Corporate Legislative Update

By Whiteford, Taylor & Preston L.L.P.

7 Saint Paul Street

Baltimore, Maryland 21202

www.wtplaw.com

Listed below are several bills of general interest to corporate attorneys. This list only highlights certain bills before and/or passed by the Maryland legislature, and is not meant to include a full list or discussion of each and every bill.

1. Labor and Employment – Minimum Wage – Increase (HB 391) (1/01/06). HB 391 was passed by the legislature but was vetoed by Governor Ehrlich on May 20, 2005. The Bill would have raised the minimum wage in Maryland to the greater of the federal rate (currently $5.15 per hour) or the new state-set rate of $6.15 per hour.
2. Corporations and Real Estate Investment Trusts – Miscellaneous Provisions (HB 958) (6/01/05). This Bill, among other things, expands the costs directors of a corporation may obtain from the corporation after successfully defending himself or herself. Although prior law permitted statutory recovery only for the successful defense of proceedings, the new law includes costs incurred in the successful defense of claims, issues, and matters as well.
3. Film Production Activity – Employer Wage Rebate Grant Program (HB 253/SB 215) (7/01/05). These Bills establish programs within the Department of Business and Economic Development to provide qualified film producers engaging in film production activity in the State a rebate of fifty percent (50%) of the first $25,000 of each qualified employee’s wages, up to a maximum of $2,000,000 for each production. The rebate does not apply to employees earning over $1 million for a production. To qualify for the rebate, a film production activity must be intended for nationwide distribution and have direct costs in the State of at least $500,000. The fiscal 2006 budget includes $4,000,000 for this new program. The Bills include specific reporting requirements to assist in evaluating how well the program works in stimulating local employment in film.
4. Commercial Law – Gift Certificates and Gift Cards –Expiration and Fees – Restrictions (SB 8) (7/01/06). After several years, and the passage of similar laws in various other states, Maryland has adopted restrictions and prohibitions on the expiration and service fees relating to gift certificates and gift cards. The Bill prohibits the expiration of, or imposition of a fee on, any gift certificate or gift card within four (4) years of the date of purchase. In the event the gift certificate or gift card expires or a fee is assessed on the card after the four (4)-year period, certain terms must be displayed in at least ten point font on the certificate or card.
5. Financial Regulation – Debt Management Services (HB 753) (10/01/05). In response to consumer complaints about debt adjustment services, the General Assembly passed the Maryland Debt Management Services Act in 2003. The Act established licensing requirements and other measures to regulate the debt management services industry. This Bill expands regulatory oversight over debt management services providers by: (1) prohibiting insider dealing, false advertising, and sales incentives to employees for enrolling consumers in debt management plans or agreements; (2) increasing the maximum amount of the bond a debt management services provider must post from $350,000 to $1,000,000; and (3) increasing the disclosures an applicant must make to receive a license. The Bill also implements a sliding scale fee schedule based on annual gross revenue for initial and renewal licenses and clarifies that the Maryland Debt Management Services Act applies whether or not the debt management services provider has an office in Maryland. Finally, the Bill requires the Commissioner of Financial Regulation and the Attorney General jointly to: (1) study the impact of the Bill on consumers and debt management services providers, regulatory mechanisms used in other parts of the country, and the impact of authorizing for-profit entities to provide debt management services in the State; (2) recommend any appropriate changes to the Maryland Debt Management Services Act; and (3) report their findings and recommendations to the House Economic Matters Committee and the Senate Finance Committee by December 31, 2006.
6. Consumer Protection – Privacy of Social Security Numbers (HB 56) (1/01/06). This Bill prohibits a person, except a unit of State or local government, from: (1) publicly posting or displaying an individual’s Social Security number (“SSN”); (2) printing an individual’s SSN on a card required for the individual to access products or services provided by the person; (3) requiring an individual to transmit the individual’s SSN over the Internet unless the connection is secure or the individual’s SSN is encrypted; (4) initiating the transmission of an individual’s SSN over the Internet unless the connection is secure or the individual’s SSN is encrypted; or (5) requiring an individual to use the individual’s SSN to access an Internet web site unless a password, unique personal identification number, or other authentication device also is required to access the web site.

Similarly, unless required by State or federal law, the Bill prohibits such a person from: (1) printing an individual’s SSN on material mailed to the individual; (2) including an individual’s SSN in material that is electronically transmitted to the individual unless the connection is secure or the individual’s SSN is encrypted; or (3) including an individual’s SSN in any material that is transmitted by facsimile to the individual. The prohibitions listed above do not apply to: (1) the collection, release, or use of an SSN as required by State or federal law; (2) the inclusion of an SSN in an application, form, or document sent by mail, electronically transmitted, or transmitted by facsimile under specified circumstances; (3) the use of an SSN for internal verification or administrative purposes; or (4) an interactive computer service provider’s or telecommunications provider’s transmission or routing or temporary storage of an SSN. A person that used an individual’s SSN before January 1, 2006, in a manner prohibited by the Bill may continue to do so until January 1, 2009, if: (1) the use is continuous; and (2) the person provides an annual disclosure form stating the individual’s right to stop the use of the individual’s SSN. A request to stop using an individual’s SSN must be implemented within 30 days after receipt. Furthermore, a person may not deny products or services to an individual because of a request to stop using the individual’s SSN. © 2005 Whiteford, Taylor & Preston L.L.P.