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.