labor lawAdivision of labor law center

One topic that we haven’t covered so far in this debate on unemployment insurance here at this blog is what happens when you are a big employer, and have employees in multiple states. We can use the example of the Maryland unemployment insurance system to demonstrate what happens in such cases.

In the state of Maryland, the labor laws on unemployment insurance in the state require that employers report all earnings by their employees who perform services in the state of Maryland under certain conditions. Those conditions are that:

The service definitely has to be what is called “localized,” or performed in and for, clients, customers, accounts, etc., in the state of Maryland. Another condition is determined by whether or not the base of your operations is actually Maryland or not.

If Maryland is the base of operations, and some service of your employees has been performed in that base of operations, then those earnings have to be reported to the Maryland unemployment insurance system. If however, no services were performed in Maryland (your base of operations), and some of the service was performed in another state where those employees also received their direction and orders from supervisors, then those wages are to be reported in that state where the directions and orders were given.

If on the other hand, a third scenario emerges where no services were performed in Maryland (the base of operations) as well as no services performed in the state were direction and control comes from, then the wages must be reported to the state that the worker claims residency in.

The way this system is set up guarantees that wages for one employee are reported in one state. So you could have 16,000 employees, but each one would have their wages reported only in one state for a given pay period.

Unemployment insurance is precisely that, insurance, and it belongs to the claimant who meets the terms and conditions of the Maryland Unemployment Insurance Law. As stated on the Maryland Unemployment Insurance posters, unemployment insurance is for workers who lose their jobs through no fault of their own. It is as logical and sensible as insurance which protects a person against the hazards of daily living.

The UI Program is financed by the Federal Unemployment Tax Act (FUTA) and must adhere to broad Federal guidelines.

Administrative funds are distributed to States based on each State’s claimload. The Maryland UI Program is administered by the Department of Labor, Licensing and Regulation. Funds are deposited to the Maryland Unemployment Insurance Trust Fund which is not part of Maryland General Revenues or any other State fund. The UI Trust Fund is used for the sole purpose of paying benefits to the unemployed.

As an employee will learn by reading the Maryland Unemployment Insurance posters, it is unlawful for an employer to require an employee to release, repay, pay into, or waive any unemployment insurance benefit rights, for any reason. An employer may be prosecuted for doing so.

As an employer, you will need to complete a Combined Registration Application within 20 days after the business begins operation. The Division of Unemployment Insurance uses the application to determine if you are liable for Maryland unemployment insurance taxes. If you are liable, an unemployment insurance account number is established.

Maryland Unemployment Insurance posters should be posted in an area in the workplace where they can be easily seen by employees. No other insurance program, public or private, so effectively safeguards the income of the worker and the economic stability of the community.