Posted by marykeating on December 28, 2011 under Maryland wage law, Wage and hour issues | 
The Fourth Circuit Court of Appeals decided against an employee seeking to recover unvested stock options after her termination. The employee had sued under the Maryland Wage Payment and Collection Act. She contended that a portion of her deferred compensation should not have been withheld by her employer. Under an optional plan, the employee had agreed to defer a part of her compensation, which the employer matched. The matching portion, however, did not immediately vest. Unless the employee’s termination was caused by her retirement, death or disability, they did not vest for seven years. Therefore, upon her termination, the employee was paid only her portion of the compensation for the most recent years.
Although the court decided that New Jersey law applied, according to the parties’ contract, it also noted that Maryland law would not have given the employee her unvested stock options, since that is all she bargained for. In other words, this deferred compensation plan was designed to leave a lot of the compensation on the table, unless someone stayed with the employer for many years.
This decision does not bind a Maryland court from making a contrary decision, but to date these unvested benefit issues have not gone well for employees.
Posted by marykeating on May 19, 2011 under Maryland wage law, Pending legislation, Unemployment compensation, retaliation |
Here is another update on new laws signed by the Governor.
HB 1228 tweaks the unemployment law to allow for the maximum chance of getting full federal funding of extended unemployment benefits. To meet federal standards, the state law needed to alter the definition of an economic downturn triggering the extnsion.
SB 551 prohibits an employer from retaliating against an employee making an oral or written complaint, or testifying in an action relating to Maryland’s wage laws. The law clarifies that taking adverse action in retaliation means not just firing the employee but demoting, or threatening to fire or demote the employee, or taking any other adverse action “that would dissuade a reasonable employee from making a complaint, bringing an action, or testifying in an action under” the law. A violation of the law is a misdemeanor.
HB 211 changes the name of the Maryland Commission on Human Relations to the Maryland Commission on Civil Rights, effective October 1.
Posted by marykeating on April 13, 2011 under Discrimination in employment, Economic situation, Employment benefit issues, Maryland wage law, Pending legislation |
The Maryland General Assembly closed on April 11 for the year. The Governor signed a few bills of interest to employers and employees yesterday; a few more are expected to be signed shortly.
“An agreement to work for less than the wage required under this subtitle is void.”
I believe this is already implied in the law. Yet, it is helpful to state it outright, since not everyone understands that minimum wage is required.
As of October 1, 2011, Maryland employers may not inquire into the credit of an employee or an applicant for employment. Exceptions include banks, credit unions, investment advisor positions, or any other job in which another law requires a credit report, such as someone needing a security clearance. Another large exception involves an employer pulling a credit report for jobs in which there is a realistic concern about the employee’s access to money. The exceptions are listed, and include management position, access to money or a corporate credit card, or has access to trade secrets.
The most unfortunate compromise is that the enforcement mechanism for violations is limited to filing a written complaint with the Commissioner of Labor and Industry. Still, the knowledge that in most cases an applicant’s credit history is off-limits should help the chances of people with poor credit. The persistent recession has hurt many people financially, and credit ratings have suffered. That does not mean that they would not be ethical, diligent employees.
- Change in disability benefits law. This is an enormous change in disability insurance practice. Effective for policies sold or renewed beginning on October 1, 2011, an insurance company may not reserve sole discretion to itself to interpret the terms of the policy, or to provie standards of review that are inconsistent with the laws of the state.
The law as originally proposed would have made all discretion illegal. That kind of change would have made an enormous difference in fights over coverage, but this is a step in favor of the person who has made a claim for disability coverage.
Posted by marykeating on April 11, 2010 under Maryland wage law, Pending legislation |
The Maryland legislative session is nearly over for the year. One favorable bill clarifies the state’s wage payment and collection act to include overtime. Both houses have passed the bill, and it’s expected to be signed by Governor O’Malley.
The wage law helps employees enforce their rights to payment for their work. When there is no good faith dispute about the worker’s entitlement to the wages, a judge may triple the amount found to be owed, and award the employee reasonable attorney’s fees for taking the case to court. The policy behind the law is clear. When an employer withholds wages (and many such cases come up when the employer refuses to pay the last paycheck, apparently figuring that the employee will go away quietly), the employee should have an effective means of obtaining the compensation. Permitting additional damages and attorney’s fees are good incentives. In addition, the law penalizes the employer for holding back pay for no reason other than wage theft. On the other hand, if there is an actual dispute over the pay owed, or the amount of a commission, the employee cannot obtain the enhanced damages, but still has access to court.
Now the law will specifically include overtime pay as an element of the compensation that the employee may sue for. Not all courts had accepted the idea that compensation of any kind included overtime pay, so employees would sue under the Maryland law for unpaid straight-time wages or bonuses, and under the federal Fair Labor Standards Act for their overtime pay. This made the cases needlessly complicated. This may not change the reality that federal judges seem more likely to apply the correct burden of proof (it’s on the employer to show exemption from overtime), but it is a good clarifying law.
Posted by marykeating on December 23, 2009 under Employment benefit issues, Maryland wage law |
Workers are entitled to be paid for the hours they work. So, even if they are fired, the employer has to pay for the time spent in its employ. If the worker was pulling a Wally in Dilbert’s company, and working harder on avoiding work than actually doing any work, the employer still has to pay for those hours, and deals with the lack of productivity by firing the “Wally.”
Things get more complicated for other types of compensation. Some people are paid entirely or in large part by commission; others get a significant portion of their annual compensation by bonus. What rights does the departing employee have to commissions for sales brought in before he left? What right does the employee leaving in November have to her year-end bonus, if her numbers were stellar until she was laid off or quit?
The best way to deal with these questions is in advance, with a contract. Highly compensated, gifted salespeople are more likely than other non-union workers to have contracts. The end of the relationship should be addressed in the employment agreement. Unless the employee leaves only because the company goes defunct, there will be some work in progress that may merit commission or partial compensation.
Without a clear provision in the employment contract, the employee should look to the commission structure and any policies that have been written about it. Fortunately, some of the more draconian policies are unenforceable under Maryland law. Consider, for example, a policy that states “no commission is payable unless the employee is currently employed on the date of payment of the commission.” The Maryland Court of Appeals rejected this policy in the case of a salesperson who had performed all of the tasks necessary to earn the commission, other than being present on the date of the payment to him. If the deal has been struck, delivery made, and the client paid the bill, the salesperson has earned that commission. In a structure like this, there will always be some uncompensated work, but when there is nothing left for the sales force to do, the whole commission should be paid. On the other hand, if the salesperson has done only a part of the work to conclude the sale, and someone else must step in to finalize the deal, he can legally be denied the commission.
Questions about bonuses can be murkier. One question is whether anyone should be paid a year-end or Christmas bonus if the worker is no longer employed; another is whether the amount of the bonus can be determined. These questions are related, and usually come down to this: how much of the bonus is based on objective numerical criteria? A court cannot enforce a deal if it has to guess how much a worker’s bonus should have been.
Often, bonuses are paid based on a handful of factors, including the company’s productivity and the worker’s specific goals. Some bonus plans allot a bonus pool to a department, and the manager has the discretion to dole out the bonus among the department members. When an element of subjectivity is allowed to define the amount of the bonus, the unhappy worker cannot mount a claim (unless there is proof that the subjective factor is an illegal one, such as the recipients’ race).
Other bonus plans are almost completely subjective. These may weigh the employee’s attitude and contribution to team spirit, for example. Moreover, they may be intended not just to reward past performance, but to provide an incentive to stay. The amount of these types of bonuses cannot be figured out until they are paid.
On the other hand, if a bonus is based solely on the employee’s performance, then an employee who reached her goals in eleven months should not be deprived of the bonus. This is akin to the commission structure, though it’s paid not on one deal but the year’s effort.
If an employer withholds bonuses or commissions without a genuine dispute about whether it has been earned, the employee is entitled to get attorney’s fees for the enforcement action, and can request the court to double or triple the amount owed, under the Maryland Wage Payment and Collection Act.
Bonus or no, enjoy your end of year holidays.
Posted by marykeating on November 20, 2009 under Federal wage and hour law, Maryland wage law |
As previously mentioned here, Maryland’s Workplace Fraud Act imposes new penalties on employers who misclassify employees as independent contractors. At a talk before the Maryland State Bar Association’s Labor and Employment Section’s annual meeting recently, representatives from the state’s Department of Labor, Licensing and Regulation explained the Department’s focus on the landscaping and construction industries. Because studies had indicated that these industries were particularly likely to misclassify employees, the new Maryland law gave additional teeth to the Department in pursuing employers found to engage in a willful pattern of classifying employees as independent contractors. The harm to employees include the lack of worker’s compensation protection, the lack of unemployment benefits, the burden of the self-employment tax on employees, and the inapplicability of anti-discrimination laws. According to the State, more investigators are on the job. Employers should expect more audits of their workforce, as well as site visits.
The federal Department of Labor recently made a similar pronouncement. Yesterday, Secretary of Labor Hilda Solis stated:
“There is no excuse for employers who disregard federal labor standards – especially those that are designed to protect the most vulnerable in the workplace. The failure to comply with these basic labor standards means that workers are not receiving the money they have earned. It is both an economic issue and a fairness issue. America’s workers should rest assured that protecting worker rights is a top priority at the Department of Labor. To make good on that promise, I have hired an additional 250 new wage and hour investigators, a staff increase of more than one third, to ensure that we promptly respond to complaints and can undertake more targeted enforcement.”
Both federal and state laws permit an employee to obtain additional damages from an employer who willfully withholds wages or misclassifies an employee. Employers now need to watch employees and the government watching their practices.
Posted by marykeating on September 2, 2009 under Collective rights, Federal wage and hour law, Maryland wage law, Wage and hour issues |
Did you see this, or hear it on NPR? A new study shows that many minimum wage workers are denied wages they have earned. The study surveyed workers in the most populous three cities, New York, Chicago, and Los Angeles. It found frequent, ongoing violations of the wage and hour laws, with the worst offenders in these industries: apparel and textile manufacturing, personal and repair services, and in private households. Illegal practices included paying a wage lower than the minimum wage, forcing workers to work off the clock, and denying overtime pay. Some of these violations are easier to hide when employers pay a flat daily or weekly rate to the employees, no matter how many hours are required.
In addition to the type of industry, the study identified several other factors that linked more strongly with wage violations. Not too surprisingly, the rate of violations are higher for employers paying by cash, as opposed to company check. Smaller employers are also more likely to pay their employees too little. Finally, those companies with a package of benefits were more likely to abide by the wage laws.
The study’s authors concluded that
“Employers that offer health benefits, provide paid time off, and give regular raises are following a business model where investing in workers leads to greater productivity, lower turnover, and other benefits for the company.”
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What to do about a violation
I have seen an increase in complaints about employers denying an employee’s last paycheck, and keeping poor records, leading to denial of overtime pay. The employer has an obligation to keep records of employee hours worked, and has the burden of proof to disprove an overtime or minimum wage claim. Still, courts have difficulty with the concept that the plaintiff worker should not have to prove his claim, and often that burden of proof is not applied correctly. Employees who witness wage issues should keep a careful daily log of their work hours, and make written complaints when they are not paid.
The Maryland wage and hour division is no longer unstaffed, and will pursue claims against employers. If an employee cannot get satisfaction, contact a lawyer. Although some of these claims are not large, state law permits a court to triple the damages for a failure to pay wages without a legitimate dispute, and allows reasonable attorney’s fees. Also, if there is one violation, chances are good that many employees are being underpaid, increasing the chances that a lawyer will take the case. The Fair Labor Standards Act also permits court access to enforce wage and overtime claims.
