News & Insights

Construction Law 2014 Legislative Update

By Jason R. Potter

In its 2014 legislative session, the Maryland General Assembly passed a number of laws in a wide variety of areas.  Some of the most significant laws in the area of construction and procurement law are listed below.

Maryland Home Improvement Commission Guaranty Fund

The Maryland Home Improvement Fund statute permits claims against the Maryland Home Improvement Guaranty Fund (the Fund) for homeowner losses arising from an act or omission of an unlicensed contractor.  The Fund caps reimbursable losses at $20,000 for a single claimant for the acts or omissions of a single contractor.  The Maryland Home Improvement Commission currently holds hearings for claims exceeding $5,000, but may, in its discretion, issued proposed orders for claims less than $5,000.  The new law raises to $7,500 the maximum claim amount for which MHIC can issue a proposed order without holding a hearing.  It also extends the deadline for a contractor to reimburse the Fund for losses the Fund pays from 30 to 60 days.

Prevailing Wage

Under current law, prevailing wage rates must be paid for public school construction projects valued at $500,000 or more in which 50% or more of the funding is provided for by the State of Maryland.  Prevailing wage rates are those rates that are paid to at least 50% of the workers in a similar locality who perform similar work.  According to the Maryland General Assembly, prevailing wage rate projects have risen substantially in recent years from 187 in 2011 to more than 700 currently.  The new law, effective July 1, 2014, further expands prevailing wages projects by reducing from 50% to 25% the amount of state funding required in order to qualify as a prevailing wage rate project. 

Government Contracts – Occupational Safety

The General Assembly has required the Maryland Department of Labor, Licensing and Regulation (DLLR) to study occupational safety and health requirements for government contractors.  The law requires DLLR to make recommendations to the General Assembly before December 31, 2014 regarding the establishment of new occupational safety and health prequalification requirements for government contractors in Maryland.

Government Contracts – Debarment

Under current law, those convicted of theft, embezzlement, forgery, and other crimes are debarred indefinitely from contracting with public entities in Maryland.  There are currently 35 persons debarred from doing business with the State of Maryland and 31 persons debarred from doing business with any public entity in Maryland.  The new law expands the list of crimes for which a person may be debarred and now includes convictions for fraudulent government claims, certain tax-related convictions, as well as knowing violations of Maryland’s Living Wage Law, Maryland’s Wage and Hour Law, Maryland’s Wage Payment and Collection Law, or Maryland’s Occupational Safety and Health Act.

Individual Sureties

On September 30, 2014, a law sunsetted that permitted Maryland state contracting agencies to accept bid, performance and payment bonds from individual sureties.  According to The Surety & Fidelity Association of America, Maryland is the only state that permitted individual sureties to bond state public works projects.  Two bills were defeated that would have extended current law to permit individual sureties to issue bonds on state public works project for a period of five (5) years.