Friday, December 19, 2008

Promised Profits and Deferred Compensation Can be a Wage -- Triple Damages Awarded!

Accountant Kevin Fetridge worked at Aronson & Co. for over 25 years. Under Mr. Fetridge's employment agreement, if he was terminated, he would receive "Terminating Employee Compensation" (TEC), a form of severance pay. However, if Mr. Fetridge violated a non-compete agreemen, Aronson would be entitled to offset damages from the TEC.

Aronson argued that the TEC was not a "wage" under the Maryland Wage Payment and Collection Law because of the offset agreement.

The Court of Special Appeals rejected this argument. It held the TEC is a wage because Mr. Fetridge was allowed to receive the TEC, at least in part, even if he violated the covenant. This is important because it allowed Mr. Fetridge to collect under the triple damages provision in the Wage Payment and Collection Law.

Aronson also argued that the definition of a "wage" under the Law does not include a business's allocation of its profits because they are not directly tied to an employee's efforts. The Court held that the jury could find that the Deferred Compensation Account funds were "promised as compensation for work performed" under the terms of his agreement and were therefore a "wage."

Aronson also appealed the jury's award under the Wage Law which allows treble damages when wages are withheld in bad faith. Aronson argued that it withheld the payments because of a bona fide dispute over whether Fetridge violated the non-compete covenant. Aronson contended that it had a good faith basis to believe that Fetridge had violated the covenant by moving to a new firm and taking Aronson's clients with him.

The jury makes the determination about the existence of a bona fide dispute, the Court held. Reviewing the record, the Court affirmed that the jury had sufficient evidence to decide that Aronson did not have a "good faith basis" for refusing to pay Fetridge.

Monday, December 08, 2008

Attorney's Fees Available Under Maryland Wage Payment and Collection Law

Karl Clark sued his former employer, Programmers' Consortium, Inc., for unpaid wages. The Consortium paid Mr. Clark sporadically because of financial difficulties in the company. He ultimately sued his former employer under the Maryland Wage Payment and Collection Law.

Under the Law, if the court finds that employer withheld the wage of an employee and it was not as a result of a bona fide dispute, the court may award the employee treble damages and reasonable attorney's fees and other costs.

A jury found that the Consortium withheld wages and it was not as a result of a bona fide dispute between the parties. However, the jury did not grant any additional damages beyond the back wages. A major question on appeal was whether the judge could award attorney's fees when the jury did not award enhanced damages.

The Court of Special Appeals decided that there are two separate and independent determinations- one decided by the jury and the other by the judge:

  • The jury decides whether wages were withheld in the absence of a bona fide dispute.

  • The judge decides whether to award attorney's fees, regardless of whether the jury awarded any additional damages.

The decision is important, especially for plaintiffs, because it allows judges to award attorney's fees and costs, even if the jury does not find the absence of a bona fide dispute and/or does not award treble damages.

NOTE: The Maryland Court of Appeals is currently reviewing this decision.

Tuesday, May 13, 2008

General Assembly Severely Limits Employees' Rights to Accrued Vacation Pay Upon Termination

The Maryland Wage Payment and Collection Law defines wages as including fringe benefits. Many plaintiffs' employment lawyers, like myself, argued that vacation pay is a fringe benefit earned just like any other wage. In August 2007, the Court of Special Appeals agreed with us ruling in Catapult v. Wolfe, that promised vacation constitutes a wage under the Law. Catapult was an important decision for Maryland employees. It gave them the right to sue to recover earned vacation pay and, possibly, three times the amount actually owed under the Maryland Wage Payment and Collection Law.

Employers were not happy with the Catapult decision. In a show of political force, the business lobby pushed through Senate Bill 797 as "emergency legislation.: The bill allows employers to require that their employee forfeit accrued vacation if the employer has a written policy to that effect. The Bill's fiscal note show that its intent is to undo Catapult.

The Governor signed the bill into law.

Court of Appeals Dismisses Hoffeld

As mentioned in a previous post, the Maryland Court of Appeals had agreed to review the most recent commissions case brought under the Maryland Wage Payment and Collection Law. The name of the case is Hoffeld v. Shepherd Electric. Our lower appeals court, the Court of Special Appeals, ruled that a salesman was not entitled to several commissions because the employer had not yet invoiced several deals. I helped draft a brief urging the Court of Appeals to review the decision to further define the rights that Maryland's salespeople have to their commissions in their pipeline when their employment terminates.

After oral argument, the Court of Appeals dismissed Hoffeld. The Court offered no explanation for its action. As a result the Court of Special Appeals decision is intact.

What does this mean?

1. Maryland salespeople still have the right to commission in their pipeline if they have completed the sales work necessary to earn those commissions.

2. The Court is likely to re-visit this area of the law when the right case comes around -- since Hoffeld was not the right case.

Friday, January 18, 2008

Q: My Employer Has Offerred Me Severance In Exchange for Signing a Waiver. What Should I Do?

Q: You have been fired. Your employer offers you a severance agreement. The agreement offers you money in exchange for signing a waiver. What should you do?

A: You should understand exactly what it is you are waiving. If possible, have a lawyer review the agreement. Some employers take advantage of their superior bargaining power and insert unfavorable terms in severance agreements. I have seen non-competition, non-solicitation, attorney fee-shifting, and arbitration provisions inserted into severance agreements.

You should protect your interests. Understand what your former employer will say to future employers seeking a reference. Will your former employer give you a positive, or at least, a neutral reference. Will your former employer contest your claim for unemployment benefits?

Lastly, do not leave money on the table. Understand your rights to earned wages under the Maryland Wage Payment and Collection Law.

Wednesday, January 16, 2008

Satisfied Client -- Commissions Case Under the Maryland Wage Payment and Collection Law

Last year I worked very hard for a client suing his former employer for commissions under the Maryland Wage Payment and Collection Law. We settled the case on the courthouse steps toward the end of the year. Because we worked so hard on the case last year I am posting with his permission my client's very kind testimonial.

To Whom it May Concern:

I am writing this letter in support of Mr. Jim Rubin. I will preface this letter by saying that I had very high expectations of the attorney I hired for my case. The amount of commission money I had at stake was substantial, and the company that I worked for was putting all of their resources into their legal machine to prevent me from collecting the money I earned. I interviewed several employment attorneys before selecting Mr. Rubin to take on my case, and am confident I made the right decision.

As a commissioned sales representative fighting for unpaid wages, I knew I needed an advocate knowledgeable in employment law. The selected attorney needed to guide me through the legal process, and counsel me throughout this stressful and emotional process.

Mr. Rubin was organized, knowledgeable, confident, and prepared for the legal onslaught we faced. After a long and hard fight, we settled the case with my previous employer. I feel very strongly that my previous employer was more amenable to settlement knowing I had a good attorney that was going to present a very persuasive case. I am thrilled with the result, but would have liked to see Jim present the case he worked so hard preparing. I have no doubt that if we had to go the distance we would have had a favorable result.

As with most serviced based occupations (real estate agents, lawyers, dentists, etc.) everyone seems to have “someone” to recommend. I am fully confident in Jim’s ability to take care of my friends, family members or colleagues that require the services of a skilled employment attorney. It is a situation that I never hope to be in again, but I am glad I now have a very good “someone” if the need arises.

Best Regards,
Former Outside Salesman