Tuesday, November 27, 2007

Triple Damages Under the Maryland Wage Payment and Collection Law

Over at the Maryland Employment Law Blog, I posted an article on when triple damages are available under the Maryland Wage Payment and Collection Law. The article includes a brief I wrote on the issue as well as a sample jury instructions.

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Thursday, September 6, 2007

Must an employer pay accrued compensatory time at my termination?

The answer is most likely, "Yes."

Workers are divided in two classes: (1) non-exempt employees who must be paid overtime; and (2) exempt employees who are entitled to overtime.

I wrote here that a private-sector employer generally cannot grant time off in lieu of of overtime to non-exempt employees. In other words, employers usually cannot give "compensatory time" instead of overtime wages to its hourly workers.

But, what about exempt employees? The law does not prohibit or require that an employer give compensatory time to exempt employees. Employer are free to do as they wish. Some employers reward their exempt employees by awarding compensatory time off if they work more than 40 hours in a week. In such case, the employee accrues "comp time" for work.

What happens to accrued comp time at the employee's termination? In my view, it must be paid. It is no different than accrued vacation. Catapult v. Wolf, discussed many times on this blog, established that accrued vacation is no different than earned wages and must be paid out at termination. All of this flows the Maryland Wage Payment and Collection Law's definition of wages, which includes "any . . . remuneration promised for service."

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Tuesday, September 4, 2007

Top Five Ways Employers Violate Maryland's Wage Law

Sunday, July 29, 2007

Can My Maryland Employer Withhold My Wages?

Maybe. In Maryland, an employee must agree in writing that his or her employer can withhold earned wages. Absent a written agreement, an employer has no right to withhold pay, even if the employee clearly owes the employer money or has failed to return company property, such as a laptop computer, at the conclusion of the employment relationship. If an employer does withhold pay without obtaining advance authorization from the employee, the employer potentially becomes liable to the employee for treble (triple) damages and attorney's fees under Maryland's Wage Payment and Collection law.


Monday, July 23, 2007

Jury Finds Maryland Company Unlawfully Withheld Vacation Pay From Departing Employees

In the fall of 2004, a group of 14 employees provided notice of their resignation to their employer, Catapult Technology, Ltd., in order to join another government contractor. Due to circumstances beyond their control, the employees were not able to provide 2 weeks advance notice of their resignation, which, according to Catapult's Employee Handbook, resulted in a forfeiture of their earned but unused vacation. The employees collectively had approximately $70,000 of accrued vacation pay withheld at the time of their resignations. When Catapult insisted that the forfeiture provision in their handbook was fully enforceable, the employees filed suit in the Circuit Court for Montgomery County under Maryland's Wage Payment and Collection law, seeking treble damages and attorney's fees.

Marc J. Smith, a partner at the Rockville, Maryland law firm of Smith, Lease & Goldstein, LLC, represented all 14 of the former employees. A copy of the Complaint can be found here. After filing suit, Smith filed a Motion for Partial Summary Judgment on the issue of liability, arguing that the Wage Payment and Collection law applied to accrued but unused vacation and that the forfeiture provision contained in Catapult's Employee Handbook was unenforceable and void under Maryland public policy. Judge Dugan agreed and collectively awarded the employees nearly $70,000. The only issue left for trial was whether Catapult had a bona fide basis to withhold the employees' accrued vacation pay and, if not, whether they were liable for up to treble damages and the employee's attorney's fees.

After a 2 day trial, the jury returned a verdict in the employees' favor, finding that Catapult had withheld the employees' vacation pay in bad faith and awarded the employees nearly $100,000 in enhanced damages. The Court subsequently awarded the employees all of their attorney's fees accrued through the trial. Catapult appealed both Judge Dugan's ruling and the jury award to Maryland's Court of Special Appeals. Oral argument was held in March 2007 and the parties are awaiting a decision from the Court of Special Appeals. A copy of the appellate brief filed on behalf of the employees can be found here.

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Friday, July 20, 2007

You May Be Entitled to Commissions in Your Pipeline when Your Employment Terminates

The Maryland law on commissions is favorable to employees. The Law that applies to commissions in Maryland is the Maryland Wage Payment and Collection Law.

A key provision of the Law states:

“Each employer shall pay an employee or the authorized representative of an employee all wages due for work that the employee performed before the termination of employment, on or before the day on which the employee would have been paid the wages if the employment had not been terminated.” Md. Code Ann. Lab. & Empl. §3-505.

“Wages” are defined as “all compensation that it is due to an employee for employment,” including commissions. Md. Code Ann. Lab. Empl. §3-501(c)(1) &(2). Md. Code Ann. Lab. Empl. §3-501(c)(1)

Section 3-501.1 provides the employee a civil cause of action to recover wages withheld in violation of Section 3-505. In addition, the Court can award the plaintiff treble damages and reasonable attorney’s fees. Section 3-501.1

The Maryland Court have issued a series of opinions on the rights salespeople have to collect their earned commissioned under the Maryland Wage Payment and Collection Law.

Admiral Mortgage, Inc. v. Cooper, 357 Md. 533, 745 A.2d 1026 (2000).

In Admiral Mortgage, Inc. v. Cooper, 357 Md. 533, 745 A.2d 1026 (2000), an employee, whose main job was to generate and develop loans, sued for commissions that closed after his termination. For the loans in question, Mr. Cooper had obtained a completed application and other necessary documents and turned the files over to another employee for processing and closing. 357 Md. at 537, 745 A.2d 1026. Admiral Mortgage claimed that, "when a loan officer left, any of his or her pending applications would be worked on by someone else, and that person would be paid the commission when the loan closed." Id. at 544, 745 A.2d 1026. Rejecting the employer’s assertion that no commission was due on any loan that had not closed by the time the plaintiff left his employment, the jury awarded the plaintiff the unpaid commissions. The Maryland Court of Special Appeals affirmed the judgment based upon the jury award.

● Medex v. McCabe, 372 Md. 28, 811 A.2d 297 (2002)

In Medex, the plaintiff was a sales representative for a medical supply manufacturer. Part of his compensation package was incentive fees based on sales made during fiscal years. His employment agreement, however, provided that “[p]ayment from all Company incentive compensation plans is conditional upon meeting targets and the participant. . . [being] employed at the time of actual payment.” 372 Md. at 33, 811 A.2d 297.

The plaintiff resigned on February 3, 2000, four days after the fiscal year ended. The employer paid the inventive fees on March 31, 2000. Because the plaintiff was not employed on that date, his employer refused to pay plaintiff’s fees.

Reversing the decision of the trial court, the Court of Appeals held that the plaintiff was entitled to the incentive fees. While acknowledging that under common law contract principles, the contract provision would have provided sufficient basis to deny payment, the Court of Appeals noted that “[c]ontractual language between the parties cannot be used to eliminate the requirement and public policy [of §3-505] that employees have a right to compensated for their efforts. Id. at 39, 881 A.2d 297. The court found the contract language in question invalid and unenforceable. Id.

The Medex Court further explained that employers in this State cannot hold their employees hostage by imposing arbitrary barriers to their compensation. The Court of Appeals held that “the employee’s right to the payment of wages vests without satisfaction of the provision of continued employment. To hold otherwise would place the rights of employees to these wages at the whim of their employer, who could simply terminate any at-will employee whose incentive fees if didn’t wish to pay.” Id. at 42, 811 A.2d 297.

McLaughlin v. Murphy, Civ. No. CCB-04-767, 2004 WL 1634980 (D.Md. July 20, 2004) (Blake J.)

In Murphy, the plaintiff was a loan officer paid by commission. His employment agreement provided that, should his employment be terminated, he would not receive a commission on loans that had not settled before termination. After he was terminated for lying about his dealings with a client, Mr. McLaughlin brought claims against his former employer under the Wage Payment Act for commissions on three loans that he had originated but had yet to close at the time of his

In denying the plaintiff’s claim, Judge Blake noted that, for two of the pending loans, Mr. McLaughlin had signed up the customers for loan programs for which they did not qualify. As a result, these loans had to be completely redone by another loan officer. Significantly, the replacement loan officer was paid the commission once the loans closed. The third loan had yet to close when Judge Blake issued her decision. 2004 WL 1634980 at *5.2

Rogers v. Savings First Mortgage, LLC, 362 F. Supp. 2d 624, 643-646 (D.Md. 2005)

The plaintiffs in Saving’s First were loan officers who sued their employer for unpaid commissions on loans that went to closing after a “voluntary or involuntary” termination. 362 F. Supp 2d at pp. 624, 627. The employer’s policy was not to pay commission to a loan officer on any deal that went to closing after a loan officer’s employment terminated.

After reviewing Murphy and Admiral Mortgage, Judge Nickerson denied the employer’s
motion for summary judgment in Savings First. He found the facts there were more similar to Admiral Mortgage than Murphy. The loan officers at Savings First developed leads then assigned most of the administrative work to other employees. Significantly, after the plaintiffs terminated their employment, Savings First did not hire new loan officers to complete the work. Nor did it pay commissions to any other loan officer. It just kept the money. In such circumstance, the Court could “[]not conclude that Defendants' bright line rule denying all Plaintiffs their terminal commissions is reasonable.”

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Monday, March 19, 2007

Maryland Overtime FAQ


Yes. Maryland's law is called the "Maryland Wage and Hour Law." You can find it here. http://mlis.state.md.us/cgi-win/web_statutes.exe?gle&3-401


Generally, it requires employers in Maryland to pay an overtime wage of at least 1.5 times an employee's usual hourly wage for all hours worked in excess of 40 in a workweek. There are exceptions to this rule.


An exempt employee is an individual who is not entitled to overtime. Exempt status is determined by analyzing how an employee is paid and what his or her job duties are. Note: just because an employer deems an individual to be exempt does not he or she is actually exempt under Maryland law. Employers and employees should consult with an experienced lawyer before concluding that a particular individual is exempt.


Yes. Maryland adopted new regulations, effective February 13, 2006, adopting the Federal standards. http://www.dsd.state.md.us/comar/09/


To qualify for the most common exemptions, employees generally must be paid on a "salary basis."Being paid on a "salary basis" means an employee regularly receives a predetermined amount of compensation each pay period on a weekly, or less frequent, basis. The predetermined amount cannot be docked because of variations in the quality or quantity of the employee's work.


Yes. Although the laws overlap, there are many differences between Maryland's Law and the Fair Labor Standards Act. One important difference is that the Maryland statute of limitations is three years while the Federal limitations period can be as short as two years.


The Maryland Law allows employees to recover their unpaid overtime and reasonable counsel fees. Employees may also bring a claim under the Maryland Wage Payment and Collection Law, which allows for treble damages.


It depends. Maryland law does not require employers to provide breaks, including lunch breaks, for workers 18 years old or older. An employer who chooses to provide a break, however, does not have to pay wages for lunch periods or other breaks in excess of 20 minutes where the employee is free to leave the worksite (or workstation if leaving the workplace is physically impractical), in fact takes their lunch or break (whether freely choosing to leave or remain at the worksite), and the employee does not actually perform work. If employees are told their pay will be reduced each day by one-half hour for lunch, and they are not free to take this lunch period without an expectation or reasonable understanding that they must work or be on hand to work, they must be paid for the time. A "reasonable understanding" that they must work or be on hand to work is a condition in which it is generally known, or the employee reasonably believes, that failure to perform work (or be available "on hand" to perform work) during their break, will result in some negative effect on employment.

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