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.