A Maryland independent contractor agreement is established between a contractor and a client or company. It outlines the scope, obligations, guidelines, and deadlines of the work performed by the contractor.
- Worker Classification: ABC Test
- Tax Structure: Graduated-Rate Income Tax
- Definition: § 8-205
- At-Will Employment: Yes
Independent Contractor Definition
Maryland law defines an employee as any individual who performs service for or is controlled by a provider of remuneration or wages [1] .
The Maryland unemployment insurance law typically excludes certain workers from the definition of covered employee, such as messenger service drivers, barbers and cosmetologists, owner-operators, and taxicab drivers [2] .
Worker Classification Test
Maryland uses the ABC test for worker classification. Under this test, a worker is presumed to be an employee unless [3] :
- The worker is free from control and direction.
- The worker runs an independent business that is of the same nature as the services provided.
- The worker works outside the place(s) of business of the alleged employer.
Rights and Responsibilities
Maryland employment laws do not apply to independent contractors. This means that independent contractors don’t have specific rights, unlike employees.
State Taxes
Maryland does not explicitly define the term employee for the purposes of income tax withholding [4] . The state may follow the Internal Revenue Service’s 20-factor test to determine worker status. The 20 factors are sorted into three general categories, as follows [5] :
- Behavioral control factors include whether the worker can hire, supervise, or pay their own assistants and whether the alleged employer has control over how, where, and when the worker should do the work.
- Financial control factors include who provided the tools and materials, whether the alleged employer pays the worker by hour, week, or month, and whether the worker can make a profit or suffer a loss from performing the services.
- Relationship factors include whether the worker can perform services for multiple unrelated companies and whether the worker performs services that are integral or essential to the operation of the alleged employer’s company.
Filing for Unemployment
During the pandemic, the CARES Act provided benefits to Maryland residents not traditionally eligible for unemployment insurance, including freelancers and independent contractors.
However, the CARES Act has already expired. This means independent contractors can no longer file for unemployment in Maryland.
Compensation for Work Injuries
When determining worker status for the purposes of worker’s compensation, courts use the right-to-control test. According to this test, an independent contractor is someone who contracts to perform a specific task or service for another according to his own methods or means, free from the direction and control of the alleged employer.
Sample
You can download a free independent contractor agreement template for Maryland below in PDF or Word format:
