Thursday, January 10, 2019

Choice of Law Provision Likely Unenforceable If It Causes a Maryland Employee to Forfeit Earned Wages

Choice of Law provisions are common in employment contracts and pay plans.  They state that the parties choose that a certain state's law (i.e., New York, New Jersey) will apply should there ever be a dispute over the meaning of the contract or pay plan. 

Maryland has several employee-favorable worker protection statutes, including the Maryland Wage Payment and Collection Law ("MWPCL").  The MWPCL allows employees to collect earned commissions and allows for triple damages if wages are withheld in bad faith. 

One could see how an employer might want to avoid the MWPCL.  One way an employer could do that is through a Choice of Law provision.  The employer could say, "This pay plan will be interpreted in accordance with Laws of New York [or some other law.]"  For many years, Court in Maryland enforced these provisions.

But in a case called, Cunningham v. Feinberg, the Maryland Court of Appeals stated the Maryland Legislature signaled that the policy underlying the MWPCL was so important that it could not be waived through a choice of law provision.  A good example of the effect this has had is this decision in Blanch v. Chubb & Sons, in which a Judge reversed herself on the application of a Choice of Law Provision because of Cunningham.

Bottom line, if you work in Maryland, the MWPCL applies to you.

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