Tuesday, August 19, 2014

Maryland's Highest Court Rules That Triple Damages are Recoverable for Unpaid Overtime

I have long tracked the debate over whether triple damages are recoverable for overtime under the Maryland Wage Payment and Collection Law.   Maryland's highest Court, the Court of Appeals, put the issue to bed in Muriel Peters v. Early Healthcare Giver, Inc.  The Court ruled (as predicted) that triple damages are recoverable for unpaid overtime.   The Court ruled that way because in 2010 the Maryland General Assembly amended the law to add the word "overtime" to the definition of wages. Several Federal Court decisions, nonetheless, held that triple damages were not recoverable if they were never promised to the employee.  The Maryland Court of Appeals rejected those cases and held triple damages are available for unpaid overtime.

The Court in Peters also held:

  • A judge or jury must first find that the employer withheld the employee's wages in bad faith before awarding additional -- up to triple -- damages to the employee; 
  • There is no outright presumption in favor of an award of enhanced damages; 
  • The employer has the initial burden to prove it withheld wages in good faith.  The burden then shifts to the employee who must ultimately persuade the judge or jury that the employer withheld the wages in bad faith; and
  • The maximum award the plaintiff can receive is three times the unpaid wages.  If the employee is owed $1 in wages, the maximum he or she can recover is $3 (there had been an argument that he or she should be able to recover $4 -- the owed wages plus triple damages).     

Monday, June 23, 2014

Q. Does the Maryland Wage Payment and Collection Law permit triple damages for overtime?

A.  I believe that the answer is yes (and wrote about why I think that is case).  A case pending before the Maryland Court of Appeals will likely provide a final answer.  The case is Muriel Peters v. Early Healthcare Giver, Inc.   The Court in Peters agreed to review the following three questions:

1) Are overtime wages recoverable under the MD Wage Payment and Collection Law (MWPCL)?

2) In a bench trial, is it an abuse of discretion to fail, without explanation, to award treble damages under the MWPCL where there is no claim of bona fide dispute?

3) Should any award of up to treble damages under MWPCL be made in addition to the award of unpaid wages?

The above questions suggest that the trial court awarded overtime wages but did not award the triple damages permitted by the Maryland Wage Payment and Collection Law (but did not explain why).  The Court of Appeals held oral argument on April 29, 2014.  The employer did not participate (probably because it did not have the money to retain a lawyer).  The Court of Appeal had many questions about how it could award triple damages in the absence of a trial court finding that the overtime wages were withheld in bad faith.  To me, that suggests the Court will remand the case back to the trial court to decide that issue and explain the rationale for its decision.
8/19/14 -- Update the Court ruled that triple damages are recoverable for unpaid overtime and remanded the case to the Circuit Court to decide whether to award such damages in this case. 

Thursday, June 19, 2014

Maryland Law Increasing Minimum Wage Also Provides for Liquidated (or Double) Damages

    The Federal law governing the minimum wage and overtime is the Fair Labor Standards Act ("FLSA").  Maryland has its own minimum wage and overtime law, called the Maryland Wage and Hour Law ("MWHL").  Under the FLSA, a plaintiff claiming unpaid wages can collect the amount owed plus an equivalent amount as liquidated damages.  The plaintiff thus can collect double damages.  Under the MWHL, a plaintiff could only collect the wages owed (single damages).  As a result, most plaintiffs have historically brought their claims under the FLSA. Most FLSA claims end up in Federal Court.

   That is likely to change.  The law eventually raising Maryland's minimum wage to $10.10 also states that Court can shall award liquidated damages for a violation of the MWHL.  An employer can avoid liquidated damages if it can show it acted in good faith and reasonably believed that the wages paid to the employee were not less than the MWHL requires.  The law takes effect July 1, 2014.  As a result, more overtime and minimum wage cases will end up in Maryland State Courts.

Thursday, February 06, 2014

Maryland Court of Appeals Will Review Case Alleging Over-Garnishment of Wages

  Bonita Marshall alleged that Safeway over-garnished her wages and the wages of similarly situated employees.  By so doing, Ms. Marshall argued Safeway violated the Maryland Wage Payment and Collection Law.  She sought back wages, triple damages, injunctive relief, class certification, and attorney's fees.

  Safeway admitted it over-garnished Ms. Marshall's wages.  But Safeway claimed it repaid her and changed its policies to insure the over-garnishment never happened again.

 The Court of Special Appeals ruled that Safeway did not withhold Ms. Marshall's wages in violation of the Wage Payment and Collection Law but garnished her wages.  The Court also noted Ms. Marshall had remedies in the case that led to the garnishment.  Ultimately, the Court affirmed the trial court's rulings denying class certification, injunctive relief, and damages.

The Court of Appeals granted certiorari on a wide variety of issues in the case, including whether the over-garnishment of wages is a claim under the Maryland Wage Payment and Collection Law. 

UPDATE 1. Argument was held February 10, 2014.

UPDATE 2.  On March 26, 2014, the Court of Appeals issued its decision.  It affirmed the Circuit Court's decision.  The Court of Appeals did find that an employer violates the Maryland Wage Payment and Collection Law if it makes an unlawful deduction from an employee's wage.  

Wednesday, December 04, 2013

Maryland Court of Appeals Will Review Employment Contract Case.

   The Maryland Court of Appeals granted certiorari in Spacesaver Systems v. Adam.   The case involves a dispute between family members in a family-owned business.  All of the family members signed identical employment agreements that contained a provision the defined "cause."   The company terminated Adam.   She sued.  

  The issues at trial was whether the company had the right to terminate her without cause and the length of the employment contract.    The trial court ruled that the written employment agreement created a lifetime employment contract that could only be terminated for cause, death or disability.   The trial court awarded Adam back pay through the date of trial ($255,868.20) and expressed no opinion as to whether Adam could continue to sue for breaches of contract for unpaid wages into the future.

  The Court of Special Appeals modified the trial court's rulings on one key point.  Adam's contract was not a lifetime contract, but a "continuous contract terminable for cause."  Lifetime contracts may require special consideration such as when the employee provides a substantial benefit other than his or her services.  According to the Court of Special Appeals, Maryland Courts have not yet decided whether special consideration is required or exactly what special consideration would be sufficient considerat.  But, because the Court decided Adam's contract was not a lifetime contract, the Court did not address the issue.

Recently, the Court of Appeals granted cert. on the five issues set forth below.  The fact pattern gives the Court of Appeal an opportunity to clarify the at will presumption, "for-cause" contracts, and life term contracts (including what special consideration may be needed to support them).

1) Under MD Law, is there a distinction between a lifetime employment contract and a “continuous for-cause contract,” both terminable for any reason by employee and only for cause by employer, such that each should have different amounts and degrees of proof and different consideration required? 

2) Where an employment contract contains no provision addressing duration of employment, must the contract be clear, specific and definite that the parties intended to create continuous and indefinite employment, terminable only for cause? 

3) Where an employment contract contains no provision addressing the duration of employment, does a “for-cause” provision transform the contract to one providing employment for life where there is no “special consideration” to establish a contract for lifetime employment? 

4) Is this Court’s dicta in Towson University v. Conte, 384 Md. 68, 862 A.2d 941 (2004) suggesting that a “just cause” provision transforms “at-will” employment into employment terminable only for cause inconsistent with this Court’s holding in Suburban Hospital v. Dwiggins, 324 Md. 294, 596 A.2d 1069 (1991) that employment contracts of an indefinite duration create “at-will” employment and remain so even if that agreement sets forth some bases that provide the employer cause for termination? 

5) Does the presence of a “for cause” provision in an employment contract transform at-will employment to lifetime employment terminable only for cause?

Update:  The Court held oral argument in the case on June 5, 2014.  

Wednesday, October 30, 2013

Maryland Department of Labor Publishes Maryland Wage Lien Act Forms

In my last post, I outlined a new tool Marylanders have to collect unpaid wages.  The Maryland Wage Lien Act, allows an employee to place a lien on an employer's property if the employer fails to pay wages. The Act has two basic steps.  

First, the employee must give the employer notice of the intent to file a wage lien.  The Maryland Department of Labor published a form setting forth the proper notice.  The form as you might expect ask the employee to fill in blanks for the name of the employer, amount of unpaid wages, and the property subject to the lien.  The form also contains a paragraph informing the employer how to contest the lien (by filing a lawsuit).

Second, if the employer disagrees with the lien claim, the employer must file a lawsuit within 30 days (since the Act only went into effect October 1, 2013, as of this writing I am aware of no lawsuits having been filed).  The Maryland Department of Labor published a model of such a lawsuit.  The model lawsuit does not contain much information and is mostly space for the employer to describe why the wages are not owed.  If such a lawsuit is filed, the Court must conduct a hearing within 45 days to determine whether the lien is valid (and whether the award attorney's fees).

Finally, the Maryland Department of Labor published a draft lien document.  If the employer does not contest the wages owed, the employee can file this lien in the Circuit Court where the employer owns property.

All of the forms are fairly simple documents.  Most lawyers will create their own more detailed documents.  Even the Maryland Department of Labor's website warns that the forms are subject to revisions.

Tuesday, July 30, 2013

Maryland Wage Lien Act - Powerful New Tool for Collecting Unpaid Wages.

The Maryland Wage Lien Act provides a powerful new tool to employees seeking to collect earned wages from employers.

Beginning October 1, 2013, Maryland employees can initiate a lien by providing "written notice" to their employers of unpaid wages.  If employers want to contest the lien, they must file a claim in Court providing a sworn statement setting forth all defenses.  The Court then only as 45 days to decide if the lien is appropriate.  Forty-five days is fast; a typical court case take months, if not years.  I am curious how the Courts will handle this new expedited procedure.

If the Court issues the lien, it can award attorney's fees to the employee.  It can award attorney's fees to the employer if the wage lien is brought in bad faith.  

The Act's definition of "employer" is broad and includes individuals who work in the employer's interest.  Under recent precedent, owners and some supervisors can be individually liable for unpaid wages.  Wages does not include owed commissions.   

A lien is like a judgment that attaches to property.  If the employer wants to sell his or her solely-owned real estate, if a wage lien is attached, the buyer will usually require the employer to satisfy the lien.  The lien also may give the lien holder priority if the employer declares bankruptcy.

The Maryland Department of Labor is tasked with issuing implementing regulations.   I will be keeping my eye out for them as they could have an important affect on  this new powerful wage collecting tool.   

H/t to the  Public Justice Center which pushed for the Act and published an excellent FAQ.