Wednesday, December 06, 2006

What You Write Can Become the Reason You Are Fired

I recently signed up for an account on myspace. Not to be a crumudgeon, but in browsing the site, I cannot help but notice that individuals post pictures and comments that they would never want known in the workplace. I then read a series of excellent articles by George Lenard (at George's Employment Blog) about how employers might use such content to screen out or terminate employees.

Would an employer be wrong to use such information in making hiring and firing decisions? Probably not, as long as it acted consistently without regard to an employee's protected class.

You are what you write.

Wednesday, November 29, 2006

True or False: All computer help desk employees are exempt from receiving overtime (i.e., not entitled to overtime).


The U.S. Department of Labor recently ruled that certain help desk employees are entitled to overtime (if they work more than 40 hours in a week). These help desk employees' duties and the amount of time, in general, that they would spend on such duties are described below:

55%─Analyzes, troubleshoots, and resolves complex problems with business applications, networking, and hardware. Accurately documents all work in
appropriate problem tracking software. Prioritizes tasks based on service level agreement criteria with limited supervision.

20%─Installs, configures, and tests upgraded and new business computers and applications based upon user-defined requirements. Assists users in identifying
hardware/software needs and provides advice regarding current options, policies, and procedures. Creates and troubleshoots network accounts and other business application user accounts as documented in the employee lifecycle process.

10%─Participates in the design, testing, and deployment of client configurations throughout the organization. This process requires detailed knowledge of Microsoft operating systems and compatible business applications. Leverages application packaging software technology for deployment of business applications to client systems.

5%─Participates in the analysis and selection of new technology required for expanding computing needs throughout the organization. Works with competing vendors to determine the best selection based on price, technical functionality, durability, manufacturer support, manufacturer vision, and position in the healthcare industry.

5%─Documents technical processes and troubleshooting guidelines. Documents end-user frequently asked questions about computer systems or programs and publishes on Intranet as guidelines for the entire organization.

5%─Monitors automated alerts generated by systems management tools and makes decisions on the most effective resolution.

The U.S. Department of Labor ruled that these help desk employees did no fall within either the administrative or computer employee exemptions. Therefore, these employee are likely entitled to overtime pay when they work more than forty hours in a week.

Wednesday, November 22, 2006

My Employer Just Changed Me From Salaried to Hourly, What Should I do?

Overtime laws divide the workforce into two categories:

1. Salaried exempt employees not entitled to overtime; and
2. Hourly nonexempt employees entitled to overtime.

Which category are you in? It depends on what your job duties are. The U.S. Department of Labor's fair pay website does a good job of describing the type of duties that qualify an employee as exempt and not entitled to overtime.

What is an employer to do when it realizes it wrongly classified an employee as exempt and failed to pay overtime?

Usually, an employer will simply change the employee's classification, begin to track his or her hours worked, and start paying overtime.

But, what about the years that the employee has spent working in the wrong classification and losing out on overtime? That employee likely has a good claim against his or her employer for all of the back overtime worked over the past two or three years. That person should consider meeting with an attorney immediately to discuss his or her options. I say immediately because the statute of limitations in overtime cases run from each paycheck that should have included overtime, but did not. For an employee who was wrongly denied overtime for more than two years, the longer he or she waits to assert a claim, the fewer pay periods that the employee can challenge in Court.

Wednesday, November 15, 2006

Should I Stay or Should I Go? What to do when you are harassed at work.

Clients facing difficulties at work often ask me: "Should I just quit?" I often respond that there are two ways to look at the question.

1.The Legal Answer. Quitting will not usually help the employee who is considering taking legal action against his or her employer. It is better to consult an attorney, have that attorney file your claim, and endure while the legal process runs its course.

Quitting may cutoff any claim for back pay, unless your working conditions are so intolerable that you can prove a constructive discharge(discussed here)

Quitting may make it more difficult to collect unemployment benefits unless the employee can prove he or she quit for "good cause." Good cause is explained here at page 16.

Most anti-discrimination and wage and hour statutes have provisions that forbid employers from retaliating against an employee who complains in good faith that his or her employer is violating the law. As a result, an employee who make his or her complaint known to his or her employer has an added measure of legal protection. The United States Supreme Court recently addressed Title VII's anti-retaliation protections in the Burlington Northern case.

2.The Reality Check: If going to work is so bad that it is affecting your emotional health, you should consider quitting. You should weigh the potential legal advantages of sticking it out against the emotional toll of continuing to work at you current job. I often tell unhappy employees that ending your current employment relationship will not help your legal claim, but may be the best decision you ever make since it gives you the opportunity to find a better job.

Tuesday, November 07, 2006

Q: Are You Entitled to Severance? A: It depends.

No Maryland law guarantees an employee's right to severance. Unless an employer promises severance, there is nothing that requires an employer to offer it. However, there are three main ways an employee may obtain severance.

1. As part of an employment contract or severance plan. Some employees negotiate a severance at the outset of their employment. Severance is used as a carrot to entice the employee to accept a job offer. For example, an employer could agree to pay one week of severance for every year of employment. In such case, severance might constitute earned wages under the Maryland Wage Payment and Collection Law. This is important because the MWPCL provides an employee with the opportunity to file suit for earned but unpaid wages, treble damages and attorney's fees.

2. As part of a non compete agreement. Severance can be used to entice an employee to agree not to compete for a period after his or her employment terminates. The Maryland Court of Appeals has suggested that this type of severance is not earned and therefore not covered by the Maryland Wage Payment and Collection Law. (An employee could still recover unpaid severance, but would need to do so by alleging breach of contract.)

3. In exchange for a waiver of claims. When an individual's employment terminates, the employee and employer often want a clean break. They can accomplish this goal by entering into a settlement agreement. Often the employee agrees not to sue in exchange for severance.

Thursday, October 26, 2006

Maryland Non-Competes: Things to consider before you sign one.

Starting with the assumption that reasonable non-compete agreements are enforceable in Maryland, what should you do if your employer asks you to sign one? If possible, you should do the following:

1. Try to get out of signing the agreement in the first place.

2. Try to narrow the agreement's terms. Find out which competitors and geographic ares your employer really cares about. Limit the agreement's reach to those terms.

3. Suggest that what your employer really wants is a non-solicitation agreement, i.e., your promise not t0 raid the company of its key employees.

4. Demand compensation. If your employer wants you to get out the industry for a period, your employer should pay for it.

5. Hire a lawyer to review your agreement and meet with you before signing away your right to a livelihood. Employers get legal advice -- so should you. Employers often put highly unfavorable terms -- such as attorney-fee shifting provisions -- in non compete agreements. Consult counsel to know your rights.

Monday, October 23, 2006

Q: Can you leverage your way out of a Maryland Non-Compete? A: Maybe.

As shown by my posts about non-competes in Maryland, reasonable non-compete agreements are generally enforceable. (Further, even if a non-compete agreement is overbroad, many Maryland Judges believe they have the power to re-write such an agreement to make it enforceable). So, can you get out of them or limit them? Maybe. Just as you and your employee can agree to enter a non-compete; you and your employer can agree to modify a non-compete. The more leverage you have, the more likely you can modify a non-compete to your liking. How can you generate leverage? Here are a few ideas:

  1. It can be a very expensive proposition for an employer and an employee to litigate to determine if a non-compete is really enforceable. You may convince your employer to reduce your non-compete obligations by agreeing not to initiate litigation.
  2. Find out what your employer's real interests are. It may not want you working for its established competitors and may not care if you are working for a start up.
  3. Give a little. Do you have something the employer wants, like money it owes you for severance? You might offer something of value in exchange for a release from any non-compete obligations.

Friday, October 20, 2006

Court Enforces Agreement Barring Employee from Working for a Competitor in North America and Mexico for Two Years

The Baltimore Circuit Court permanently enjoined James Braithwaite from working a competitor of his former employer in this decision. Braithwaite signed a non-competition agreement that forbade him from working for any employer in liquid filling system industry located in the United States or Mexico for a period of two years. The Court characterized the industry as "highly specialized" and "relatively small." As such, the Court ruled that the non-competition agreement was reasonable in duration and geographic scope.

Monday, October 16, 2006

Fail to Pay Maryland State Income Tax -- Lose Your Professional License

In 2003, the General Assembly enacted a law that provides that individuals who do not pay their taxes cannot renew their State professional licenses. See 2003
Laws of Maryland ch. 203 § 24.

Along comes Dr. Knoche, a dentist, who did not pay any state income tax between 1980 and 1989. In July 2004, the Dental Board denied Dr. Knoche's application to renew his dental licences.

In Knoche v. State, the Court of Special Appeals upheld the Constitutionality of the law and told Dr. Knoche that he was out of luck.

Friday, October 13, 2006

In 5-5 Split, Fourth Circuit Denies En Banc Review of Black Monkeys Case

By reporting to your boss that one co-worker called African-Americans "black monkeys" and "black apes," are you opposing discrimination in the workplace? (An employer cannot retaliate against an employee for opposing workplace discrimination.) Two Fourth Circuit judges (out of a three judge panel) had ruled that reporting a single racist comment is not sufficient opposition to be entitled to Title VII's anti-retaliation provision. See here, here, and here.

Now, by a vote of 5 to 5, the full Fourth Circuit denied en banc review of Jordan v. Alternative Resources Corp. En banc review (that is: review by all of the judges on the court) requires a majority vote. As a result, employers in Maryland are free to fire employees who complain that a co-worker made a racially derogatory remark.

I imagine this case is headed to the United States Supreme Court.

Tuesday, September 26, 2006

Retaliation: How to Build and Prove a Case after Burlington Northern.

I am serving as a moderator for an upcoming seminar on the Supreme Court's decision in Burlington Northern. There, the Court established that employees may challenge "materially adverse" job actions as retaliatory under Title VII.

What is a materially adverse job action? According to the Court: "A plaintiff must show that . . . the challenged action . . . might have dissuaded a reasonable worker from making or supporting a charge of discrimination."

I reviewed most of the major decisions issued after Burlington Northern here.

Wednesday, September 13, 2006

Two Decisions on Standards Governing Professional Disciplinary Boards

I wrote here about the extraordinary powers that Maryland licensing boards have when seeking to discipline licensees. Today, the Maryland Court of Special Appeals issued two decisions on how these Boards function.

1. In Maryland Board of Physicians v. Elliot, the Court (reversing the Circuit Court) affirmed a Board's decision to deny a physician's application for a license. The Board denied the license because the physician failed to disclose past disciplinary proceedings and malpractice actions on his application. (The Court reversed the Circuit Court finding it applied an incorrect standard of review).

2. In Maryland Board of Veterinary Medical Examiners v. Hammond, the Court of Special Appeals remanded a disciplinary proceeding because an Agency improperly accepted new evidence after a contested hearing. The evidence was an affidavit given by a witness to the critical event: when a veterinarian choked an assistant to demonstrate how a cat feels when it is choked. I am not making this up. The Court summarized the event as follows:

On July 11, 2000, appellee observed Gallagher inadvertently choking a cat that she was holding during an attempt to draw blood from the cat. Appellee grabbed Gallagher's hand, releasing the cat from her hold. Appellee was angered by the incident. Immediately thereafter, without requesting or obtaining Gallagher's consent, appellee pressed two fingers against Gallagher's trachea to show her how uncomfortable her hold had been the cat. Although appellee did not compromise Gallagher's breathing, he did cause her to feel discomfort and anxiety.

After appellee released Gallagher, she left the treatment area. Gallagher was shaken, stunned, and scared by appellee's actions. Shortly thereafter, and as a result of the incident with appellee, Gallagher resigned her position at the [veterinary hospital].

Friday, September 08, 2006

Fourth Circuit Finds Disability Plan Abused Discretion By Failing to Credit Plaintiff's Doctor.

Individuals do win against insurance companies that deny disability claims. Donovan v. Eaton Corporation is a good example. A disability plan's own doctors denied Ms. Donovan's claim in part because her doctor changed his opinion during the course of treatment. But this doctor had a reasoned explanation for changing his opinion -- namely he was able to review additional evidence demonstrating the plaintiff's severe back pain. According to the Court:

The district court found that the Plan's wholesale disregard of
Dr. Welshofer's affidavit in favor of his earlier April 2004
statement, which was based on incomplete information, was unreasonable.

We agree.

Tuesday, August 29, 2006

Saudi Prince and Security Company are Liable For Overtime as Joint Employers Fourth Circuit Rules

The issues in Schultz v. Capital International Security, were: (1) whether a Saudi Prince and a Security company were joint employers for purposes of the FLSA; and (2) whether the security guards were employees or independent contractors.

According to the Fourth Circuit, because both Prince and the Security Company ("CIS") shared control over the guards, they should be considered a joint employer

Both the Prince and CIS were involved in the hiring of agents.. . CIS advertised for agents and screened responses, which were forwarded to the detail leader. The detail leader, who was on the CIS payroll and reported to [the Prince's representative], interviewed selected applicants; the Prince's representative]had the final word on hiring. [The Prince's representative]generally handled agent work schedules, compensation, discipline, and terminations, but CIS played some role in these matters. CIS maintained the authority to discipline agents and change the terms of their employment.

With respect to the independent contractor issue, the Court easily determined that the guards were employees because the Prince and CIS "exercised nearly complete control over how the agents did their jobs."

This decision, while not creating new law, is important because it clarifies when two entities can be considered a "joint employer" for overtime purposes, even if one entities has no responsibilities for payroll. The Court's reasoning could certainly be applied to a temporary agency/employer relationship.

Wednesday, August 23, 2006

Employment Law: News of the Weird

It is the week before school starts. The Courts are not writing opinions; Maryland Employment Law is not developing (this week). So I give you this:

People With Issues

In July, Cory Neddermeyer, 42, was turned down for unemployment benefits in Iowa, after a judge ruled that he was fired for cause. His employer, the Amaizing Energy ethanol plant, suffered a massive spill that created a pond of fuel alcohol, and Neddermeyer (a recovering alcoholic), after resisting as long as he could, gave in and started drinking from the pool (causing him to pass out and later register an 0.72 blood-alcohol reading). [Des Moines Register, 7-9-06]

Tuesday, August 22, 2006

Q: Which Overtime Law applies -- Maryland or Federal? A: The Law That Most Benefits the Employee.

  • There is a Maryland overtime law. There is a Federal overtime law. Which one applies? The one that is most favorable (or provides a greater benefit) to the employee.

    So, the Maryland law carves out employers in certain industries, such as:

    Trucking companies which operate interstate
    Hotels or motels
    Gasoline service stations
    Private country clubs
    Not for profit
    temporary home care services
    Not for profit concert promoter or theater
    Some amusement or recreational establishments, including seasonal swimming
    pools (However, companies which manage such establishments may still be required
    to pay overtime)
    Food processing companies engaged in canning, freezing,
    packing, or first processing of perishable or seasonal fresh produce, poultry,
    or seafood.
  • But the Federal law may nevertheless apply. For example, the Federal law does not carve out Restaurants. If you have any doubt as to what law applies, you should contact an attorney.

Tuesday, August 15, 2006

On Reconsideration: Court of Special Appeals reaffirms that Statute of Limitations Bars Workers Compensation Claim

I wrote here that the Court of Special Appeals denied a workers compensation claim because the employee waited too long to file it. I stated:

On January 2, 2002, Randolph Griggs was injured while working construction. On February 20, 2004, Mr. Griggs filed a workers compensation claim. Maryland Law requires employees to file such claims within two years of the accident. Because Mr. Griggs's claim was untimely, the Court of Special Appeals affirmed the dismissal of his case. The Court did not buy the argument that Griggs's employer -- by promising to file a claim for him -- actually induced Mr. Griggs to wait more than two years to file with the Workers Compensation Commission.

On reconsideration, the Court of Special Appeals affirmed its decision and had this to say:

Our opinion was first filed on June 1, 2006. Griggs asks us to reconsider our decision, arguing that we erred by “shift[ing] the burden of producing undisputed facts” from appellees to him. In his view, it is “inconsistent to hold that a reasonable person could have relied on the letter to his or her detriment but refuse[] to draw the inference that [Griggs] did actually have such a reliance.” He argues that, because “there is no evidence refuting appellant’s actual reliance on the letter,” he cannot be required to produce evidence of actual reliance in order to survive the motion for summary judgment. We do not agree.

Estoppel under LE section 9-709(d)(1) requires proof of actual reliance. . . Although appellees had the summary judgment burden of establishing that Griggs did not rely on them to file his claim, they satisfied that burden by pointing to established law that an employer is not obligated to file a worker’s compensation claim on behalf of its employee. . . Griggs did not present any evidence that he construed the December 15, 2003 letter as an offer to file his claim and that he did not file the claim because of that offer. We therefore deny the motion for reconsideration.

Monday, August 14, 2006

Fourth Circuit Re-Affirms Decision in "Black Monkeys" Case

"They should put those two black monkeys in a cage with a bunch of black apes and let the apes f--k them."

I wrote here that an employer was free to retaliate against an employee for reporting the above comment to his employer. A majority opinion (Judge Niemeyer joined by Judge Widener) held that the employee could not have reasonably believed that above single outburst constituted a civil rights violation. This is so because a single racially derogatory remark does not rise to the level of actionable racial harassment

I then wrote here the Fourth Circuit panel vacated it decision for reconsideration.

The Fourth Circuit re-issued its opinion and reached the same result as the original decision. (Judge King dissented.)

I am sure the plaintiff will seek re-hearing en banc.

Thursday, August 10, 2006

Maryland District Court Rules Waiver-For-Severance Deal Violates ADEA and Title VII

In a shocker, Judge Titus ruled in EEOC v. Lockheed Martin Corp, that Lockheed Martin's offer of severance in exchange for a full waiver of claims violated the ADEA and Title VII as a matter of law. Lockheed eliminated several positions as a result of a merger. It offered those losing their jobs severance benefits in exchange for a complete release of claims. Judge Titus ruled that Lockheed's could not "provide [severance] only to employees who refrain from protected activity."

Washington Post and Baltimore Sun Cover Steffen's testimony

Ehrlich Adviser Details Firings

Steffen, From Ehrlich's Transition Team in 2002 to Yesterday's Testimony

Taciturn 'Prince of Darkness' Leaves Assembly in Just That

Steffen's testimony raises perjury issue

Wednesday, August 09, 2006

Steffen Ordered to Testify

Following up on yesterday's posting, a Harford County Circuit Court Judge ordered Joseph Steffen to testify today before the Committee examining Governor Ehrlich's employment practices. Given his colorful personality, no matter what your political affiliation, what Mr. Steffen says should be interesting.

Tuesday, August 08, 2006

"Prince of Darkness" Moves to Quash Subpoena

I wrote here and here about the Special Committee on State Employee Rights and Protections. The Committee is looking into Governor Ehrlich's employment practices, including whether he terminated employees based on their political beliefs. The Committee leaders allege that Joseph Steffen, nicknamed the "Prince of Darkness," served as Governor Ehrlich's hatchet man. In the past few months Steffen (1) agreed to testify (2) left the jurisdiction avoiding a subpoena; then (3) reemerged and stated again he wanted to testify. Today's Baltimore Sun reports that Steffen has changed his mind again. He filed suit yesterday contending the Committee lacks the power to issue subpoenas.

Thursday, August 03, 2006

Maryland District Court Dismisses Sexual Harassment Claim But Allows Retaliation Claim to Proceed

Carole Sraver's boss, Dr. Jeffrey Owen, allegedly made the following comments:

"Good morning/afternoon Carole, did you get laid last night?"

"How's the sex life?"

"You'll get a bonus when I get a blow job."

I have a present for you that is "about six inched long with a gold tip . . . "

"Your boobs are bigger than my wife's."

"I am on a liquid diet to make my dick look bigger."

Sraver complained about her Owens's comments, but continued to perform her job. In fact, she prospered earning raises and bonuses.

Shortly after Sraver complained about one of her Owens's comments, her employer, Surgical Monitoring Services (SMS) terminated her employment. The company gave no explanation for its decision to terminate Sraver at the time it took the action. It later claimed that she made an administrative error that cost the company $5 million.

Sraver sued for: (1) sexual harassment; and (2) retaliatory termination. After discovery, SMS moved for summary judgment. The Court dismissed Sraver's sexual harassment claim finding that the alleged harassment was not severe or pervasive enough to create an abusive working environment. The Court noted that Dr. Owens never threatened Sraver, many of his comments were directed to several people, and that despite the alleged harassment, Sraver thrived at SMS.

The Court allowed Sraver's retaliation claim to proceed. The Court relied on SMS's failure to mention the alleged $5 million mistake at the time of Sraver's termination. Also, Sraver claimed that SMS's attorney and management directed her to take the actions the company now claimed were erroneous.

Monday, July 31, 2006

NLRB issues opinion invalidating broad arbitration clause

The NLRB issued a decisionthat may have an effect on Maryland employees facing mandatory arbitration clauses (discussed here).

The policy at issue states that it:

. . . applies to all . . . employees. . . and covers all disputes relating to or arising out of an employee’s employment . . . or the termination of that employment.

The Board invalidated the provision because it tended "to inhibit employees from filing charges with the Board." Employees facing a similarly broad clause now have an arrow in their quiver: filing an unfair labor practice charge with the NLRB.

Friday, July 28, 2006

Court of Appeals Resolves Procedural Issue in Employment Law Case

In St. Mary's County v. Lacer, the former CEO of the County government sued for breach of an employment contract and violations of the Maryland Wage Payment and Collection Law. After cross-motions for summary judgment, the Court granted Lacer's motion in part and also permitted him to depose the County Commissioners regarding closed deliberations about Lacer's employment. The Circuit Court certified the decision as final, despite the fact that none of Lacer's claims were resolved. The County appealed.

The Court of Appeals quickly determined that the Circuit Court's order was not final and did not fall within any of the exceptions to the final judgment rule. Because the order was not final, the County's appeal was not ripe. The Court of Appeals remanded the matter to the Circuit Court for a trial.

The Court of Appeals also reserved judgment on Lacer's right to offer the Commissioners testimony into evidence, finding appellate review of their privilege claims would be appropriate after trial.

Thursday, July 27, 2006

New U.S. DOL Opinion Letter: Acquisition, Relocation, and Property Management Agents are Exempt Administrative Employees Not Entitled to Overtime

Who is an exempt administrative employee? A new US DOL opinion letter answers that question for three employee classifications in the government contracts and real estate industries. Notably, the Acquisition, Relocation and Property Management Agents had fairly sophisticated responsibilities involving purchasing and regulatory compliance.

Tuesday, July 25, 2006

Fourth Circuit Vacates Decision in Jordan v. Alternative Resources Corp.

I recently wrote about Jordan v. Alternative Resources Corp. There, the Fourth Circuit held as a matter of law that a plaintiff did not reasonably believe that the following comment violated our anti-discrimination laws:

"they should put those two black monkeys in a cage with a bunch of black apes and let the apes f--k them"

The Fourth Circuit recently granted rehearing and vacated its earlier opinion. The next chapter in this case will be soon be written.

Why The Maryland Wage Payment and Collection Law Benefits Commissioned Employees: The Fourth Circuit Rejects Virginia Employee's Claim to Commissions

The Maryland Wage Payment and Collection Law grants employees a special right: once an employee earns wages or benefits and employer cannot impose arbitrary conditions that require the employer to forfeit those wages. This issue arises most often with: (1) accrued vacation (see here and here); and (2) commissions earned but not paid before an employee's termination (see here, and here). Once an employee does the work to earn the commissions or accrued vacation, an employer cannot take those benefits away.

Why is this important? The law is very different and less favorable to employees in other states. Take for example, Jensen v. IBM, a decision issued by the Fourth Circuit yesterday. Applying Virginia Law, the Court interpreted a provision in an employee's compensation plan. The plan stated: "No one becomes entitled to any payment in advance of his or her receipt of the payment." In other words, IBM reserved the right to change the terms of the plan up until the point that it decided to pay the commissions. The Court found this language (as well as other clauses in the plan) "did not invite a bargain or manifest a "'willingness to enter into a bargain.'"

I am quite confident that this portion of Jensen would have been decided differently had the Court applied the Maryland Wage Payment and Collection Law, rather than Virginia state law. Maryland employers cannot change the terms of a plan or require an employee to forfeit compensation once the employee has earned the compensation.

(Note: there are other aspects of Jensen not discussed here that indicate that the Court was correct in deciding that the employee was not entitled to the commission he was seeking.)

Monday, July 24, 2006

Governor Ehrlich's Statement on decision striking Wal-Mart Law

Following up on my last article, Governor Ehrlich issued a press release following the decision striking down the Wal-Mart law. He pulled no punches, stating:

"I am very pleased with the decision of the Baltimore City Federal District Court to invalidate the Fair Share Health Care Fund Act. . . ."

"The District Court's decision to strike down this unfair mandate on one Maryland employer is further validation that the General Assembly overstepped its bounds in an effort to demonize that employer for political gain. This is yet another example of the General Assembly's reckless approach to legislating that threatens families, jobs, including nearly 1,000 of them on the Eastern Shore, and any positive gains Maryland has made in creating a healthy business climate."

Wednesday, July 19, 2006

Maryland District Court Declares Wal-Mart Law Preempted (and therefore Unenforceable)

In January 2006, the Maryland General Assembly enacted a bill (over Governor Ehrlich's veto) that requires employers with 10,000 or more employees to spend 8% of their total wages on health insurance. The bill was deemed "the Wal-Mart Lill" because the only qualifying employer in this State is Wal-Mart. (Johns Hopkins, Giant, and Northrop Grumman are either exempt or paid the 8%).

A trade association, which includes Wal-Mart as a member, sued the State to stop it from enforcing the Wal-Mart law. The trade association claimed that law related to employee benefit plans was therefore preempted by the federal law governing such plans: ERISA.

The Court agreed with Wal-Mart and its trade association. At bottom, Congress has decided that it is the only body that can regulate employee benefit plans. As such, States are completely preempted from legislating in this area. Hence, the Court effectively stopped Maryland from enforcing the Wal-Mart law.

The trade association also claimed that the law violated equal protection. The Court rejected that argument.

Maryland District Court Declares Wal-Mart Law Preempted (and therefore Unenforceable)

In January 2006, the Maryland General Assembly enacted a bill (over Governor Ehrlich's veto) that requires employers with 10,000 or more employees to spend 8% of their total wages on health insurance. The bill was deemed "the Wal-Mart Lill" because the only qualifying employer in this State is Wal-Mart. (Johns Hopkins, Giant, and Northrop Grumman are either exempt or paid the 8%).

A trade association, which includes Wal-Mart as a member, sued the State to stop it from enforcing the Wal-Mart law. The trade association claimed that law related to employee benefit plans was therefore preempted by the federal law governing such plans: ERISA.

The Court agreed with Wal-Mart and its trade association. At bottom, Congress has decided that it is the only body that can regulate employee benefit plans. As such, States are completely preempted from legislating in this area. Hence, the Court effectively stopped Maryland from enforcing the Wal-Mart law.

The trade association also claimed that the law violated equal protection. The Court rejected that argument.

Tuesday, July 18, 2006

The Intersection of Employment Rights and Maryland Politics

I wrote here about the Special Committee on State Employee Rights and Protections. The Committee apparently was going to issue a report in September, which happens to be when Maryland has its primary election. However, the Committee's work may be extended because the main target of the investigation, Joseph Steffen, recently became available to testify. This link collects The Baltimore Sun's coverage of the committee's work, including Mr. Steffen's reemergence and the suit filed by several legislators seeking to compel executive department employees to testify about Gov. Robert L. Ehrlich Jr.'s hiring and firing practices.

Monday, July 17, 2006

Maryland Court Issues Preliminary Injunction Enforcing Non-Competition Agreement Ancillary to Business Contract

In Corporate Healthcare Financing Inc. v. BCI Holdings Co. the United States District for the District of Maryland issued a preliminary injunction enforcing a restrictive covenant that two businesses had entered ancillary to a business contract. The non-competition agreement states that the parties agreed not to solicit each other's customers. Although not an employment case, the Court for the most part applied the law as it has developed in the employment law context.

An interesting part of the opinion discussed the so called "blue pencil" rule. Under the rule, which I discussed here and here, some Courts have claimed to have broad authority to revise an otherwise overbroad non-compete agreement to make it enforceable. Judge Blake noted that there is some doubt about the extent of the Court's blue pencil authority:

Finally, even if the court does find that the covenant is unreasonable in one or more respects, there is an open question whether Maryland law would allow it to enforce the covenant only partially. If limiting enforcement of the covenant . . . could not be accomplished by merely deleting words in the provision, such a change might not be permissible under the traditional "blue-penciling" doctrine. . . . If, however, the "flexible" approach is valid under Maryland law, at least under the specific facts of this case, then such limited enforcement might be permissible. . . (citations ommitted)

Friday, July 14, 2006

Court of Appeals Avoids Addressing Forfeiture Issue in Accrued Vacation Pay Case

I have written here and here about whether under the Maryland Wage Payment and Collection Law, an employer can require an employee to forfeit his or her accrued vacation. The Maryland Court of Appeals recently addressed the issue of accrued vacation, but specifically avoided the application of the Wage Payment and Collection Law.

The issue in Board of Education of Talbot County, Maryland V. Heister was whether the State of Maryland could require its teachers to forfeit their vacation if they failed to give proper notice of their termination.

Interestingly, the Circuit Court addressed the question I wrote about in the previous posts and concluded:

[S]ection 3-505 of the Labor and Employment Article [of the Maryland Code (1991, 1999 Repl. Vol.)] . . . appl[ies] to teachers as well as any other employees. And that means that the forfeiture of monies already earned violates that section. And therefore the action of the boards is illegal. (emphasis added)

On appeal, the Maryland Court of Appeals specifically ducked the Maryland Wage Payment issue and rebuked the Circuit Court for raising it, apparently because no lawyer had raised it in preceding administrative hearings. The Court stated:

We . . . need not address the [Wage Payment] question, which, in any event, the Circuit Court interjected in the case on its initiative. We note, however, in Department of Labor V. Boardley, 164 Md. App. 404, 414-15, 883 A.2d 953, 960 (2005), the Court of Special Appeals determined recently that a circuit court erred in "basing its decision to remand the case on excuses [by the claimant for not appearing before an administrative hearing examiner that were] never properly raised before the agency . . . ."

Two conclusions are evident from a review of this active area of the law:

(1) Employers should be very careful about requiring employees to forfeit accrued vacation. Such employers should review their policies and seek the advice of counsel.

(2) Employees who are required to forfeit accrued vacation should also seek counsel because they may have a claim under the Maryland Wage Payment and Collection Law, which provides for triple damages and attorney's fees.

Thursday, July 13, 2006

Maryland District Court Issues Opinion Clarifying Rights of Federal Employees When the EEOC Has Issued a Finding of Discrimination

The process governing federal employees' rights to have their discrimination complaints adjudicated is very different than the process governing their private sector counter-parts. Federal employees can elect to have their cases heard by an Administrative Law Judge ("ALJ") or a Federal Judge. If a federal employee elects to have his or her case by an ALJ, if he or she is not happy with the result, the employee has a right of appeal to the Equal Employment Opportunity Commission ("EEOC").

In Malek v. Leavitt, a federal employee elected to proceed before an ALJ. He eventually won his discrimination claim. The EEOC ordered the employing agency (HHS) to make the employee whole by awarding him reinstatement, back pay, and attorney's fees. The employee later complained to the EEOC that HHS failed to fulfill the EEOC's make whole remedy. The EEOC disagreed and found that HHS had complied with the order.

Still unhappy, the employee file a claim in Federal Court. He sought an enforcement order compelling HHS to make him whole for its discrimination. The Court ruled however that it did not have jurisdiction to hear his claim. According to Federal Regulations, the Court only has jurisdiction to hear such a case when the EEOC first has determined that the Agency is not complying with its make whole order. Because the EEOC held that the Agency was complying with its order, the employee had not right to seek enforcement in federal court.

Wednesday, July 12, 2006

New Fourth Circuit Decision on How To Weigh Subjective Pain Complaints for Determining Eligibility for Social Security Benefits

Jeffrey Hines suffered from Sickle Cell Disease, also known as sickle cell anemia. Mr. Hines applied for social security benefits. To obtain the benefits he had to show his condition prevented him from working a regular work week. A Social Security Administrative Law Judge ("ALJ") ruled that Mr. Hines could perform a wide range of sendentary work. According to the Fourth Circuit, however, the ALJ "applied an incorrect legal standard when he required objective evidence of pain."

The correct legal standard is: (1) once an applicant proves through objective evidence that he suffers a condition reasonably likely to cause pain (2) the applicant is entitled to rely exclusively on subjective evidence to prove the pain prevents him from working a regular work week.

Mr. Hines proved through blood work that he suffered from Sickle Cell Disease. His subjective evidence -- that he had to lie down "half a day" -- proved he could not work. As such, the Fourth Circuit reversed the ALJ and awarded Mr. Hines benefits.

Tuesday, July 11, 2006

Federal Court Denies Disability Insurance Claim Based on Conflicting Medical Evidence

The Maryland Federal District Court denied Daniel Ankney's claim for short term disability benefits under ERISA. Ankney claimed he was disabled as a result of spine injuries he suffered in a car accident. He sought disability benefits from MetLife. The Court noted:

  • Ankney's own physical therapist noted that Ankney's back condition improved significantly;
  • An independent medical consultant concluded that Ankney did not suffer any functional limitations.

Metlife is permitted to credit the opinions of its own medical consultants over the plaintiff's treating physician, the Court noted. The Court's decision is similar to many others in this area.

A key to avoiding this result is to make sure that an individual's record of disability is well-established before submitting his or her claim to the insurance company. It is much more difficult for insurance companys to "re-evaluate" a claim when an individual has a strong well documented medical history supporting his or her disability.

Monday, July 10, 2006

Court of Appeals Blocks Enforcement of Law Ousting Public Service Commissioners

Continuing the run on decisions affecting the rights of public employees, the Court of Special Appeals issued a two paragraph order last Friday enjoining enforcement of the statute that "fired" all five Public Service commissioners. The Order states that enforcement of the law is enjoined "pending further order of this Court."

Wednesday, July 05, 2006

Baltimore City Police Commissioner's Employment Contract Does Not Trump State Law

In February 2003, the Mayor of Baltimore entered an employment agreement with Kevin Clark. Under the agreement, Clark was to serve as Baltimore City's Police Commissioner. The Agreement permitted the Mayor to remove Clark without cause.

Sure enough, on November 10, 2004, the Mayor notified Clark that his employment terminated was being terminated without cause.

Clark sued the City alleging that despite the employment agreement's language, the Mayor could remove the Commission only with cause and upon notice and a hearing. In a June 30, 2006 decision, the Court of Special Appeals agreed with Clark. According to the Court:

  • The Baltimore City Police Department is a State agency.
  • The Mayor has the authority to appoint the Commissioner;
  • State law allows the Mayor to remove the Commissioner for misconduct, malfeasance, inefficiency, incompetence or prolonged illness; and
  • The Mayor must give the Commissioner notice of why he is being removed and a hearing to contest the charges.

Monday, July 03, 2006

Maryland State Employee Only Entitled to Pay for Travel Time that Exceeds Ordinary Commuting Time

The issue in Comptroller v. Miller is whether a State employee is entitled to pay for all time spent commuting from home to a remote work station. The State employee claimed she was entitled to compensation for all of her travel time, without deducting the time normally spent commuting to the office. The Comptroller argued that the employee was not entitled to pay for time the employee would have otherwise spent commuting work.

The Court of Special Appeals sided with the state and noted that under the Fair Labor Standards Act, employees are not entitled to pay for travel within their normal commuting area.

Friday, June 30, 2006

Mandatory Arbitration Agreement Enforced Against Maryland Employee At Will

In Holloman v. Circuit City Stores (March 13, 2006), the Maryland Court of Appeals enforced a mandatory arbitration agreement against an employee who attempted to pursue her discrimination claim in court. The agreement:
  • was a condition of applying for a job with Circuit City;
  • could be amended only by Circuit City once per year provided the company gave 30 days notice of its intention to alter the agreement's terms;
  • applied to "any and all claims;"
  • did not confer any rights to the applicant or employee -- if hired, he or she remained an "at will" employee.

The five judge majority opinion held that the arbitration agreement was enforceable and thus prohibited the employee from pursuing her claims in court. (She was required to pursue them through arbitration). Writing for the majority, Judge Battaglia found "Circuit City's promise to arbitrate . . . constitutes consideration. . . " Chief Judge Bell (joined by Judge Greene) stated that the agreement was a contract of adhesion and was unconscionable because of the extraordinary difference in bargaining power between the parties.

The lesson in Holloman is that Maryland employers can require that their employees consent to arbitration as a condition of employment. Such agreements require carefully drafting and should be reviewed by counsel.

Thursday, June 29, 2006

Plaintiffs Alleging Discrimination May Sue Employer's Insurance Carriers to Resolve Coverage Issue

A class of plaintiffs sued their employer, Friedman's, alleging it had discriminated against them because of their race. Friedman's has employment practices liability insurance (EPLI) through Federal Insurance Company and St. Paul Mercury Insurance Company. In the early stages of the litigation the parties reach a settlement conditioned on Friedman's obtaining funding from its insurers. The insurance companies, however, deny that Friedman's EPLI policies cover the plaintiffs' claims.

Before Friedman's could resolve the coverage dispute, it filed for bankruptcy. Court rulings in the bankruptcy preclude monetary relief against Friedman's but permit monetary relief against its insurers.

The discrimination plaintiffs respond by asking for leave to amend their original complaint to add claims against Federal Insurance Company and St. Paul Mercury Insurance Company. Friedman's argues that the plaintiffs do not have standing to sue the insurance companies.

Seeing the original settlement slipping away, the District Court of Maryland permits the plaintiffs to sue the insurance companies. According to the Court:

"The fact that Federal and St. Paul remain the only means by which Plaintiffs may recover under their claim, coupled with the fact that the coverage dispute remains a significant obstacle to a settlement agreement, presents the Court with a genuine controversy regarding the legal rights and responsibilities of Plaintiffs and Friedman's EPLI insurers."

Wednesday, June 28, 2006

No Right to Review Personnel File in Maryland.

Many states require that employers grant employees access to personnel files. Maryland has no such law. Nevertheless, it is generally a good idea to allow employees to see what it is in their personnel files. Employers should have nothing to hide. This link provides a chart of the state laws on the issue. (Other than Maryland I cannot vouch for chart's accuracy.)

Tuesday, June 27, 2006

Opinion Letter Further Defines the Outside Sales Exemption

Employees who seek charitable contributions by door-to-door solicitation are not exempt outside salespersons, according a recent U.S. Department of Labor opinion letter. That is because the employees are not making "sales," as defined by the Fair Labor Standards Act. The letter relies on a 1940 DOL Report for the definition of a sale. According to the report:

In extending the scope of the term "outside salesman" to include such employees as radio time, advertising, and freight solicitors, it is not intended to include persons who in a very loose sense are sometimes described as selling "service."
* * *
[R]equests to include as outside salesmen such employees as service men, installation men, delivery men, and collectors must be denied as lying outside the scope of the Administrator's authority.

Monday, June 26, 2006

Fourth Circuit Affirms Summary Judgment for Employer in Gender Discrimination Claim Against Fire Station

Jonnie Sue Hux was the first woman in the City of Newport New Fire Department to obtain a fire officer's position. (She was a Fire Lieutenant). But the City denied her four attempts to be promoted to Fire Captain, hiring 19 male candidates instead. Ms. Hux sued the City, claiming she was better qualified than the male selectees and was the victim of gender discrimination.

Affirming the District Court in a published opinion, the Fourth Circuit recently stated that Ms. Hux was not better qualified than any of the male selectees. In attempting to pick apart the City's hiring decisions, Ms. Hux failed to acknowledge the selectees' "qualifications were superior to hers overall." According the Court, Ms. Hux's "suggestion that summary judgment is precluded by pinprick objections to an employer's non-discriminatory justification would place routine personnel decision in judicial hands."

Wednesday, June 14, 2006

US DOL Opinion Letter Addresses Mortgage Loan Officers' Right to Overtime

There has been significant litigation in Maryland over the rights of mortgage loan officers. Most of the litigation has focused on an individual's right to commissions that close after his or her employment terminates. I wrote about this issue here.

In addition, there has been litigation over whether Maryland loan officers are exempt from receiving either the minimum wage or overtime. One exemption that may apply is the outside sales exemption. A recent opinion letter issued by the United States Department of Labor applies the outside sales exemption to mortgage loan officers. Not surprisingly, the issue in these case is to the extent to which the loan officer "is engaged away from the employer's place of business." The opinion letter assumes that the loan officers work "primarily outside the employer's offices." Given that assumption, it did not take much for the Department of Labor to conclude the loan officers at issue are exempt outside salespeople.

If a loan officer performed most of his or her work in the employer's office, the result may likely be that he or she is entitled to the minimum wage and/or overtime.

Monday, June 12, 2006

Maryland Unemployment: Narrow definition of independent contractor

Maryland's unemployment law "presumes" a person performing services is an employee. That presumption can be difficult to overcome when an employer is attempting to classify an individual as an independent contractor. The unemployment law generally considers:

  • The extent to which the individual who performs the work is free from control and direction over its performance both in fact and under the contract;

  • The extent to which the individual customarily is engaged in an independent business or occupation of the same nature as that involved in the work; and

  • The extent to which the work is: (a) outside the usual course of business of the person for whom the work is performed, or (b) performed outside any place of business of the person for whom the work is performed.

A full set of circumstances evidencing independent contractor status can be found here.

Friday, June 09, 2006

Thursday, June 08, 2006

Employer Ordered To Turn Over Audio Tapes of Plaintiff's Prior Testimony

An employer being sued for sexual harassment refused to turn over audio tapes of the plaintiff's testimony in prior workers' compensation and domestic proceedings. The employer contended that because it intended to use the tapes for impeachment purposes only, the tapes were not discoverable. Magistrate Judge Day (acting as the trial judge)ruled to the contrary. Because the tapes had a substantive purposes, i.e., to prove that the employer was not the cause the employee's emotional distress, the Court ordered the employer to produce the tapes to the plaintiff.

Tuesday, June 06, 2006

Falling to File Opposition to Summary Judgment Motion Not Fatal, If The Motion Itself Creates Issue of Fact

A claimant files a worker's compensation claim. Employer moves for summary judgment, arguing that the claim is untimely because the claimant filed it more than two years after discovering his injury was work-related. The Employer's own motion (which included the claimant's hearing testimony ) showed the claimant may have filed a timely claim. Claimant files no response to the motion. What happens?

The Circuit Court dismissed the case because, it held, filing a written response to a motion for summary judgment is mandatory.

The Court of Special Appeals reverses finding the even if a claimant fails to respond to a summary judgment motion, a Court still must analyze whether the moving party met its burden of proving the absence of a disputed material fact.

Despite this decision, it is obviously prudent to file a written opposition to a motion for summary judgment.

Monday, June 05, 2006

Insurance Company's Reliance on Flimsy Evidence May be Reason to Overturn Disability Benefits Denial

Although the case is a year and a half old, Stup v. Unum Life Insurance (4th Cir. 2004), shows disabled individuals can prevail in challenging disability benefit denials. The plaintiff suffered from lupus and fibromyalgia. The issue was whether her condition prevented her from performing any gainful occupation.

Unum sent the plaintiff to a functional capacity evaluation ("FCE"). Although the physical therapist ("PT") conducting the FCE concluded that Ms. Stup could perform sedentary work, the PT equivocated because Ms. Stup's condition rendered her unable to complete the evaluation. As such, the PT stated "it would not be prudent to make recommendations regarding specific job duties that this client can or cannot perform due to a lack of consistent and true information." Based on the PT's report, A UNUM doctor concluded Ms. Stup could perform sedentary work.

For her part, Ms. Stup present a lenghty and well-documented medical history demonstrating she could not work.

UNUM denied Ms. Stup's claim. Citing the supposedly conflicting medical evidence above, UNUM claimed that under the deferential standard of review applied to these cases, the Court should affirm the benefits denial.

Not so, the Fourth Circuit held. To defer to an insurance company's decision, it must produce "substantial evidence" supporting its decision. The FCE was not substantial. According to the Court:

[An insurance company] does not act reasonably in denying benefits if faced, on the one hand, with substantial evidence of disability and, on the other, with only tentative and ambiguous evidence that might, or might not, favor denial of benefits. This is precisely the situation at hand.

Friday, June 02, 2006

Statute of Limitations Bars Workers Compensation Claim, says Court of Special Appeals

On January 2, 2002, Randolph Griggs was injured while working construction. On February 20, 2004, Mr. Griggs filed a workers compensation claim. Maryland Law requires employees to file such claims within two years of the accident. Because Mr. Griggs's claim was untimely, the Court of Special Appeals affirmed the dismissal of his case. The Court did not buy the argument that Griggs's employer -- by promising to file a claim for him -- actually induced Mr. Griggs to wait more than two years to file with the Workers Compensation Commission.

Thursday, June 01, 2006

Liquidated Damages Clause in Non Compete is Invalid

Suing to enforce a non competition agreement is similar to suing to enforce other contracts. The person bringing the suit must prove the defendant breached the agreement and the plaintiff suffered actual damages as a result. Some parties try to do away with the necessity of proving actual damages by stipulating to an amount of liquidated damages.

The employer in Willard Packaging Company, Inc. v. Javier inserted a liquidated damages provision in a non-compete agreement. The provision states in the event a breach, the departing employee will pay "$50,000 as . . . liquidated damages." Willard Packing entered into non-compete agreements with all of its sales staff. The salespeople marketed the company's line of packaging materials to businesses in the Mid-Atlantic. Willard sued one of its former salesmen, Javier, after the Company discovered he was working for a competitor.

During a bench trial, the Court held that Willard proved Javier breached the non-compete agreement. But, the Court held, Willard did not prove it suffered actual damages. Finally, the Court invalidated the liquidated damages provision because it unfairly penalized Javier.

On appeal, the Court of Special Appeals affirmed the trial court. Because the parties posses unequal bargaining power and because the liquidated damages provision bore no relation to Willard's actual damages, the Court held the provision constituted an unenforceable penalty.

Wednesday, May 31, 2006

Extremely Difficult Conditions Not Sufficiently Intolerable To Prove A Constructive Discharge Says Fourth Circuit

An employee who is not actually discharged may be entitled to relief if he can prove his employer intentionally made the working conditions intolerable in an effort to cause him to resign.

In Alba v. Merrill Lynch, the plaintiff proved his employer:

  • unfairly criticized his work;
  • fired his son;
  • threatened to take away certain retirement benefits;
  • told his colleagues that he was being terminated; and
  • disconnected his access to the company's computer system.

The Fourth Circuit held as a matter of law: "While we agree that Alba's allegations show that his working condition were difficult and stressful, we hold that they cannot be described as intolerable." The Court noted that before the plaintiff resigned, the employer stated it might work out some arrangement with him short of his termination.

Tuesday, May 30, 2006

Failure to Participate in Administrative Process Bars Court Claims

A plaintiff's failure to respond to requests for information by the Montgomery County Office of Human Rights bars her federal claim. That is the law according to Bell v. Manugustics Group, Inc., a decision issued Friday by the United States District Court for the District of Maryland. The plaintiff, an attorney representing herself, failed to file a rebuttal statement as requested by the MCOHR. The Court held her inaction was tantamount to a "failure to exhaust administrative remedies depriv[ing the] Court of jurisdiction . . . "

Friday, May 26, 2006

New Maryland Commercial Nondiscrimination Policy

On May 2, 2006, Governor Ehrlich signed a new law establishing a commercial nondiscrimination policy. In short, the law states that if a contractor is found to have discriminated against a vendor, supplier, subcontractor, or commercial customer, then the State can disqualify that contractor from participating in State-funded projects.

Interestingly, the law allows any "person" to claim that a contractor discriminated against him or her within the last four years. By so doing, the new law opens up a new avenue of redress for individuals claiming discrimination in Maryland.

Wednesday, May 24, 2006

Montgomery County Circuit Court Grants Summary Judgment to Employer in Business and Technology Case

Judge Ronald Rubin (no relation to this author) granted an employer's motion for summary judgment in Bennett v. Damascus Community Bank. The case is less significant for what it says -- a bank properly terminated its president -- than for what it establishes: the Maryland Business and Technology Case Management Program is another source of decisional law for Maryland Employment lawyers.

Tuesday, May 23, 2006

Maryland State Employee Rights In Light of Committee Hearings

The recent hearings by the Special Committee on State Employee Rights and Protections beg the question: what rights and protection do state employees have?

State employees are classified in several basic categories:

1. Skilled service. Most State employees are in this category. They are selected on a competitive basis and enjoy full merit system protection.

2. Professional service. These employee have advanced knowledge in a field of science or learning acquired through special courses and study, often requiring a professional license or advanced degree. Most professionals enjoy merit system protection.

3. Management service. These employees have direct oversight over personnel and financial resources, but are not in the executive service.

4. Executive service. Political appointments at the highest levels of State government.

5. Special Appointments. About 10% of all state employees fall in this catch all category.

Most employees serving special appointments, in the management service, and in the executive service and are noncompetitively selected and deemed to be "at will." They make up about 10% of the State's payroll

Today's Washington Post states that the Special Committee is looking into claims that "[Governor] Ehrlich went beyond the usual bounds by firing low- and middle-level bureaucrats and technicians." These actions "have spawned several lawsuits, many of them alleging they were discriminated against because of their political party."

Monday, May 22, 2006

Disability Plan Rendered Inconsistent Decisions Says Fourth Circuit

Disabled employees who are fortunate enough to have private disability insurance often find themselves fighting with their insurance companies over whether they are entitled to benefits. The fight is usually over whether the employee qualifies as disabled under an insurance plan's special definition of that term. Courts generally defer to an insurance company's interpretation of the policy. Hence, it is unusual for a Court to overturn a insurance company's determination.

But that is exactly what the Fourth Circuit did in Singelton v. Temporary Disability Benefits Plan, 05-1341 (4th Cir. May 19, 2006)(unpublished per curiam). There, the insurance plan issued inconsistent decisions for denying an executive's claim for benefits. (The executive claimed he was disabled due to depression). The plan first denied benefits because it claimed the executive, Dean Singleton, was not disabled when he was an employee. After an internal appeal, the plan switched gears and denied benefits because it claimed Mr. Singelton was not an active employee when he requested benefits. After Mr. Singelton filed suit, the plan switched back and claimed Mr. Singelton was not disabled while an active employee.

For his part, the Court observed, Mr. Singelton was not diligent in pursuing his claim for benefit. For example, he waited two years to respond to the plan's request for documents.

Faced with a confused administrative record, the Fourth Circuit stated that both Mr. Singleton and the plan "mishandled resolution of his claim." As such it directed the District Court to remand the case back to the plan to start from "square one."

Friday, May 19, 2006

Accrued Vacation Under the Maryland Wage Payment and Collection Law

As I wrote here, the Maryland Wage Payment and Collection Law allows employees to sue to collect earned wages.

I wrote:

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. §3-505.

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

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.

Is accrued vacation earned and therfore recoverable under the Wage Payment Law?

This footnote from Stevenson v. Branch Banking and Trust Corp. may answer the question:

Although we have ruled that Stevenson cannot recover unpaid
Termination Compensation under the Wage Payment Act, we recognize that the Act does provide her a remedy to recover other unpaid wages that she earned before she was fired, such as any vacation pay or deferred compensation accumulated during her employment.

* * *

The same principles applicable to unpaid vacation benefits that qualify as "wages" under the Act would apply equally to any unpaid deferred compensation that qualifies as "wages."

Thursday, May 18, 2006

Maryland Employers Not Permitted to Print SSN's on Paychecks after January 1, 2007

A new Maryland Law, amending the Wage Payment Law, prohibits employers from printing employee social security numbers on paycheck. The new law takes effect on January 1, 2007.

The substance of the new law is this:


Wednesday, May 17, 2006

Q: When is your Grandmother your Parent?
A: Under the Family and Medical Leave Act.

While on vacation in Jamaica, Cynthia Dillon told her employer that her grandmother (who lived in Jamaica) was very ill. According to Ms. Dillon, her grandmother played an intrumental role in Ms. Dillon's life. Ms. Dillon, therfore, asked to extend her leave. Her employer, the Maryland-National Capital Park and Planning Commission (M-NCPP), denied Ms. Dillon's request stating it needed her in the office. Ms. Dillon stayed in Jamaica after her approved leave expired. When she did not show up for work, M-NCPP terminated her for being AWOL.

Ms. Dillon sued M-NCPP for violating the Family and Medical Leave Act ("FMLA"). M-NCPP moved for summary judgment contending that Ms. Dillon's grandmother did not qualify as a parent under the FMLA. The FMLA grants certain qualified employees 12 weeks of leave to care for a seriously ill parent. The Act defines parent as "the biological parent . . . or an individual who stood in loco parentis to an employee." Loco parentis means standing in the place of a biological parent.

Based on Ms. Dillon's testimony that her grandmother raised, fed, slept with, and provided for her, in August 2005, Judge Chasanow denied M-NCPP's motion for summary judgment.

In March 2006, a jury found in Ms. Dillon's favor. It awarded her $76,914.00 in backpay. As of this writing, the parties' post trial motions are pending.

Tuesday, May 16, 2006

Fourth Circuit Attempts to Sort Out Messy Insurance Coverage Issue Left Over From Perdue Farms Wage Litigation

In December 1999 several Perdue employees sued the company for (1) wage and hour violations; and (2) ERISA violations (for failing to contribute to a retirement plan). After obtaining class certification, in 2002 the plaintiffs settled with Perdue for $10 million.

Perdue had an insurance policy with Travelers casualty that covered ERSIA claims but not wage and hour claims. Travelers picked up period's defense costs -- to the tune of $4.4 million. Travelers however refused to indemnify Perdue for the $10 million settlement it paid to the workers.

Travelers' refusal to indemnify Perdue is what led to Perdue Farms, Inc. v. Travelers Casualty and Surety Company of America. A Maryland District Court ruled that Travelers had to indemnify Perdue for nearly the entire settlement amount. On appeal, the Fourth Circuit reversed and directed the District Court to apportion the settlement between covered (ERISA) claims and non-covered (wage and hour) claims.

It looks like this dispute will continue.

Maryland Adopts Federal Overtime Standards For White Collar Exemptions

Months after the United States Department of Labor adopted new regulations redefining the white collar overtime exemptions under the Fair Labor Standards Act, the Maryland Department of Labor adopts the same standards. (Maryland has its own overtime law.)

Administrative Employees

Executive Employees

Outside Salespeople

Professional Employees

Computer-Related Employees

Maryland's delay in adopting the new standards could raise an interesting question as to the law that applies to state law overtime claims arising before the new standards became effective.

Monday, May 15, 2006

Maryland Federal Court Dismisses Overtime Claim Against Small Business

The Fair Labor Standards Act is the federal law that requires employers to pay overtime to their employees. The Act applies to employers that have "annual gross volume of sales made or business done in excess of $500,000." The Act may also apply to individual employees if he or she is "engaged in commerce or the production of goods."

In Russell v. Continental Restaurant, Judge Williams dismissed a food-server's overtime claim because the restaurant she worked for (located in Montgomery County, Maryland) did not earn $500,000 in gross receipts. The Court also rules that the waitress was not engages in commerce even though she alleged served out-of-state customers.

Note, Maryland's overtime law does not apply to restaurants.

Friday, May 12, 2006

Maryland Employers Free to Retaliate Against Employee Who Reports His Co-Worker Called African Americans "Black Monkeys"?

In October 2002, authorities captured two snipers (both African-American) who had terrorized the Washington area. At the time of the capture, co-workers Robert Jordan and Jay Farjah were watching TV at work in Maryland. Farjah said: "they should put those two black monkeys in a cage with a bunch of black apes and let the apes f--k them." Mr. Jordan reported Mr. Frajah's comments to other employees who stated they had heard Farjah make similar comments. Pursuant to company policy Mr. Jordan then reported Mr. Farjah's comments to management. Shortly thereafter, the company imposed harsher working conditions on Mr. Jordan and ultimately terminated his employment.

The principal issue in Jordan v. Alternative Resources Corp,No. 05-1485 (4th Cir. 2006) was whether Mr. Jordan reasonably believed that Mr. Frajah's derogatory remarks constituted a violation of federal or local anti-discrimination laws. If he did, his behavior was protected by those laws. Employers may not retaliate against employees for engaging in protected activity.

The majority (Judge Niemeyer joined by Judge Widener) held that Mr. Jordan could not have reasonably believed that Mr. Farjah's single outburst constituted a violation. This is so because a single racially derogatory remark does not rise to the level of actionable racial harassment. The dissent (Judge King) stated that "it was entirely reasonable . . . for Jordan to believe that, in reporting the racially charged 'black monkeys' comment . . . he was opposing a racially hostile work environment."

Speaking of Unemployment Insurance Rates -- MD DLLR is owed Millions

I wrote here about how unemployment insurance rates are calculated. It turns out, Maryland is owed $76 million in benefits it overpaid, according to a legislative audit and an article in the Gazette. I assume rates would go down if Maryland collected the overpaid benefits.

Thursday, May 11, 2006

Family responsibilities, Sexual Orientation, and Genetic Status Discrimination are Outlawed by Montgomery County Code

As mentioned here, some Maryland Counties have enacted their own anti-discrimination statutes. Montgomery County's statute is much broader than Title VII and forbids discrimination based on, among other things, "sexual orientation, family responsibilities, or genetic status."

The above terms are defined as follows:

  • Sexual orientation means actual or perceived male or female homosexuality, heterosexual, or bisexuality;
    (1) by practice between lawfully consenting adults; or
    (2) by inclination.

  • Family responsibilities means the state of being financially or legally responsible for the support or care of a person or persons, regardless of the number of dependent persons or the age of any dependent person

Genetic status includes discrimination based on (1) genetic information; or (2) the actual or perceived genetic condition of an employee or the employee's relative.

  • Genetic information means information regarding an employee's (or an employee's relatives): (1) actual or perceived genetic condition; (2) request for or receipt of any test that can detect, indicate, or analyze a genetic condition; or (3) medical history, if the information otherwise satisfies either paragraph (1) or (2).

  • Genetic condition includes the presence of deoxyribonucleic acid (DNA), ribonucleic acid (RNA), chromosomes, proteins, or certain metabolites that indicate or confirm that an individual has a mutation or other genotype associated with a disease or disability.

Wednesday, May 10, 2006

Maryland Licensing Boards Have Broad Powers

An area of Maryland employment law not frequently discussed is disciplinary actions taken by Maryland licensing boards. Most such boards function under the Maryland Department of Mental Health and Hygiene. (A list can be found here). Of course, if you are a professional and you lose your license, you are likely to lose your job.

The Boards have broad investigatory powers. In 2004, for example, the Court of Appeals in Doe v. Maryland Board of Social Work Examiners upheld a Board's authority to subpoena the treatment records of all the clients of a social worker who is under investigation by the Board for violations of her professional duties.

Tuesday, May 09, 2006

Maryland's Highest Court Issues Important Decision for State Employees

The Maryland Court of Appeals today issued an opinion confirming that Administrative Law Judges have the authority to reclassify Maryland State employees. If a Maryland State employee believes his Agency has placed him in an incorrect job classification (i.e., one that does not pay enough), the employee may file a grievance. The last step of the grievance procedure is a hearing before an administrative Law Judge at the Office of Administrative Appeals. In Department of Public Safety and Correction Services v. Myers, while the Agency admitted that an Administrative Judge could award back pay to a wrongly classified employee, it claimed the Judge has no authority to order the Agency to properly classify the employee. The Maryland Court of Appeals rejected the Agency's argument.

According to the Court:

[An ALJ can determine] that a particular employee is executing duties and responsibilities that those agencies have assigned to a different position and that the employee is therefore entitled to be in that position.

The Court affirmed the ALJ's decision to award backpay to several State employees and to upgrade their classifications.

Monday, May 08, 2006

Broad Non-Compete Agreements May Be Totally Unenforceable

I wrote about a Maryland Court's authority to strike language from an unenforceable non-competition agreement here. By striking the language, the Court can render enforceable an otherwise unenforceable agreement.

Some language, however, is too broad and cannot be saved. In an unreported decision, Deutsche Post Global Mail, Ltd. v. Conrad, 116 Fed.Appx. 435
(4th Cir. 2004), the Court refused to revise the following language and struck a non-competition agreement in its entirety.

[The employee may not . . . ]Engage in any activity which may affect adversely the interests of the Company or any Related Corporation and the businesses conducted by either of them, including, without limitation, directly or indirectly soliciting or diverting customers and/or employees of the Company or any related Corporation or attempting to so solicit or divert such customers and/or employees....

Friday, May 05, 2006

Will My Unemployment Rates Go Up If I Lay Off this Employee?

Employers frequently ask this question . The answer is it depends on whether and to what an extent an employer is "charged" for the benefits paid to the employee. As explained on the notice sent to employers when a claimant is first approved for benefits:

  • When an individual files a new claim for Unemployment Insurance benefits, a base period is established. The claimant's base period is the first four of the last five completed calendar quarters prior to the effective date of the claim.

  • The total combined wages reported by you and all other employers during the base period determine the claimant's weekly benefit amount, maximum benefit amount, and the percent of benefits charged to each employer who reported base period wages.

The percent of benefits charged is calculated as follows:

  • If the claimant had more than one base period employer, benefits are chargeable to each base period employer in the same proportion as the amount of wages paid to the claimant by each such employer is to the total amount of wages received by the claimant during the base period, and is rounded off to the nearest whole number without the decimals.

Hence, it is quite possible that if you terminate an employee shortly after he or she is hired, you either will not be charged or charged very little because the claimant earned most of his or money from another employer during the base period (first four of the last five completed calendar quarters).

Assuming you are charged, it will affect your "experience rating." How is your experience rate computed?

  • Your experience rate is assigned on a calendar year basis (January to December). It is determined by finding the ratio between the benefits charged to your account and the taxable wages that you reported in the three fiscal years prior to the computation date (July 1 prior to rated year).
    * * *
    The benefit ratio converts to a rate according to the Table of Rates in the Unemployment Insurance Law.

    The Table of Rates can be found in this helpful manual.

Thursday, May 04, 2006

Disability Retirement Benefits Awarded During Marriage Are Marital Property

In a unanimous opinion, the Court of Appeals ruled today in Conteh v. Conteh that service-connected disability retirement benefits constitute marital property.

Certain employees qualify for "service-connected disability retirement benefits" if they suffer a work-related injury that renders them disabled. Not suprisingly, "service-connected" disability retirement is more generous than "accidental" or normal disability retirement.

Because "service-connected" disability retirement benefits awarded during a marriage constitute marital property, the Court can award a portion of those benefits to a divorcing spouse.

Flashback: Virginia's 2005 Non-Compete Legislation Fails

Writing yesterday about a Maryland Court's authority to revise non competition agreements to make them conform to the law (so called "blue pencil" authority) reminded me of the effort in 2005 to codify Virginia's law on non-compete agreements. The Senate bill passed committee then died. A Virginia Chamber of Commerce newsletter takes credit for persuading the bill's sponsor to study the matter further. It appears there was no effort to move a similar bill this year.

Expressing no opinion on the Virginia Bill's merits, similar legislation in Maryland may bring more certainty (by eliminating the blue pencil rule) and even the playing field in this area.

Wednesday, May 03, 2006

Court Enforces Maryland Non-Compete

Judge Alexander Williams granted an employer's motion for preliminary restraining order in Medserv International, Inc. v. Michael Rooney (8:05-cv-03173-AW March 21, 2006), and directed Mr. Rooney to refrain from soliciting MedSev's clients. The non-compete agreement states that Rooney "shall not, directly or indirectly, compete with [MedServ] or solicit any customer of [MedServ]." Although the Court struck the agreement's general ban on competition using its blue pencil authority, the Court enforced the agreement's prohibition on client solicitation.

If you email me, I will send you a copy of the decision.

Tuesday, May 02, 2006

Another Maryland Commissions Case

Here is another case on a salesperson's right to commissions that close after his or her employment terminates. This opinion follows the decisions discussed in my post on terminal commissions.

Monday, May 01, 2006

Court of Special Appeals overturns Jury in Malicious Prosecution Case

Can an employer that honestly (but wrongly) believes that its employees are stealing, and reports that matter to the police be liable for wrongful prosecution? Apparently not, according to an opinion issued today by the Court of Special Appeals.

The elements of a wrongful prosecution claim are: (1) the defendant instituted or continued criminal proceedings against the plaintiff; (2) defendant lacked probable cause for the proceedings; (3) there was malice or a primary purpose in instituting the proceedings was other than that of bringing an offender to justice; and (4) the proceedings ended in a favorable result for the the plaintiff.

In Smithfield Packing Co. v. Eveley, the Court ruled that an employer "continued criminal proceedings against its employee" by failing to turn over exculpatory evidence to the police. That evidence was the employee's explanation that he did not steal the employer's property (two cases of ham), but held the property in his truck for a purely innocent reason. The Court found that by failing to turn over the employee's statement to the police, the employer "continued the prosecution."

In the same opinion, overturning a jury's verdict, the Court seems to be stating that the employer is insulated from liability because at the time it reported the employee to the police it honestly believed he was stealing. The Court did not address whether the employer continued to have probable cause after it learned the employee had a purely innocent explanation for putting the ham in his truck.

Friday, April 28, 2006

Anti-Discrimination Protections Vary By County

In four Maryland counties (Prince George's, Montgomery, Howard, and Baltimore County), a Maryland employee can file a lawsuit alleging a violation of a local civil rights ordinance. These local ordinances allow greater potential damages than their federal counter-parts and offer broader protections. For example, the Montgomery County Code prohibits discrimination in employment based on an individual's "family responsibilities" and contains no cap on compensatory and punitive damages. Federal law offers no protection for family responsibilities and caps damages.

Employees in the select counties enjoy greater protection than employees who work in the Maryland's other twenty counties. A bill that would have authorized a private right of action for violation of local law in all Maryland counties failed to pass in the General Assembly.

Thursday, April 27, 2006

No absolute right to reinstatement under the FMLA

In YASHENKO v. HARRAH'S NC CASINO CO., No. 05-1256, 4th Cir. (April 27, 2006) the Fourth Circuit decided today that an employee has no absolute right to reinstatement upon return from FMLA-qualified leave. The plaintiff claimed that Harrah's interfered with the exercise of his FMLA rights when, after he took his most recent leave, it refused to restore him to his previous employment position. Yashenko argued that a section of the Act granted him "an absolute entitlement to restoration."

Not so the Fourth Circuit held stating that the right to reinstatement is limited. Specifically, an employer can avoid liability under the FMLA if it can prove that it "would not have retained an employee had the employee not been on FMLA leave." Harrah's did just that -- entitling it to summary judgment.

Wednesday, April 26, 2006

Rumors of Sexual Activity: Title VII -- No; Defamation -- Yes

In reviewing some of the United States District Court for the District of Maryland opinions, I came across Bystry v. Verizon Services Corp., CCB-04-01 (March 31, 2005). There, an internal security employee's statements that Ms. Bystry was involved in a sexual relationship with a co-worker led to her termination. Ms. Bystry claimed the statements evidenced gender discrimination and were defamatory.

Judge Blake granted Verizon's motion for summary judgment on Ms. Bystry's gender discrimination claim. The Court held that the rumors of Ms. Bystry's sexual activities were not based on her gender. "[D]iscrimination based solely on sexual activity or rumors of sexual activity is insufficient."

As for defamation, Judge Blake found sufficient evidence that Verizon employees spread the rumors intentionally or recklessly. The security employee who made the statements claimed she got her information from other Verizon employees. However, these other employees specifically denied they ever made statements about Ms. Bystry's sexual activities.

James Rubin

These materials have been prepared by The Rubin Employment Law Firm, P.C. for information purposes only and are not legal advice. Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship between the sender and receiver. Internet subscribers and online readers should not act upon this information without seeking professional counsel.

Maryland Court of Appeals to Rule on Ministerial Exception

The Spring 2006 issue of the Maryland State Bar Association Section of Labor and Employment Law published “Doing God’s work? Maryland Court of Appeals will Review how the Ministerial Exception Applies to Religious Employees.” The article discusses Archdiocese of Washington v. Moerson, 389 Md. 124, 883 A.2d 914 (2005). In Moerson, the Maryland Court of Appeals is faced with deciding whether the ministerial exception applies to a church organist's tort claims against his former employer.

James Rubin

These materials have been prepared by The Rubin Employment Law Firm, P.C. for information purposes only and are not legal advice. Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship between the sender and receiver. Internet subscribers and online readers should not act upon this information without seeking professional counsel.
Maryland Court of Appeals Grants Cert. in Haas.

On April 12, 2006, the Maryland Court of Appeals granted certiorari in Suzanne Haas v. Lockheed Martin Corporation. The issue in Haas is when the statute of limitation commences in a discrimination case. Haas contends that the statute began to run on the day that she was actually discharged, October 23, 2001. Her employer contends that the statute began on the day that she was notified of her prospective discharge, October 9, 2001.

In December 2005, the Court of Special Appeals ruled that in determining the point in time when the statute of limitations begins to run, the focus is on the time of the discriminatory act, i.e, at the time of notification that appellant would be discharged, not the point at which the consequences of the unlawful act are actualized, i.e., at the time of termination of appellant’s employment.

James Rubin

These materials have been prepared by The Rubin Employment Law Firm, P.C. for information purposes only and are not legal advice. Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship between the sender and receiver. Internet subscribers and online readers should not act upon this information without seeking professional counsel.

Tuesday, April 25, 2006

Give me a break. Working during breaks can result in overtime.

In Chao v. Self Pride, Inc. RDB No. 03-3409 (June 14, 2005) Judge Bennett granted partial summary judgment in favor of Community Living Assistants (CLAs) -- represented by the Department of Labor -- against their employer, Self Pride. Self Pride operated community living facilities in Baltimore, Maryland.

The CLAs sued for the overtime they earned when they worked a 48 hour weekend shift. Self Pride's defense was that CLAs did not work more than 40 hours in a week because it gave the CLAs two four hour breaks. But the CLAs produced undisputed evidence that there were no breaks because the residents required constant care. Further, the CLAs showed that Self Pride deducted the breaks from the employees' time regardless of whether the employees actually took the breaks.

The Court ruled that Self Pride violated the Fair Labor Standards Act by failing to keep appropriate time records; and was was liable for liquidated damages. Judge Bennett also ruled that FLSA permitted individual liability for the CLAs' supervisor and that such liability was warranted in this case.

James Rubin

These materials have been prepared by The Rubin Employment Law Firm, P.C. for information purposes only and are not legal advice. Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship between the sender and receiver. Internet subscribers and online readers should not act upon this information without seeking professional counsel.

Monday, April 17, 2006

Terminal Commissions

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).

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.

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.”

James Rubin

These materials have been prepared by The Rubin Employment Law Firm, P.C. for information purposes only and are not legal advice. Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship between the sender and receiver. Internet subscribers and online readers should not act upon this information without seeking professional counsel.