Extension of Deadline - Reporting Requirement

Maryland lawmakers have pushed back the October 15 deadline for companies to send in records that the state plans to use in a study of Maryland’s corporate income tax structure. The new deadline is November 30, 2008. Under the revised reporting requirement (pursuant to the passage of Senate Bill 444), corporations that are members of a larger corporate group are required to file with the Comptroller certain specified information, including (but not limited to) information on the State income tax impacts of a single sales factor, and income apportioned to other states that might otherwise be taxed by the State. Hefty fines remain in place for late filing of this information - $5,000 per day for the first 30 days and $10,000 per day thereafter.

Election Day Reminder to Employers

The election is only a few short weeks away. Remember that under Maryland law, an employee is allowed up to two hours to vote during his/her work day if the polls aren’t open two consecutive hours outside the employee’s regular shift. The time off is paid with proof that the employee voted. (Md. Code Ann. Section 10-315) If the polls are open for two consecutive hours outside an employee’s regular shift, an employer is not required to permit an employee to leave to vote on Election Day. Furthermore, if an employer permits an employee to leave to vote under these circumstances, that employer does not have to pay the employee for the time missed from work by the employee to vote.

Maryland: State Will Offer Health Insurance Subsidies to Small Employers

The Working Families and Small Business Health Coverage Act, which took effect on July 1, 2008, establishes a Small Employer Health Benefit Plan Premium Subsidy Program (the “Program”) for small employers not currently offering health insurance to their employees. The purpose of the Program is threefold: (i) to provide incentives to employers with 2-9 employees to offer their employees health insurance; (ii) to assist low to moderate income employees of these small employers in securing health insurance; and (iii) to promote access to health care services and reward participating individuals for efforts to improve their health and/or manage chronic disease.

Under the Program, a small business that has 2 to 9 full-time employees, has not offered health insurance to its employees during the previous 12 months, and meets the Maryland Health Care Commission’s wage requirements, is eligible to receive a subsidy of up to 50% of the cost of insurance premiums. Family coverage can also be subsidized. Once enrolled in the Program, most businesses will be eligible for the subsidy in following years. To receive the premium subsidy, the employer must establish a Internal Revenue Code Section 125 premium conversion plan (Section 125 allows eligible employees to pay for certain fringe benefits that are sponsored by their employer with pre-tax dollars) and must also purchase a wellness benefit as part of the health plan. The subsidy goes both to the employer and to the employee. Enrollment will be capped to stay within the Program’s approved annual budget.

To be eligible, businesses must meet the following eligibility requirements:

• The business has at least 2 and no more than 9 full-time employees. Full-time is defined as any individual who is not a temporary, seasonal, or substitute employee and works 30 hours or more per week. Owners and partners working more than 30 hours per week at the business count as full-time employees.
• The business has not offered insurance to its employees in the most recent 12 months.
• The average wage of the full-time employees is below $50,000.

Eligibility Requirements for the Employee

Any full-time employee who obtains health insurance through an eligible small employer’s plan may receive a subsidy toward the cost of employee-only coverage. A full-time employee seeking an additional subsidy for dependent coverage (spouse and/or children) must have a family income of less than $75,000. Part-time, temporary, and seasonal employees do not qualify for a subsidy.

Additional details about the plan’s eligibility requirements, the amount of premium subsidies, and the application process can be found at:

http://www.dhmh.state.md.us/workingfamilies/index.html

Statutory Provisions May Affect Open-Ended Contracts

In Maryland, open-ended contracts may be affected by statutory provisions enacted after the contracts were executed. An open-ended contract is a contract that does not provide a specific date of expiration by its own terms, but will terminate only after either or both parties end the contract. In a recent Maryland case, a supplier and a dealer entered into an open-ended contract in 1984, which provided that the contract could be terminated with 120 days notice. In 1998, Maryland enacted the Maryland Equipment Dealer Act, prohibiting a supplier from terminating a dealer contract without good cause. The supplier subsequently attempted to terminate the open-ended agreement by providing notice of 120 days, as stated in the contract; however, the Maryland Court found that the supplier could only terminate for good cause because of the Maryland Equipment Dealer Act. The Court found that parties are presumed to know the law when entering into contracts and because the contract at issue had a 120 day notice provision, the open-ended contract renewed every 120 days. Therefore, upon the renewal of the contract, the new statutory provision was incorporated. Thus, companies entering into any open-ended contract must be aware of any statutory changes affecting the terms of the contract. If you have any questions, please contact Michael W. Siri at siri@bowie-jensen.com.