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.