My comment on Hoffeld v. Shepherd Electric

In my prior post I reviewed the recent decision issues by the Court of Special Appeals in Hoffeld v. Shepherd Electric. After a bench trial (no jury), the Court held that the plaintiff was not entitled to several commissions because the employer had not yet invoiced several deals. The Court apparently reasoned in part that because Hoffeld knew that invoicing was part of the sale, he was not entitled to a commission on deals Shepherd had yet not invoiced by his last day worked.

After reading the decision, my feeling and the feeling of several of my colleagues was that it was not entirely consistent with the seminal case in the area, McCabe v. Medex. Medex holds that an employer cannot tie the payment of commission to a condition unrelated to the work necessary to earn those commissions. Because it appears from the trial record that Hoffeld had done all the work necessary to earn several commission, tying commission to the invoice date appeared to be arbitrary.

Hoffeld asked the highest Court in Maryland, the Court of Appeals, to review the Court of Special Appeals decision. The Metropolitan Employment Lawyers Association (MWELA) and Maryland Lawyers Association (MELA) filed an amicus brief supporting Hoffeld's request. I co-authored the brief.

I am pleased to report that Court of Appeals granted Hoffeld's request and will review the decision issued by the Court of Special Appeals.

New Commissions Case issued by Court of Special Appeals

The Court of Special Appeals recently issued Hoffeld v. Shepherd Electric Co. There, Mr. Hoffeld worked for a wholesale and retail electrical supplier as an outside salesman. Shepherd Electric paid Mr. Hoffeld solely on commission. Shepherd Electric did not pay a commission until an order was shipped and invoiced. Mr. Hoffeld had continuing responsibilities from the date a customer indicated its intent to purchase through the date of delivery and invoice. Specifically, business requirements for a customer’s particular project frequently evolved in terms of the nature, amount, and/or prices of the goods specified, inevitably requiring adjustments to the original purchase order. Such changes required Mr. Hoffeld to perform additional work throughout the order interval, continuing those duties until the order is actually shipped. When Mr. Hoffeld quit, Shepherd Electric transferred his accounts to a new representative who received the entire commission at issue.


Mr. Hoffeld contended he was entitled to commission on several purchase orders that were not invoiced and/or shipped until after his termination. Shepherd Electric contended the commission was not earned until invoiced and paid.


The Court of Special Appeals ruled that the trial court did not commit clear error in finding that sales were made and commissions were earned when the orders were shipped and invoiced. According to the Court, commissions were not linked to the arbitrary factor of employment, but to a reasonable job requirement, i.e., Mr. Hoffeld’s continuing service to a customer. Of particular importance to the Court of Special Appeals was the fact that Shepherd Electric did not keep the commissions at issue, but paid them to another salesperson who assumed Mr. Hoffeld’s accounts. Notably, in Hoffeld, the Court of Special Appeals stated Shepherd Electric’s policy was properly scrutinized to ensure that it has not been used to circumvent the MWPCL. Indeed, an employer may not terminate an employee as pretext to avoid paying commissions. Such act would violate the Wage Payment and Collection Law.

Triple Damages Under the Maryland Wage Payment and Collection Law

I frequently represent salespeople seeking unpaid commissions under the Maryland Wage Maryland Wage Payment and Collection Law. I have written about this area of the law many times.

One important part of the Maryland Wage Payment and Collection Law is the provision that allows the Court to award triple damages if the plaintiff successfully proves his or her claims. If the jury finds that an employer withheld earned commissions “not as a result of a bona fide dispute,” the jury may award the employee an amount not exceeding 3 times the wage. The Court may then also award reasonable counsel fees and other costs. Under the provision, a claim for $25,000 may represent $75,000 or more of potential liability.

What does a plaintiff need to prove to get triple damages?

• Here is a brief on when employees are entitled to triple damages under the Maryland Wage Payment and Collection Law.

• Here are suggested jury instructions on triple damages.

Top Five Ways Employers Violate Maryland's Wage Laws

I am amazed at how creative employers can be when it comes to violating Maryland's wage laws. However, as my law practice continues to grow, several consistent wage violations continue to recur. In no particular order, here is what I see.

1. Employers fail to pay their non-exempt employees overtime when they work more than 40 hours in a week.
2. Employers misclassify their non-exempt employees as exempt from receiving overtime.
3. Employers misclassify their employees as independent contractors.
4. Employers fail to pay salespeople commissions in their pipeline when their employment terminates.
5. Employers fail to pay accrued vacation at termination.

How Employment Lawyers Charge Their Clients

Employment lawyers work to earn money. When an employment lawyer is evaluating a case his or her eyes are on the bottom line. "Can I service my client while making a profit?" is the question we are asking. Many cases come with laudable rewards in addition to money, including working to attain a measure justice for our clients. But do not kid yourself: lawyers work for money.

There are four ways a lawyer can charge: by the hour, on a flat rate, on a contingency-fee basis, or some combination therof. Choosing how to charge involves an evaluation of risk for both the attorney and the client.

Hourly billing -Most risky for client; Least risky for attorney.

The attorney keeps track of his or her time and send the client a bill for the hours worked. Because liability often is not readily apparent in employment law cases, many employment law attorneys require that the initial phase of the attorney-client relationship be based on hourly billing. In purely defensive cases, such as when an employer is claiming my client is violating a non-competition agreement, hourly billing is often the most rational choice. (Much has been written about hourly billing variants, such as value-based billing. I am keeping it simple for this article.)

Flat Rate -- Moderately risky to the client; Moderately risky to attorney.

Employment lawyers bill a flat rate for certain discrete tasks. For example, I have processed federal employee disability retirement applications on a flat rate. The client pays a set fee and does not need to worry about the amount of time I am spending on his or her matter.

Contingency Fee -- least risky to the client; most risky to attorney.

The attorney only recovers a fee if the client wins. For this reason, most employment attorneys will not consider a pure contingency fee relationship unless the employer's liability and ability to pay are clear. I generally only consider pure contingency fee arrangements in overtime, unpaid commissions, and accrued vacation pay cases.

Combination of Hourly, Flat Rate, and/or Contingency Fee.

The lawyer and client and agree to any combination of the above. For example, the lawyer and client may agree to hourly billing until the bills reach a certain dollar amount and then agree to convert the matter to a contingency fee relationship. The possibilities are infinite and require careful analysis of the merits of the claim and the possibility for settlement or success at trial.

Accrued Vacation Pay Is Covered by the Wage Payment and Collection Law

I have written many articles on why accrued vacation should be considered a wage under the Maryland Wage Payment and Collection Law (MWPCL) . This is an important issue for Maryland employees. If accrued vacation is covered by the MWPCL, a plaintiff suing to recover earned wages may be entitled to three times the amount actually owed.

The Maryland Court of Special Appeals settled the matter in favor of Maryland employees. In Catapult Technology, LTD v. Wolfe, the Court held that accrued vacation is covered by the MWPCL and cannot be forfeited. The Court stated that information on on the Maryland Department of Labor's website stating that accrued vacation is not a wage -- is wrong. In a troubling portion of the opinion the Court denied treble damages finding that the plaintiffs did not prove Catapult kept their earned waged in bad faith.

My colleague, Marc Smith, of Smith, Lease and Goldstein,and WageCollection.com, litigated this case.

Protecting Employee Rights in the State Courts of Maryland

The Third Annual Maryland Employment Lawyers ("MELA") Conference, "Protecting Employee Rights in the State Courts of Maryland," will be Friday, September 28, 2007 at the Columbia Sheraton.

There will be an exciting line-up, focused on how to succeed in the Maryland state courts. Special attention will be given to the new private right of action under 49B, Maryland's anti-discrimination law. Judges from various circuit courts in Maryland, and from the Office of Administrative Hearings, will give an insider's view to their jurisdictions. You'll also learn how to run a "lean and mean employment law practice," and get tips from seasoned employment litigators about how to win employment cases in the circuit courts (especially under local county codes). A full agenda is below and a brochure/registration form is attached.

8:30-9:00 a.m. Registration and Continental Breakfast

9:00-10:00 a.m. How to Run a Lean and Mean Employment Law
Practice

Moderator: Mary T. Keating, Esq.
Law Office of Mary T. Keating

Daniel A. Katz, Esq.
Andalman & Flynn, PC

Gwenlynn Whittle D'Souza, Esq.
Lippman, Semsker & Salb, LLC

Peter Holland, Esq.
The Holland Law Firm, PC

Break

10:15-11:15 a.m. Mechanics of the New Private Right of Action
under 49B

Moderator: Deborah Thompson Eisenberg, Esq.
Brown, Goldstein & Levy, LLP

Kathleen Cahill, Esq.
Law Offices of Kathleen Cahill, LLC

Glendora Hughes, Esq.
General Counsel, Maryland Commission on
Human Relations

11:15-12:15 p.m. Tips for Litigating Discrimination Claims
under the Local County Codes

Moderator: Thomas Gagliardo, Esq.
Gagliardo Law Firm

Linda Hitt Thatcher, Esq.
Thatcher Law Firm, LLC

Rebecca N. Strandberg, Esq.
Rebecca N. Strandberg & Associates

Leizer Goldsmith, Esq.
The Goldsmith Law Firm, LLC

Tammany M. Kramer, Esq.
Heller, Huron, Chertkof, Lerner, Simon & Salzman, PLLC

12:15 - 1:30 p.m. LUNCH

Keynote Speaker:
The Honorable Thomas Perez, Secretary Maryland Department of Labor, Licensing & Regulation

1:45 - 2:45 p.m. How to Litigate a State Administrative Hearing
at the OAH

Moderator: James E. Rubin, Esq.
Rubin Employment Law Firm, P.C.

The Honorable Thomas Dewberry
Chief Administrative Law Judge, OAH

The Honorable Bernard McClellan
Administrative Law Judge, Deputy Director of Quality Assurance, OAH

The Honorable Wayne Brooks
Administrative Law Judge, Deputy Director of Operations, OAH

Jessica Kaufman, Assistant Attorney General Maryland Department of Labor, Licensing and Regulation

Break (Sponsored by JMW Settlements)

3:00 - 4:15 p.m. Views from the Bench: Litigating in Maryland's Circuit Courts

Moderator: Jerry R. Goldstein, Esq.
Bulman, Dunie, Burke & Feld

The Honorable Evelyn Omega Cannon
Circuit Court for Baltimore City

The Honorable Toni E. Clarke
Circuit Court for Prince George's County

The Honorable Ronald B. Rubin
Circuit Court for Montgomery County

4:15 - 5:00 p.m.
MELA Happy Hour

Top Five Ways Restaurants Violate Wage Laws

Over at wagecollection.com, I noted the top 5 ways restaurants violate wage laws.

Employees win Jury Verdict in Accrued Vacation Case

I have argued many times that earned accrued vacation pay counts as wages under the Maryland Wage Payment and Collection law. Counting vacation pay under the law is significant because it allows employees to collect up to three times the amount owed if an employer wrongfully withholds earned vacation pay.

My colleague Marc Smith at Smith, Lease and Goldstein reports at the wage collection blog that he won a jury verdict obtaining accrued vacation and additional damages under the Wage Payment and Collection Law.

DISCLOSURE: Mr. Smith and I are using the wage collection blog to report on updates on developments in wage law and on our own wage collection cases.

Two More Ways to Leverage Your Way Out of A Non-Compete

On this post, I listed three ways to leverage your way out of a non-compete in Maryland:

• Convince your employer to reduce your non-compete obligations by agreeing not to initiate litigation. Another way to put this is convince your employer that the litigation will be more expensive than the benefit of enforcing a non-compete.
• 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.
• 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.

Here are two more:

• Examine your affirmative claims. Do you have a wage payment, overtime, or discrimination claim that is of equal or greater value to your employer's claimed non-compete violation? If so, it may make sense for the parties to release each other from the alleged violations in a settlement agreement rather then pursuing expensive litigation.
• Convince your employer that the non-compete agreement is not aimed at a protectable interest.

A Non-Compete Success Story

I recently defended an individual salesperson accused of violating a non-compete agreement. (The individual, the companies involved, and the result are confidential.) What I believe played a major role in the favorable result was establishing who can and who cannot be subject to a non-compete in Maryland. Here are two paragraphs (slightly modified) from the papers in the case:

Because non-compete agreements by their nature conflict with the “natural and inherent” right of individuals to pursue their livelihoods and with the right of the “general public . . . to have the energy, industry, skill and talents of all individuals freely offered upon the market,” they are closely scrutinized and narrowly enforced by Maryland's courts . . .

Furthermore, to be enforceable a non-compete agreement must protect a legitimate interest. With regard to salespeople generally the only legitimate interest is preventing a former employee from using a list of unique customers. Non-competition agreements are not enforceable against a relatively unskilled worker who does not actually solicit his or her former employer’s customers. . .

Maryland Permits Church Organist to Continue Lawsuit

I have written a lot about Archdiocese of Washington v. Moerson. Here is a summary I wrote more than a year ago:

In Moerson, the Circuit Court and Court of Special Appeals issued conflicting decisions on whether the "ministerial exception" to Maryland's employment laws applies to an organist's claim against his former employer.

According to established precedent (Presbyterian Church v. Hull Memorial Presbyterian Church), the "free exercise" clauses to the United States and Maryland Constitutions create a zone of autonomy for religious organizations. The church autonomy doctrine deprives civil court of subject matter jurisdiction to review matters involving church governance and doctrine. However, the First Amendment is no impediment to a civil court's jurisdiction when it can resolve a Church's conflict by "neutral principles of law" without examining its religious doctrine (Maryland and Virginia Eldership of the Churches of God v. Church of God at Sharpsburg, Inc.).

As applied to statutory or common law employment claims, the church autonomy doctrine bars a civil court from reviewing a church's employment decisions regarding its ministers (hence, the phrase "ministerial exception."). This is so because the "perpetuation of a church's existence may depend upon those whom it selects to preach its values, teach its message and interpret its doctrines both to its own membership and to the world at large." (Rayburn v. General Conference of Seventh Day Adventists). But when a matter does not involve a minister, a civil court may resolve employment disputes, even if they are within a Church, if the
employee provides a purely secular service for the church (as in the 1982 decision EEOC v. Pacific Press Publ'g Ass'n, when the Civil Rights Act was applied to an editorial secretary in a church publishing house). Defining the line between ministerial and secular is often the issue in these cases as it is in Moerson.

Today, in a 4-3 decision, the Court ruled that Mr. Moerson is not a ministerial employee ruling that he merely accompanied relgious services.

Overtime Calculator

Calculating your overtime premium can be a pain. Now the U.S. Department of Labor has an overtime calculator on its website to help with your calculations. Are you owed overtime? Check the calculator to see. (Thanks to Michael Fox at Jottings by an Employer's Lawyer for the link)

Maryland Department of Labor to add Wage investigators

An employee who is owed wages from his or her employer can pursue an action to collect those wages under the Maryland Wage Payment and Collection Law. The employee has two options: (1) hire a private attorney to sue his or her former employer; (2) report the employer to the Maryland Department of Labor, Licensing and Regulation ("DLLR"), Employment Standards Division.

Under Governor Ehrlich, by 2006, the Employment Standards Division had zero investigators devoted to wage payment claims. (For this reason I was reluctant to send employees to the DLLR).

According to the new DLLR Secretary, Thomas Perez, the O'Malley administration added budget money to hire six investigators. As of the ariting of the article cited here, the Department had filled three positions.

Of note:

1. The investigators' starting salary is $24,000 per year.
2. O'Malley's transition teams suggested that Maryland hire 11 investigators.

Two Key Maryland Cases End Today

1. The Fourth Circuit's "black monkeys" case narrowed Title VII's anti-retaliation protection for employees working in Maryland. The Court held that by reporting to your boss that your co-worker called African-Americans "black monkeys" and "black apes," you are not opposing discrimination in the workplace (and therefore not entitled to Title VII's anti-retaliation protections). The Court reasoned that because a single discriminatory outburst does not violate Title VII, opposing such an outburst is not entitled to protection. See here, here, here, and here. Today, the Supreme Court declined to review the Fourth Circuit's decision in Jordan v. Alternative Resources Corp.


2. Attorney General Douglas Gansler today announced he would not seek Supreme Court review of the Fourth Circuit's decision holding that the Maryland's Wal-Mart law is preempted by ERISA. The Wal-Mart law, summarized here, would have required the company to spend at least 8% of its total wages on health insurance.

Restaurant Workers Among the Most Abused.

In fiscal year 2006, the Department of Labor collected nearly $50.6 million in back wages for approximately 86,700 workers in "low-wage industries." What industry made up the bulk of the violations? The restaurant industry.

Although the statistics are drawn from the entire nation, I know it is no different in Maryland since this firm (and several of my colleagues) have pursued claims on behalf of servers, kitchen workers, and custodial employees.

Are You Really an Independent Contractor?

Monday is tax day. Is the individual responsible for payroll taxes or is the employer? Is the individual entitled to overtime for working more than 40 hours in a week. It may depend on whether the individual is an independent contractor or an employee. How can you tell?

One place to start is Maryland's unemployment law. That law provides a narrow (perhaps the narrowest) definition of an independent contractor. The law states an individual is an independent contractor if:

(1) the individual who performs the work is free from control and direction over
its performance both in fact and under the contract;

(2) the individual customarily is engaged in an independent business or occupation of the same nature as that involved in the work; and

(3) the work is: (i) outside of the usual course of business of the person for whom the work is performed; or (ii) performed outside of any place of business of the person for whom the work is performed. (emphasis added)

The Court of Appeals interpreted the statute in DLLR v. Fox. There the Court held that hygienists (and other professionals) were employed by the agency that placed them in temporary positions in the Baltimore area. Why? The hygienists were not "free from control" by the agency. The agency "controlled" the hygienists' placement and pay rate. (As a result the agency had to pay back unemployment tax premiums for hygienists).

Again, the Maryland unemployment law independent contractor test is one of the most restrictive. The IRS and common law tests are slightly different. But, if your employer controls your work and sets your pay you may well be an employee entitled to unemployment benefits.

Do you believe you have been misclassified as an independent contractor? Contact me.

True or False: Maryland Law Does Not Require Employers to Give Breaks to their Adult Employees.

[UPDATE: Starting March 1, 2011, certain retail employee will be entitled to breaks.]

True. According to the Maryland Department of Labor: "There is no law requiring an employer to provide breaks, including lunch breaks, unless the employee is under the age of 18."

But if an employer gives you a "break" you must be completely relieved of your duties for at least twenty minutes. Otherwise you are working and should be compensated for this "break" time. See this post.

Medex v. McCabe and Accrued Vacation

The Maryland Court of Appeals seminal wage payment and collection law decision is Medex v. McCabe. The rule of Medex is:

If an employee earns compensation he or she is entitled to it and an employer cannot arbitrarily require an employee to forfeit those wages.

The Court of Appeals reinforced Medex's holding in a severance case, Stevenson v. BB&T. The Court distinguished between severance an employee earns and severance an employer gives the employee for something other than his or her labor (such as in exchange for a covenant not to compete or in exchange for a waiver of claims). Earned severance is subject to the Wage Payment and Collection Law; unearned severance is not subject to the Wage Payment and Collection Law. (Coverage matters because the Wage Payment and Collection Law allows an employee to recover up to triple the amount owed and his or her attorney's fees.)

Is the law any different for vacation pay. I think not. Medex nearly says as much. The Court citing a series of out of state decisions comes to the conclusion:

[A]n employee’s right to compensation vests when the employee
does everything required to earn the wages

If an employer allows employee to accrue or earn vacation based the time they work such vacation "vests."

Note the idea of vesting vacation pay exists in other states, most notably California.

A Tail of Two Wage Bills.

Legislators introduced two interesting wage bills in this General Assembly session. One "living wage bill" raises the minimum wages for employees working for state-government contractors. The other bill seeks to limit executive compensation to a maximum of thirty times a company's lowest paid worker. (Thanks to Trevor Rosen at the Maryland Law Blog for pointing me to the executive compensation bill)


A vote on a living wage bill is expected today. According to the Daily Record:

The House of Delegates is expected to vote Friday on House Bill 430, which would make Maryland the first state to require companies with state contracts to pay the living wage. The wage would apply to workers on contracts worth $100,000 or more and would be set at $11.30 an hour for contracts performed in Baltimore City and Montgomery, Prince George’s, Howard, Anne Arundel and Baltimore counties. State contracts in the remaining counties would require workers to be paid $8.50 an hour.

The executive compensation bill appears unlikely to make it out of Committee.

Employers May Not Have their Hand in Restaurant Workers' Tip Pool

Employers can pay restaurant workers the "sub minimum wage" ($3.08 per hour in Maryland) because servers and waiters can make up the difference earning tips. Employers call this the "tip credit" against the minimum wage.

Employers may pool all tips and distribute them equitably to those employees who are in the business of providing service to the customers. This is called a tip pool.

But can the House keep any tips? Absolutely not. If the employer keeps the tips then it is not entitled to the tip credit. In such case the serves would have valid claims for the full minimum wage.

Restauruant workers who work overtime: are you entitled to 1.5 x $3.08 per overtime hour or 1.5 x the minumum wage?

Which is it? Hint: Restaurants frequently get the answer wrong. Here is the answer from the United States Department of Labor website:

Overtime: Overtime must be paid at a rate of at least one and one-half times the employee's regular rate of pay for each hour worked in excess of 40 hours per week. Tipped employees who receive $2.13 per hour in direct wages are also subject to overtime at one and one-half times the applicable minimum wage, not one and one-half times $2.13.

Note: Maryland's minimum wage for tipped employees is $3.08.

Even Written Employment Contracts Can be At Will

Maryland is an "at will employment" state. With limited exception, an employer or an employee can terminate the relationship without notice for any reason. One familiar exception is that an employer cannot terminate an employee because of his or her protected status, i.e., because of his or her race, color, religion, gender, age, disability status, etc. Another familiar exception is if the parties have entered into a written agreement altering the at will relationship. The parties usually do this by agreeing in writing to an employment term (i.e., a year) and limiting the employer right to terminate to very specific reasons (often referred to in shorthand as limiting the right to terminate only "for cause").

But, what if the employees and the employer enter a written agreement without specifying an employment term. United States District Judge Blake ruled in this case that the absence of a term means that the relationship is "at will." How does this affect you? If you are an employee and are going through the trouble of negotiating an employment agreement make sure it has a term (and make sure you have an employment attorney review that agreement).

Two sidenotes:

• I wrote here that under Maryland law a written at will employment agreement can contain a arbitration provision (waiving the employee's right to a jury trial).

• Under Maryland law a written at will employment agreement can contain a non-compete provision (limiting the employee's ability to earn a living after the relationship ends).

Two more reasons to get expert advice when asked to sign an employment agreement.

General Assembly Extends Discrimination Cause of Action Statewide

I wrote here about a quirk in Maryland's anti-discrimination laws. At the time only individuals who lived in four Maryland counties (Prince George's, Montgomery, Howard, and Baltimore County), could file a lawsuit alleging a violation of a local civil rights ordinance.

On March 23, 2007, Maryland General Assembly extended the law to cover the entire State. If Governor O'Malley signs the law, which is expected, all Maryland residents will have the right to bring suit under a local anti-discrimination law. The bill, which takes effect on October 1, 2007, opens the door to state court for discrimination victims.

Daniel Snyder Makes the Number 1 Employment Law Mistake: Jury Awards $44,880 to Nanny

What is the number one employment law mistake? Failing to pay overtime to non-exempt employees. Redskins owner Daniel Snyder learned the hard way after a Montgomery County jury awarded his former nanny $44,880 in unpaid overtime. The jury declined to award the nanny additional damages under the Maryland Wage Payment and Collection Law.

Snyder also learned that Maryland's overtime law contains no exception for in-home workers. Any person who pays another person to work can be an employer in Maryland.

Snyder could have easily avoided the lawsuit with no extra cost. How? You will have to email me to find out.

Rejecting Offer May Disqualify You From Receiving Maryland Unemployment Benefits

STS (a company) laid off Sharon Long from a seasonal position. She applied for unemployment benefits. A few weeks later STS offer Ms. Long a job at a higher rate of pay, but only until tax season ended. Ms. Long rejected the offer because she wanted to full time permanent work.

STS contested Ms. Long's unemployment claim. The company contended that she should be disqualified because she rejected STS's employment offer without good cause. Hence, STS presented the issue -- ultimately decided by the Court of Special Appeals -- of whether Ms. Long's decision to rejects STS's offer was made for good cause.

According to the Court:

We hold that under the circumstances of this case an ordinarily reasonable individual would not have turned down the offer of seasonal employment made by STS. Crucial to our decision in this regard is the fact that Long was offered
a “suitable job.” The job duties were exactly the same as the position she had last held before she became unemployed – and the pay was better.

Best Sources for Maryland Employment Law

My five favorite sources for Maryland Employment Law:

1. Maryland Courts Watcher -- a review of most maryland judicial opinions.
2. Maryland State Court Opinion Index.
3. United States District Court of the District of Maryland Opinions.
4. Paul Mollica's Review of the United States Court of Appeals for the Fourth Circuit.
5. Maryland Business and Technology Court Opinions.

Since the original posting I discovered another excellent site: Trevor Rosen's Maryland Law Blog.

Non-Competes Are Only Enforceable if Directed at a Legally Protected Interest

Not all employees can be covered by non-compete agreements. For example, if you are an administrator with little contact with customers or your employer's secrets, a court is unlikely to enforce any non-compete you signed. Non-compete agreements generally can only be enforced if directed at a legally protectable interest. Maryland Courts have found there to be a only a few (perhaps only two) legally protectable interests. Foremost among those interests are an employer's relationship with its customers and an employer's trade secrets.

No access to customers or secrets = no non-compete.

The Maryland Court of Appeals summarized the concept of what is a protectable interest forty years ago in Silver v. Goldberger. The concepts stands to this day. The Court stated:

There is a line of cases which holds that restraint is justified if a part of the compensated services of the former employee consisted in the creation of the good will of customers and clients which is likely to follow the person of the former employee. And there is another line of cases which holds that restraint is not justified if the harm caused by service to another consists merely in the fact that the former employee becomes a more efficient competitor just as the former employer did through having a competent and efficient employee.

Maryland Court of Appeals Grants Cert. in Two Employment Law Cases

The Maryland Court of Appeals will review two employment law cases in its September 2006 term. Both cases arise in Montgomery County. The issues presented are set forth below.

Sterling v. Atlantic Automotive (Ct. Spec. App. unreported) will address the extent an employer is vicariously liable for the harassment of its employee. Will the Court adopt the United States Supreme Court's Faragher/Ellerth anaylsis? In today's Haas opinion, the Court specifically declined to follow U.S. Supreme Court precedent on a statute of limitations issue.

Friolo v. Frankel will decide the extent to which a plaintiff can recover attorney's fee under the Wage Payment and Collection Law for work performed on a successful appeal overturning a trial judge's fee award. The Court of Special Appeals denied the plaintiff's claims for appellate fees.

Haas: Maryland Court Rules That Statute of Limitations For Discrimination Claim Begins At Termination

I wrote here that the Maryland Court of Appeals granted cert in Suzanne Haas v. Lockheed Martin Corporation. The issue in Haas is when the statute of limitation commences in a discrimination case. Haas contended 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. Haas filed suit October 22, 2003. The statute of limitations for her state law (Article 49B) discrimination claim is two years from the date of the occurence.

Today, the Court of Appeals issued its decision in favor of Haas and found her statute of limitations began on the date she was actually discharged. The Court rejected United States Supreme Court precedent stating that the statute of limitations in discrimination claims begins when a plaintiff has notice of her claims.

More on Accrued Vacation and the Maryland Wage Payment and Collection Law

A line of Maryland cases states that under the Maryland Wage Payment and Collection Law an employer cannot require an employee to forfeit earned wages. Accrued vacation is undoubtedly earned as it is accrued.


Which of the following statements is true:

A. "[I]f an employer informs employees at hiring that unused vacation leave will be lost or forfeited when employment ends, then an employee will probably not be able to claim it."

OR

B. Wages under the Maryland Wage Payment and
Collection Law include: "some accrued or accumulated compensation such as vacation ("annual") leave, sick leave, or other promised benefit."

Statement B is a correct statement of law; Statement A appears to be false. The problem is that both statements, which contradict each other, are taken from the Maryland Department of Labor, Licensing and Regulation's Guide to Wage Payment and Employment Standards.

To further complicate matters, in the 2006 legislative session, several Delegates sponsored House Bill 701 which would have made explicit an employer's obligation to pay accrued vacation. The Bill died in committee. The Fiscal and Policy Note apparently picks up the contradictory language from the Department of Labor, Licensing and Regulation's website. The note states:

In Maryland, the question as to whether an employer must pay an employee for vacation leave upon termination depends on the employer's policies. In the Wage Payment and Collection Law (WPCL), wage means all compensation due an employee and includes any fringe benefit promised in exchange for service. Accrued vacation leave, which accumulates as an employee provides services, is then sometimes viewed as recoverable under WPCL.

My advice: ignore the DLLR's website and follow the WPCL: accrued vacation counts as earned wages.

Year in Review: 5 Top Maryland Employment Law Issues from 2006

5. Employers can require at-will employees to waive their right to a jury trial through mandatory arbitration provisions in job applications. At the same time many Maryland employment lawyers realize that arbitration is just as expensive, unwieldy and unpredictable as litigation.

4. After the skirmish over Governor Ehrlich's political appointments, the citizens of Maryland elect a new governor. Will the General Assembly investigate soon-to-be Governor O'Malley's appointments?

3. The Maryland Federal District Court strikes down the Wal-Mart bill. The case is now pending at the Fourth Circuit Court of Appeals.

2. The Supreme Court's Burlington Northern decision expands employee rights to challenge workplace retaliation. At the same time, the Fourth Circuit greatly restricts such rights in Jordan v. Alternative Resources Corp. Will the Supreme Court review the Jordan case in 2007?

1. The Maryland Wage Payment and Collection Law really means that it says. Employer must pay employees earned wages, whether they be accrued vacation, bonuses, or commissions.