Business and Labor Practices Flashcards

A licensed MHIC contractor pays workers a fixed daily rate, supplies all equipment, and directs not only the final result but also the specific sequence and methods of each task. The workers also perform occasional jobs for other contractors. Under Maryland's worker classification analysis, which factor MOST strongly establishes an employment relationship rather than an independent contractor arrangement?

Answer: The contractor controls the manner and method by which the work is performed, not merely the end result

Maryland's worker classification analysis — applied for workers' compensation and wage/hour purposes — centers on the right to control not just the result but the manner and method of work. When a contractor dictates how, when, and in what sequence tasks are done, that control is the hallmark of an employment relationship. Supplying tools and paying a flat rate are relevant supporting factors but not the decisive one. Working for multiple principals actually weighs toward independent contractor status, not against it.

A subcontractor finishes installing flooring on a Maryland residential project on April 10 and is never paid by the general contractor. Under Maryland's mechanic's lien law, which of the following correctly states the subcontractor's notice obligation to preserve lien rights against the property owner?

Answer: The subcontractor must serve written notice on the owner within 120 days of the date work was last furnished, before filing any lien

Under Maryland Real Property Article §9-104, a subcontractor or materialman must serve written notice on the owner within 120 days of the date work was last furnished — this is a prerequisite to enforcing a lien against the property. The 180-day deadline applies to filing (establishing) the actual lien petition in circuit court and is a separate, later step. Skipping the 120-day owner notice forfeits lien rights even if the petition is filed within 180 days. Subcontractors do have lien rights on Maryland residential projects.

A homeowner visits a contractor's licensed showroom, unsolicited, and signs a $22,000 kitchen remodeling contract. Two days later she mails a written cancellation notice. Which of the following correctly describes the legal effect of her cancellation?

Answer: The cancellation is ineffective; the FTC Cooling-Off Rule does not apply to contracts negotiated at the seller's permanent place of business

The FTC Cooling-Off Rule (16 C.F.R. Part 429) grants consumers a 3-business-day right to cancel sales of $25 or more made at their home, workplace, or any location that is NOT the seller's permanent place of business. Because this contract was initiated and signed at the contractor's own licensed showroom — the seller's regular business location — the rule does not apply and the attempted cancellation has no legal effect. The homeowner is bound by the contract.

MHI Solutions LLC holds an active MHIC license, with its president serving as the qualifying party. The president unexpectedly resigns. Under MHICL, what must the company do to remain in compliance?

Answer: Notify the Maryland Home Improvement Commission and designate a new qualifying party within 30 days to avoid license lapse

MHICL requires a licensed business entity to maintain a designated qualifying party — the individual licensee responsible for the company's compliance. When that person leaves, the company must promptly notify the Commission and provide a replacement qualifying party within the required window (30 days). Operating without a current qualifying party is a violation. The Commission does not receive automatic notifications from other state agencies; the licensee bears the duty to report the change directly.

A licensed Maryland home improvement contractor hires a sole proprietor subcontractor who presents no certificate of workers' compensation insurance. The subcontractor is injured on the job. Under Maryland workers' compensation law, which outcome is MOST likely?

Answer: The contractor may be treated as the statutory employer and held responsible for workers' compensation benefits if the subcontractor is uninsured

Maryland's Workers' Compensation Act contains a 'statutory employer' doctrine: when a contractor hires an uninsured subcontractor, the contractor may be deemed the statutory employer of the subcontractor's workers (including a sole proprietor who has not elected coverage). This exposes the contractor to full workers' compensation liability for the injury. The sole proprietor's business status does not automatically insulate the hiring contractor. Best practice is to verify a certificate of insurance before work begins.

A licensed MHIC contractor runs ads promising 'FREE written estimates — no obligation.' Upon arrival, the contractor presents a homeowner with a $95 'site evaluation fee' as a prerequisite to receiving any written quote. The homeowner had not been informed of this fee before the appointment. This scenario MOST directly implicates which legal violation?

Answer: Deceptive trade practice under the Maryland Consumer Protection Act for advertising a service as free while charging for it

Advertising an estimate as 'free' and then charging for it upon arrival — without prior disclosure — is a textbook deceptive trade practice under the Maryland Consumer Protection Act (Com. Law §13-301), which prohibits false or misleading representations about the price or availability of services. While it may also implicate MHICL's prohibition on fraudulent or deceptive conduct, the CPA is the primary and broadest vehicle for enforcement and allows both Commission action and private consumer claims. Subsequent disclosure in the contract does not cure the deceptive advertisement that induced the homeowner to book the appointment.