Maryland Workers' Compensation for Payroll Departments
Maryland Workers' Compensation: Payroll Department Guide
At A Glance
- Maryland generally requires employers with one or more employees to provide workers' compensation coverage unless a specific statutory exception applies
- Employers generally satisfy their workers' compensation obligations by obtaining coverage from an authorized insurance carrier or qualifying for approved self-insurance
- The employer is generally responsible for the cost of workers' compensation insurance and may not deduct the cost of the premium from covered employees' wages
- Part-time, seasonal, temporary, and other employees may be covered depending on the employment relationship and applicable Maryland requirements
- A Form 1099 does not by itself establish that a worker is an independent contractor for workers' compensation purposes
- Employees should report workplace injuries to their employers as soon as possible
- Employers generally must file a First Report of Injury with the Maryland Workers' Compensation Commission when an accidental injury results in more than three days of disability, subject to applicable requirements
- Payroll departments play an important role in providing wage and employment information used in workers' compensation claims and benefit calculations
- Maryland workers' compensation benefits can include temporary total disability, temporary partial disability, permanent disability, medical benefits, vocational rehabilitation, and death benefits
- Payroll should accurately track wages, hours, paid leave, salary continuation, modified-duty earnings, and post-injury compensation
- Maryland workers' compensation claims are administered through the Maryland Workers' Compensation Commission, insurance carriers, self-insured employers, and claims administrators
Compliance Overview
Maryland workers' compensation compliance requires employers to determine which workers are covered, maintain required insurance or an approved self-insurance arrangement, report qualifying workplace injuries, maintain accurate employment and payroll records, and cooperate with insurers and the Maryland Workers' Compensation Commission. Payroll departments are particularly important because wage and employment information can affect workers' compensation benefits and claim administration.
Payroll should establish procedures for promptly providing accurate employee information when a workplace injury occurs. These procedures should address employment dates, job classification, regular wages, overtime, bonuses, commissions, hours worked, paid leave, salary continuation, and post-injury earnings.
Employer Requirements
- Determine whether the business is required to maintain Maryland workers' compensation coverage
- Maintain workers' compensation insurance through an authorized carrier or maintain approved self-insurance when applicable
- Maintain current insurance carrier and claims administrator information
- Provide required workers' compensation information and notices to employees
- Maintain required workers' compensation records
- Establish procedures for reporting workplace injuries
- Cooperate with the Maryland Workers' Compensation Commission, insurance carrier, and claims administrator
- Provide accurate payroll and employment information when requested
- Maintain documentation supporting workers' compensation claims
- Review workers' compensation procedures when business operations, locations, classifications, or workforce arrangements change
Coverage Requirements
Maryland generally requires every employer with one or more employees to provide workers' compensation coverage, subject to statutory exceptions. Employers should review the applicable Maryland requirements before determining that a particular worker or business activity is excluded from coverage.
- Review whether the employer is subject to Maryland workers' compensation requirements
- Determine whether employees are covered under the employer's workers' compensation policy
- Review statutory exclusions before excluding an individual from coverage
- Review the status of corporate officers and business owners
- Review LLC member and manager status when applicable
- Review sole proprietor and partner status
- Review independent contractor classifications carefully
- Review workers supplied through subcontractors or staffing arrangements
- Confirm that employees working in Maryland are properly covered when required
- Review workers' compensation requirements when employees work in multiple states
Injury Reporting
Employees should report workplace injuries to their employer as soon as possible. Payroll should have a procedure for directing injury information to HR, management, safety personnel, or the designated workers' compensation contact.
- Establish a procedure for promptly escalating reported workplace injuries
- Record the date and time an employee reports an injury
- Provide accurate employee and payroll information to the insurance carrier or claims administrator
- Track time missed from work because of a workplace injury
- Coordinate injury-related payroll information with HR and the claims administrator
- Provide wage information needed for the First Report of Injury and other claim documents when requested
- Maintain documentation supporting information submitted for the claim
- Monitor applicable Maryland reporting requirements for serious or disabling injuries
Payroll Records
Accurate payroll records are an important part of Maryland workers' compensation administration. Payroll should maintain sufficient information to document an employee's wages, hours, employment status, job classification, and compensation before and after a workplace injury.
- Maintain complete payroll and hours-worked records
- Maintain accurate regular wage and salary information
- Track overtime earnings
- Track bonuses and commissions
- Track other compensation that may be relevant to a workers' compensation claim
- Maintain records of wage and compensation changes
- Maintain employee hire and termination dates
- Maintain accurate job classifications and work locations
- Track pre-injury wages and hours
- Track post-injury wages and hours
- Track salary continuation and employer-paid compensation
- Track vacation, sick leave, PTO, and other paid leave used during a claim
- Maintain records supporting payroll information submitted to the insurer or claims administrator
- Maintain records needed for workers' compensation premium audits
Benefit Calculations
Maryland workers' compensation benefits vary depending on the type of benefit, the employee's average weekly wage, the degree and duration of disability, the nature of the injury, and other statutory requirements. Payroll generally does not determine the final benefit amount, but accurate payroll information can be critical to the calculation.
- Average Weekly Wage: Maryland workers' compensation benefits generally depend on the employee's average weekly wage and the applicable statutory formula
- Temporary Total Disability: An employee who is unable to work because of a compensable workplace injury may qualify for temporary total disability benefits
- Temporary Partial Disability: An employee who returns to work but experiences a qualifying reduction in wage-earning capacity may qualify for temporary partial disability benefits
- Permanent Partial Disability: Qualifying employees may receive permanent partial disability benefits based on the nature and extent of the compensable injury
- Permanent Total Disability: Employees who satisfy Maryland's requirements for permanent total disability may qualify for permanent total disability benefits
- Serious Disability Benefits: Maryland provides special benefit rules for qualifying serious disabilities
- Death Benefits: Eligible dependents may receive workers' compensation benefits following a compensable work-related death
- Medical Benefits: Workers' compensation can provide medical treatment related to compensable workplace injuries and conditions
- Vocational Rehabilitation: Qualifying injured workers may receive vocational rehabilitation services when appropriate
- Waiting Period: Maryland workers' compensation disability benefits are subject to applicable statutory waiting-period requirements
Medical Care
The employer and workers' compensation insurer are generally responsible for payment of medical care and treatment related to a compensable workplace injury. Payroll generally does not administer medical treatment, but medical restrictions can directly affect payroll because they may change an employee's work status, hours, duties, and earnings.
- Coordinate medical restrictions with HR and the workers' compensation claims administrator
- Accurately document changes in work status resulting from medical restrictions
- Track hours missed because of medical restrictions
- Track wages paid while an employee is receiving medical treatment
- Track modified-duty earnings when applicable
- Maintain appropriate confidentiality of employee medical and workers' compensation information
- Provide updated wage information when requested by the claims administrator
Modified Duty
An injured Maryland employee may return to work with restrictions rather than immediately returning to the employee's regular position. Payroll should accurately record the employee's modified schedule, hours, duties, pay, and other compensation.
- Track modified-duty hours
- Track reduced hours resulting from an injury
- Track modified-duty wages
- Document changes in pay rates
- Document changes in job duties
- Document changes in work schedules
- Coordinate payroll changes with HR and the claims administrator
- Maintain records of post-injury earnings
Return-To-Work
Return-to-work arrangements can change several times during a Maryland workers' compensation claim. An employee may progress from being completely unable to work to restricted work and eventually to regular duties.
- Record the date an employee returns to work
- Track whether the employee returns to regular or modified duty
- Track hours worked following an injury
- Track changes in compensation
- Track overtime following an injury
- Document changes resulting from medical restrictions
- Coordinate return-to-work payroll changes with HR
- Provide updated wage information to the claims administrator when requested
Employee Classifications
Correct employee classification is important for Maryland workers' compensation compliance. Payroll should coordinate with HR and management to ensure that employee classifications, job duties, work locations, and employment statuses are accurately maintained.
- Maintain accurate employee classifications
- Maintain accurate job titles and descriptions
- Maintain accurate work locations
- Review independent contractor classifications
- Review workers supplied through subcontractors
- Review corporate officer and business owner status
- Review LLC member and manager status when applicable
- Review sole proprietor and partner status
- Review employee classifications when duties change
- Review classifications when employees transfer departments or locations
- Review workers' compensation requirements when employees begin working in another state
Difficult Administrative Areas
Maryland workers' compensation administration can become complicated when payroll must coordinate information across multiple systems and departments. The following areas commonly require additional attention.
- Determining the correct wage information when employees receive overtime, bonuses, commissions, or multiple forms of compensation
- Handling employees who work multiple jobs, departments, shifts, or locations
- Tracking modified-duty employees whose hours or earnings change following an injury
- Coordinating workers' compensation payments with paid leave and salary continuation
- Maintaining accurate pre-injury and post-injury earnings
- Responding to detailed payroll information requests from insurers and claims administrators
- Maintaining accurate information for Maryland Workers' Compensation Commission filings
- Managing employees who work in multiple states
- Maintaining accurate subcontractor and independent contractor information
- Protecting confidential medical and payroll information
- Keeping workers' compensation procedures and benefit information current
Common Errors
- Failing to maintain required Maryland workers' compensation coverage
- Incorrectly excluding employees from coverage
- Misclassifying employees as independent contractors
- Failing to report workplace injuries promptly
- Failing to provide required injury information to the insurer or claims administrator
- Providing incomplete or inaccurate wage information
- Failing to track post-injury earnings
- Failing to document modified-duty work
- Failing to coordinate salary continuation and paid leave with the claims administrator
- Using outdated workers' compensation benefit information
- Failing to maintain accurate employee classifications
- Failing to retain supporting payroll records
- Allowing confidential workers' compensation information to be accessed by unauthorized personnel
Recent Court Cases
- Maryland appellate decisions involving workers' compensation can address issues such as compensability, disability, medical causation, claim modification, and the interpretation of Maryland's workers' compensation statutes
- Recent Maryland appellate decisions have addressed the statutory five-year limitation for applications to modify a prior workers' compensation award
- Maryland workers' compensation decisions can affect how employers, insurers, and claims administrators evaluate claims involving disability, medical treatment, employment status, and benefit eligibility
- Payroll departments should coordinate with HR and claims personnel when a court decision affects wage information, employment status, benefit calculations, or return-to-work administration
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Frequently Asked Questions About Maryland Workers' Compensation
- Does Maryland require employers to carry workers' compensation insurance?: Generally, yes. Maryland generally requires employers with one or more employees to provide workers' compensation coverage unless a specific statutory exception applies
- How many employees must a Maryland business have before workers' compensation is required?: Maryland generally requires coverage for employers with one or more employees, subject to applicable statutory exceptions
- Are part-time employees covered by Maryland workers' compensation?: Part-time employees may be covered. Part-time status alone does not necessarily exclude an employee from Maryland workers' compensation coverage
- Are seasonal employees covered by Maryland workers' compensation?: Coverage depends on the employment relationship and applicable statutory requirements. Seasonal status alone should not automatically be treated as an exclusion
- Are independent contractors covered by Maryland workers' compensation?: Worker status depends on the actual employment relationship and applicable Maryland law. A contract, Form 1099, or job title does not by itself determine workers' compensation status
- Can a Maryland employer purchase workers' compensation insurance?: Yes. Employers generally obtain workers' compensation coverage from an insurance company licensed to write workers' compensation insurance in Maryland
- Can a Maryland employer self-insure?: Certain large employers may apply to become self-insured subject to Maryland requirements and approval by the Workers' Compensation Commission
- How quickly should an employee report a workplace injury in Maryland?: Employees should report workplace injuries to their employer as soon as possible
- When must a Maryland employer report a workplace injury?: Maryland generally requires an employer to file a First Report of Injury when an accidental injury results in more than three days of disability, within the applicable reporting period after notice of the accident
- What payroll records are important for a Maryland workers' compensation claim?: Important records can include wages, hours worked, overtime, bonuses, commissions, employment dates, classifications, wage changes, pre-injury earnings, post-injury earnings, modified-duty wages, paid leave, salary continuation, and other compensation relevant to the claim
- How are Maryland workers' compensation benefits calculated?: Benefit calculations depend on the type of benefit, the employee's average weekly wage, disability status, the nature of the injury, and applicable Maryland statutory requirements
- What is the Maryland workers' compensation waiting period?: Maryland disability benefits are subject to statutory waiting-period rules. The applicable waiting period and whether the waiting period is later payable can depend on the duration and nature of the disability
- What happens when an injured Maryland employee returns to work?: An employee may return to regular or modified work depending on medical restrictions and the circumstances of the claim. Payroll should accurately track hours, wages, duties, and compensation changes
- Does Maryland provide workers' compensation medical benefits?: Yes. Workers' compensation can provide medical care and treatment for compensable workplace injuries and conditions
- Does Maryland provide vocational rehabilitation?: Maryland workers' compensation can provide vocational rehabilitation services for qualifying injured workers
- What are common Maryland workers' compensation payroll mistakes?: Common mistakes include inaccurate wage records, delayed injury reporting, improper worker classification, failure to document modified duty, failure to track post-injury earnings, and use of outdated procedures
- Where can employers find official Maryland workers' compensation information?: Employers can obtain official information through the Maryland Workers' Compensation Commission concerning coverage, claims, benefits, reporting, forms, employer responsibilities, and self-insurance
