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SB 938

Conservation Easements

2026 Regular Session Introduced by Stan McClain

SB 938 creates a worker-protection unit in the AG’s office to enforce wage, benefit, and workplace-fraud laws, with stronger penalties and license debarment.

Introduced
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Bill Summary · SB 938

Summary — SB 938: Fraud Prevention and Worker Protections — Prohibitions, Penalties, and Enforcement

Status
- Introduced: January 27–28, 2025 (By Request — Office of the Attorney General / The President)
- Assigned to: Finance Committee
- Hearing scheduled: March 5, 2025, 1:00 p.m.
- Related/companion bills reported: HB 1096, HB 672, HB 2043

Purpose
SB 938 creates a new, centralized enforcement mechanism in state government to prevent workplace fraud and strengthen worker protections. It expands the Attorney General’s civil enforcement authority over wage, benefit, and workplace-fraud violations, tightens the Maryland False Claims Act (MFCA) as it relates to unemployment insurance and prevailing-wage violations, and increases administrative penalties and remedies (including license suspension/revocation and debarment) to deter noncompliance.

Key provisions
- Worker Protection Unit (WPU), Office of the Attorney General (OAG)
- Establishes a staffed WPU (chief counsel, assistant attorneys general, investigators, administrators, etc.) to investigate and bring civil enforcement actions to obtain restitution, injunctions, compensatory/punitive awards, and other relief for workers and the public.
- Grants WPU investigative tools (administrative search warrants, subpoenas, sworn questioning); allows OAG to adopt implementing regulations.
- Anti‑retaliation protections for workers who report or participate in investigations; OAG may sue on behalf of retaliated workers and recover remedies specified in the bill.

  • Maryland False Claims Act (MFCA) changes

    • Narrows certain MFCA “claim” coverage to exclude unrestricted payments made by a governmental entity directly to an individual beneficiary (e.g., income subsidy or compensation).
    • Adds specific prohibitions: knowingly making or using false records/statements that cause underpayment of unemployment insurance (UI) contributions to the Unemployment Insurance Trust Fund (UITF) or payment of UI benefits exceeding $15,000 in a calendar year.
    • Requires the Comptroller to deposit civil penalties/damages related to UI into the UI Fund.
    • When MFCA violations involve failure to pay prevailing wages, recovered penalties/damages must be used to pay restitution directly to affected workers.

  • Wage enforcement expansions

    • OAG may bring actions under the Maryland Wage and Hour Act and Maryland Wage Payment & Collection Law when an employer pays fewer than required wages to 10+ employees or underpayment/unpaid wages total at least $25,000 (with specified civil penalties, liquidated damages, and attorney’s fees).
    • OAG may investigate before filing suit.

  • Workplace Fraud Act and related changes

    • Expands the Workplace Fraud Act beyond construction/landscaping to cover all employers, contractors, subcontractors, and other entities that engage workers in the State.
    • Treats general contractors and higher‑tier contractors as employers for enforcement purposes and revises the test for determining employer/employee status.
    • Prohibits private agreements from waiving workplace fraud protections; certain agreements are not defenses to citations or civil actions.
    • Requires licensing authorities to suspend or revoke licenses for specified workplace fraud violations and strengthens debarment grounds under State procurement law.

Fiscal and economic impact
- Fiscal Note (Department of Legislative Services): initial general fund OAG costs of about $526,300 in FY 2026 for startup; MD Labor expects increased hearing costs and higher special/federal fund expenditures (special fund increase at least $748,600 and federal fund increase ~$295,700 in FY 2026). Ongoing costs and revenues are expected.
- Potential significant increases in general fund and non‑budgeted revenues beginning FY 2026 due to penalties, recovered funds, and improved employer compliance; mandated appropriation begins FY 2027.
- Local effects: potential increases in local income tax revenue.
- Small business: meaningful impacts (increased compliance costs, risk of license action and penalties).

Who is affected
- Employers, contractors, subcontractors, and other entities engaging workers in Maryland (statewide expansion of enforcement coverage).
- Workers — strengthened enforcement remedies and protections against retaliation.
- State agencies: OAG (new unit), Maryland Department of Labor, Workers’ Compensation Commission (assessment impacts), Comptroller.
- Licensing authorities and public procurement processes (debarment/suspension mechanics).

What to watch next
- Committee hearing (Finance) on March 5, 2025 — testimony and amendments may change scope or implementation timelines.
- Budget/appropriation actions for staffing the WPU (mandated appropriation beginning FY 2027).

Compiled from official sources — confirm details with the bill’s official record.

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