09.32.01.18-2

.18-2 Covered Employment—Certain Business Entities.

A. Sole Proprietorships.

(1) Except as otherwise provided, a person performing services for wages for a sole proprietorship is engaged in covered employment.

(2) The following persons employed by a sole proprietor are not engaged in covered employment:

(a) The sole proprietor;

(b) A spouse of the sole proprietor;

(c) Children of the sole proprietor under the age of 21; and

(d) Parents of the sole proprietor.

B. Partnerships.

(1) A partner in a partnership is not engaged in covered employment.

(2) If a partnership consists exclusively of spouses, then their children under 21 years old employed by the partnership are not engaged in covered employment.

C. Corporations with Revoked Charters.

(1) When a corporate charter has been forfeited or revoked and the entity continues to operate, the entity shall be treated as a sole proprietorship or a partnership, as determined by the Secretary.

(2) Persons determined by the Secretary to be sole proprietors or partners are not engaged in covered employment.

(3) Any other employee of the entity is engaged in covered employment.

D. Limited Liability Companies.

(1) If a limited liability company is automatically classified as a corporation or elects to be classified as a corporation for federal tax purposes, the limited liability company is treated as a corporation for Maryland unemployment insurance purposes. All persons, including members who receive remuneration from the limited liability company for services performed, are engaged in covered employment.

(2) If a limited liability company has a single member and is not classified as a corporation for federal tax purposes, the limited liability company is treated as a sole proprietorship for Maryland unemployment insurance purposes. The following persons employed by the single member limited liability company are not engaged in covered employment:

(a) The single member;

(b) The spouse of the member;

(c) Children younger than 21 years old of the member; and

(d) Parents of the member.

(3) If a limited liability company consists of two or more members and is not classified as a corporation for federal tax purposes, the limited liability company is treated as a partnership for Maryland unemployment insurance purposes. The following persons employed by the limited liability company are not engaged in covered employment:

(a) The members; and

(b) Children younger than 21 years old of the member, if the members of the limited liability company consist exclusively of spouses.