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Maryland Governor Martin O'Malley signed legislation on May 8 that makes Maryland the first state to pay a "living wage" to employees. This means government contractors must pay their employees significantly better than the minimum wage.

The law requires companies working in the Washington-Baltimore area to pay $11.30 an hour. For those who work in more rural counties, the minimum will be $8.50 an hour.

"Maryland is the first state in the nation with a living wage law," said a statement by the AFL-CIO. "A living wage helps to ensure low-wage workers and their families can live above the poverty level. Since 1994, more than 140 communities have enacted living wage laws which cover a wide range of workers, municipal employees, those working for city and county contractors, health care workers and college and university employees."

Annual adjustments to the living wage rates are based upon annual average increases or decreases. Employers who have 10 or fewer employees and who have a state contract for services valued at less than $500,000 will be exempt from the requirement. Certain wage rate reductions are also provided by the law if employers contribute to an employee's deferred compensation plan or provide health care insurance benefits.

The living wage will apply to employees for the duration of a contract if at least one-half of the employee's time during any work-week relates to a state contract for services or a subcontract for services under a state contract. Employees are not covered who are 17 years of age or younger for the duration of the contract or who work less than 13 consecutive weeks for the duration of the contract and during that period works full time.

The law does not apply to contracts for services needed immediately to prevent or respond to an imminent threat to health or safety; with a nonprofit organization; with a public service company; between units; or between a unit and a county or Baltimore City.

It has been estimated that 50,000 workers could be affected by the bill.

If you have questions about payroll issues or taxes, please contact Tax Specialist Crystal Martin at 717-757-6999 or 800-745-8322 or email Crystal by using the form below.

 


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