Triple Damages for Overtime: an Update

  This post covers what I call "The Overtime Amendment" to the Maryland Wage Payment and Collection Law.  In 2010, the Maryland General Assembly added two words to the definition of wages under the Law. Wages now includes "overtime wages," which are eligible for triple damages.  Since the addition of those words, I have found only one reported decision from our State Court that addresses The Overtime Amendment (many Federal Courts have addressed it, a topic which I will cover in another post).  The case is Montgomery County v. Deibler.  

The issue in Deibler was whether the ability to earn overtime wages should be included in an employee’s “wage earning capacity” as defined by the worker’s compensation statute.   MD. CODE ANN., LAB. & EMPL. §9-615(a)(1).  The claimant suffered a knee injury that prevented him from working overtime.  To collect temporary disability benefits his post-disability wage earning capacity had to be less than his pre-disability wage earning capacity.  Montgomery County argued that the ability to earn overtime did not decrease the claimant’s wage earning capacity.

To divine the meaning of the phrase “wage earning capacity,” the Court looked at how the General Assembly defined wages throughout the Labor and Employment Article, including in the MWPCL (before the Overtime Amendment).  According to the Court, the meaning of the word “wage” in each of the statutes “includes a wide range of employment remunerations, including overtime compensation.”  423 Md. at 72 “[T]o read ‘wage’ more narrowly to exclude overtime compensation (as the County would have us do) would produce a ‘farfetched, absurd or illogical result[] which would not likely have been intended by the enacting body.’” Id., quoting, Kilom v. State, 394 Md. 168, 177, 905 A.2d 306, 311 (2006).  According to the Court, the Overtime Amendment clarified the existing definition of wages, which had always included overtime. 423 Md. at 70 n.6.  

The takeaway:  overtime is collectible under the Law and is subject to triple damages.

Vague Claims of Stolen "Pricing Knowledge" Do Not Support Maryland Uniform Trade Secret Act Claims

  I often defend employees accused of non-compete violations.  Tacked on to these claims are often alleged violations of the Maryland Uniform Trade Secrets Act (link to law review article).  The Act allows a Court to award fees to an employer if it prevails (but apparently no reported decision has ever done so according to the article.)

Proving information is truly a trade secret is no easy task. In Structural Preservation Systems v. Andrews,  the employer alleged that its former employees stole its “pricing structure, pricing knowledge and research, and established customer relationships."  The Maryland Federal District Court (Judge Marvin Garbis) ruled, however, that the employer's allegation were too vague to form a valid claim for a violation of the Act.  The Court relied on the Act's definition of trade secret.   To qualify for protection, the information must "derive independent economic value . . . from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use."  Pricing information is rarely a trade secret because it is rarely a secret (since prices are shared with customers).    Ultimately, the Court dismissed the employer's trade secret claims.      

Proposed Bill Would Require Maryland Employers To Provide Mandatory Sick Leave

Current Maryland State Law does not require that employer provide paid or unpaid leave.  Bills introduced in the Senate (SB698) and the House (HB735) would require employers to provide paid sick leave. An employee would earn at least 1 hour of paid sick leave for every 30 hours an employee works up to 7 days of sick leave per year.  The laws would allow employees to care for themselves and most dependents.  The Maryland Chamber of Commerce opposes the legislation; while workers' rights groups support it.  The Fiscal Note provides a good summary of the proposed law.

Of course, some employees (who work for employers with 50 or more employees) are guaranteed at least 12 weeks of unpaid leave for some illnesses under the Federal Family and Medical Leave Act.  Also, the Maryland Flexible Leave Act states that if an employer (with more than 15 employees)  already offers paid  leave, it must allow an employee to use it to care for a sick family member.  Other laws may require an employer to allow an employee to use leave as an accommodation for a disability.   The reality is, however, that most low wage and part-time employees get no sick leave.        

Proposed Senate Bill Would Void Non-Competes For Employees Eligible for Unemployment

   A lot of what drives non-compete disputes (and litigation) is the unclear and fluid nature of the law that applies to such agreements.  Written agreements are not always enforced according to their letter.  Instead, non-compete agreements are measured by standards developed through case decisions.  For example, for a non-compete agreement to be enforceable it must be directed at a legitimate and protectable business interest.  The uncertainty over what is legitimate and what is protectable often becomes the center of a dispute, which can only be decided by a Court.

A proposed senate bill would change, but not necessarily make better, the above state of the law.  Senate Bill 51  would void non-compete agreements that apply to employees eligible for unemployment.  A Chicago lawyer, Kenneth J. Vanko, persuasively argues that the bill would not end the battle but move it  from the Courts to the Office of Unemployment Appeals, which is already quite crowded.

The bill recently received an unfavorable report from the Senate Finance committee.  As such, it is unlikely to become law.


 

What to do when you are threatened with a non-compete lawsuit.

I recently had two successful outcomes in a non-compete cases on behalf of employees either being sued or threatened with being sued. It got me to thinking what are the ways my clients should prepare for the first meeting with a lawyer in these circumstances. Here are my thoughts:

1. If you are served with legal papers call a lawyer immediately. Employers often ask the Court to grant immediate emergency relief in these cases. Time is of the essence. Bring the Court papers with you. Record the date you are served.  Bring the cease and desist letter if you received one.

2. Bring a copy of the non-compete agreement to your first meeting with a lawyer.

3. Bring copies of your job descriptions at your old job and your new job or be prepared to describe your job duties in detail. An employee's best defense is often that he or she is not the type of employee who can be covered by a non-compete agreement.

4. Did you advise your new employer in writing that you signed a non-compete with your previous employer? If yes, bring a copy of the document that proves this fact. If no, consult a lawyer.

5. Gather other relevant documents presented in an organized fashion, including:

• Evidence of affirmative claims you have against your former employer. Are you owed wages? Were you mistreated? Employees often can use their own claims to leverage their ways out of a non-compete agreement;
• Documents you believe your old employer might claim as evidence of your breach.
• Contact information for your new employer and any potential witnesses.

Maryland Employees: Do Not Lose Earned Wages When You Change Jobs

I have written many times about the Maryland Wage Payment and Collection Law, the basic law that protects employee wages.  The Law states that employees are entitled to the wages that they earned. If an employer fails to pay earned wages, it could be liable for triple damages and attorney's fees.

Below are examples of earned wages that can be recovered in Wage Payment and Collection Law cases.

Commissions. A series of favorable Maryland decisions (reviewed here) state that if an employee performs the work necessary to earn a commission, he is entitled to it -- even if he or she has left the company

Bonuses. Did you do everything you could possibly do to earn the bonus? If so, you probably earned it and are owed it.

Severance. If severance is promised to entice an employee to take a job or to reward an employee for years of service, it likely falls under the category of earned wages.

Straight wages.  Did your employer just fail to pay?  You are owed your wages.

Overtime:  A recent amendment  includes overtime in the Law's definition of wages.

The Law can be enforced in three ways:

1.  You can file a lawsuit.  I recommend you consult a Maryland Employment attorney before doing so.

2.  You can file an administrative complaint with the Maryland Department of Labor (DLLR).  Instructions on how to file such a complaint can be found on the DLLR website.  

3. You can file a criminal complaint for a willful violation.  A warning:  I have not yet seen a criminal wage violation prosecuted.   My impression is that such claims are rarely prosecuted (since they are left to the civil process).
  

Promise in Employee Handbook Not Enforceable, Fourth Circuit Overturns Jury Verdict

  Make clean with hand; then make dirty with the other.

  That is what a lot of employers do in employee handbooks.  They publish employee-favorable policies, but then pepper the handbook with disclaimers that state that their policies are not contractual and cannot be enforced in Court.

A Maryland employee sued her employer claiming its anti-retaliation policy rose to the level of a contract.   The policy stated:

Retaliation and threats of retaliation against employees who raise concerns, or against individuals who appropriately bring important workplace and business issues to the attention of management, are serious violations of [the Company's] values and standards and will not be tolerated. . . . All directors, officers and employees are strictly prohibited from engaging in retaliation or retribution . . . which is directed against an individual on the basis of or in reaction to that individual making a good faith report to the Company . . . of suspected violations of law, regulation, policy or procedures, or Our Values and Standards.

The employee claimed her supervisor fired her for reporting the supervisor's violations of the company's published ethical rules.  

She won a $555,000 jury verdict in the Maryland Federal District Court.

The Company, of course, appealed.

On appeal, the Fourth Circuit reversed and directed the trial court to enter judgment in the Company's favor.  The Appellate Court ruled that the disclaimers in the employee handbook rendered unenforceable the Company's anti-retaliation promise.

Individual Owners of Corporations May Be Liable Under the Maryland Wage Payment and Collection Law

  The Maryland Wage Payment and Collection Law provides that employers must pay employees their earned wages on time.  An employer that violates the Law may be liable for triple damages and attorney's fees.   Lawyers have long debated whether a company's owners individually can be held responsible for failing to pay wages (in addition to holding the corporation responsible).  A recent decision holds that individuals can be liable if they control the employee's work.  Control can mean the power to hire and fire, set wages and schedules, and maintain records.  Hence, company-owners cannot hide behind a corporation when they control their employees but fail to pay them.  

Maryland's intermediate appellate court issued the decision.  I suspect there will be continued debate about the issue, which may end up before the Maryland Court of Appeals.