. Select Account Maintenance from the menu options.
2. Select the Maintain POA icon and the scroll down to the Upload POA field.
3. Enter the Employer Account ID and select search.
4. Once the Employer details populate, upload the POA document intoMaryland Unemployment Insurance Portal (BEACON).
5. Once the document has been uploaded, select the Save button to complete the assignment.
6. Once the assignment is approved by agency staff, the POA status will change to Active, and the Agent will be able to act on the employer’s behalf.

SUTA dumping refers to an employer taking unlawful actions to pay at a lower unemployment insurance tax rate than what should be assigned based on the employer’s experience with layoffs and payrolls. Most frequently SUTA dumping involves merger, acquisition, or restructuring schemes, especially those involving the shifting of workforce/payroll from one business entity to another.

Frequently, an employer will acquire a business from a previous owner or the employer will reorganize their business. The effect of various transactions on the employer’s contribution rate are summarized below:

New Employing Unit Acquired Business
When a new business entity is formed and it acquires assets, business, organization, or trade of another employer, the new business entity is classified as a successor employer. If there is any common ownership, management or control between the successor employer and the former employer (predecessor), the predecessor’s tax rate and experience rating is transferred to the successor. If there is no common ownership, management or control with the predecessor employer, no experience rating is transferred and the new business entity is assigned the new account rate.

Common Ownership
There is common ownership, management or control when any person serves in any of the following positions for both the predecessor and successor:

• Sole proprietor (includes spouse, children and parents of sole proprietor)
• Partner of a partnership
• Member of a limited liability company
• Chief Executive Officer
• Chief Financial Officer
• Any corporate officer
• Any shareholder owning, directly or indirectly, more than 50% of a corporation’s stock

When calculating taxable wages in the year of the acquisition, a successor employer that assumed the experience rating of a predecessor should make the calculation for each employee based on wages paid to the employee by both the predecessor and successor. Otherwise, the successor may not compute taxable wages based on wages paid by the predecessor.

Existing Employing Unit Acquired Business
When an existing business entity acquires assets, employees, business, organization, or trade from another employer, the existing business entity is classified as a successor employer. If there is no common ownership, management or control with the predecessor employer, the successor continues to pay contributions at the previously assigned rate from the date of transfer through the next December 31. The successor’s tax rate for the year following the acquisition is a blended rate that includes the predecessor’s experience.  If there is any common ownership, management or control between the successor and the predecessor, the predecessor’s tax rate and experience is transferred to the successor, and the successor’s tax rate beginning the quarter in which the acquisition occurred through the next December 31st, is a blended rate that includes the predecessor’s experience.

When calculating the amount of taxable wages for the quarterly contribution report in the year of the acquisition, a successor employer that assumed the experience rating of a predecessor should make the calculation for each employee based on wages paid to the employee by the predecessor and successor.

An employer acquiring the assets, business, organization, or trade of a predecessor employer is not a successor employer for the purposes of attributing or assigning the rate of contribution if the acquiring employer:

1. Has no common ownership, management, or control with the predecessor employer
   AND
2. Acquires less than 50 percent of the payrolls or employees of the predecessor employer
   AND
3. Acquires less than 50 percent of the assets, business, organization, and trade of the predecessor employer.

When calculating the amount of taxable wages for the quarterly contribution report, a new employer or existing employer which is not classified as a successor employer must compute taxable wages for each employee based on wages that it paid and not on wages paid by any previous employer.

Reorganized Employer
A reorganized employer is an employing unit that alters its legal status, such as changing from a sole proprietor to a corporation, or that changes its trade name or business identity while remaining under any of the same ownership. From the date of the reorganization through the next December 31, the reorganized employer’s contribution rate remains the same as the rate of the employing unit prior to the reorganization.

When calculating the taxable wages (for the quarterly contribution report) in the year of the reorganization, a reorganized employer makes the calculation for each employee based on wages paid to the employee before and after the reorganization.

Out-of-State Transfers
Employers transferring all or part of their business from another state to Maryland may be eligible to transfer their experience rate to Maryland. Contact the Experience Rate Unit at 410-767-2413 for additional information regarding out-of-state transfers.

When calculating the amount of taxable wages for the quarterly contribution report in the year of the transfer from another state, an employer should make the calculation for each employee based on wages paid to the employee before and after the transfer.

Penalties
If an employer knowingly withholds or provides false information related to determining the assignment of a contribution rate, the employer will be assigned the highest contribution rate in the year of the violation and in each of the next 3 years. If the employer is already at the highest tax rate for any year, or if the amount of increase in the employer’s contribution rate would be less than 2% for that year, then a penalty rate of contributions of 2% of taxable wages will be imposed for that year.

Knowingly withholding or providing false information to avoid or reduce any contribution or other required payment is a misdemeanor. On conviction, an employer is subject to imprisonment not exceeding 1 year, a fine not exceeding $10,000, or both.

If an individual (who is not an employer) violates, attempts to violate, or knowingly advises an employer or prospective employer in a manner that causes the employer to withhold or provide false information to avoid or reduce any contribution or other required payment, the individual may be penalized.

Penalties may include:

• A civil penalty of not more than $5,000.
• Conviction of a misdemeanor. On conviction, the person is subject to imprisonment not exceeding 1 year, a fine not exceeding $10,000, or both.

Questions?
For additional information regarding employer rates, contact the Experience Rate Unit at 410-767-2413 or toll free at 1-800-492-5524.