New Maryland Law Makes General Contractors Liable for Unpaid Wages Owed by Sub-Contractors

As of October 1, 2018, under a new law, general contractors in the construction industry are liable for wage theft by their sub-contractors.  General contractors are liable regardless of whether they control the sub-contractor's employees.   This new law broadens the possible defendants in a claim under the Wage Payment and Collection Law.  An employee in the construction industry may file for a lien, and may sue his direct employer, the individual owner of the company he or she works for, and - now - the general contractor.  The Law allows for triple damages and attorney's fees if the employee can prove that wages were withheld in bad faith.   

Can Severance Pay Be a "Wage" under the Maryland Wage Payment and Collection Law? Maybe!

Severance pay falls into two legal baskets under Maryland law.

1. Severance pay earned for an employee's labor or work. 
2. Severance pay awarded in exchange for something other than work, most commonly in exchange for a covenant not to compete or in exchange for a waiver of claims.

Back in 2003, in Stevenson v. BB&T,  the Court  of Appeals ruled that severance for labor is a "wage" subject to the Maryland Wage Payment and Collection Law.   Severance for a non-compete or waiver is not a wage subject to the Wage Payment and Collection Law. 

Does this matter?  It sure does.  Wages subject to the Maryland Wage Payment and Collection Law can be tripled (if withheld in bad faith).

In Blood v. Columbus U.S. (April 2018) the Maryland Court of Special Appeals recently followed Stevenson:  money paid in exchange for a period of non-competition is not a wage “due for work" and therefore not subject to the Maryland Wage Payment and Collection Law.

Maryland Department of Labor Publishes Regulations Implementing Wage Lien Act

The Maryland Department of Labor (DLLR) recently published regulations implementing the Wage Lien Act.  The regs track the language of the statute, but to a good job explaining how to file a wage lien.

1. An employee starts the process by serving on the employer a "Notice of Claim for Unpaid Wages."    The regulation specifies eight pieces of information that must be on the Notice, including: (a) The basis for the claim that wages were due but were not paid; (b) the monetary amount of the lien sought; (c) the real or personal property, or both, against which the lien is sought along with a description adequate to identify the property, name of owner, and location; and (d) notice to the employer of their right to dispute the lien by filing a complaint within 30 days of receipt of the notice.  Service can be accomplished by certified mail requesting, “Restricted Delivery—Show to whom, date, and address of delivery.”                                                                                                                                                              
2. If the employer disagrees with the Notice, the employer can file suit.   The suit must contain  an explanation of why the wages claimed by the employee are not due and owing by the employer.                                                                                                                                           
3. If the Lien is either not disputed or established in Court, the employee can then file a "Wage Lien Statement."   The Statement must include: A description of the property; the name of the property owner; the monetary amount of the lien; A copy of the Notice for Unpaid Wages; and a copy of the Order establishing the lien for unpaid wages if the lien for unpaid wages is established in a court.

Maryland's Highest Court Rules That Triple Damages are Recoverable for Unpaid Overtime

I have long tracked the debate over whether triple damages are recoverable for overtime under the Maryland Wage Payment and Collection Law.   Maryland's highest Court, the Court of Appeals, put the issue to bed in Muriel Peters v. Early Healthcare Giver, Inc.  The Court ruled (as predicted) that triple damages are recoverable for unpaid overtime.   The Court ruled that way because in 2010 the Maryland General Assembly amended the law to add the word "overtime" to the definition of wages. Several Federal Court decisions, nonetheless, held that triple damages were not recoverable if they were never promised to the employee.  The Maryland Court of Appeals rejected those cases and held triple damages are available for unpaid overtime.

The Court in Peters also held:

• A judge or jury must first find that the employer withheld the employee's wages in bad faith before awarding additional -- up to triple -- damages to the employee; 
• There is no outright presumption in favor of an award of enhanced damages; 
• The employer has the initial burden to prove it withheld wages in good faith.  The burden then shifts to the employee who must ultimately persuade the judge or jury that the employer withheld the wages in bad faith; and
• The maximum award the plaintiff can receive is three times the unpaid wages.  If the employee is owed $1 in wages, the maximum he or she can recover is $3 (there had been an argument that he or she should be able to recover $4 -- the owed wages plus triple damages).     

Maryland Department of Labor Publishes Maryland Wage Lien Act Forms

In my last post, I outlined a new tool Marylanders have to collect unpaid wages.  The Maryland Wage Lien Act, allows an employee to place a lien on an employer's property if the employer fails to pay wages. The Act has two basic steps.  

First, the employee must give the employer notice of the intent to file a wage lien.  The Maryland Department of Labor published a form setting forth the proper notice.  The form as you might expect ask the employee to fill in blanks for the name of the employer, amount of unpaid wages, and the property subject to the lien.  The form also contains a paragraph informing the employer how to contest the lien (by filing a lawsuit).

Second, if the employer disagrees with the lien claim, the employer must file a lawsuit within 30 days (since the Act only went into effect October 1, 2013, as of this writing I am aware of no lawsuits having been filed).  The Maryland Department of Labor published a model of such a lawsuit.  The model lawsuit does not contain much information and is mostly space for the employer to describe why the wages are not owed.  If such a lawsuit is filed, the Court must conduct a hearing within 45 days to determine whether the lien is valid (and whether the award attorney's fees).

Finally, the Maryland Department of Labor published a draft lien document.  If the employer does not contest the wages owed, the employee can file this lien in the Circuit Court where the employer owns property.

All of the forms are fairly simple documents.  Most lawyers will create their own more detailed documents.  Even the Maryland Department of Labor's website warns that the forms are subject to revisions.

Maryland Wage Lien Act - Powerful New Tool for Collecting Unpaid Wages.

The Maryland Wage Lien Act provides a powerful new tool to employees seeking to collect earned wages from employers.

Beginning October 1, 2013, Maryland employees can initiate a lien by providing "written notice" to their employers of unpaid wages.  If employers want to contest the lien, they must file a claim in Court providing a sworn statement setting forth all defenses.  The Court then only as 45 days to decide if the lien is appropriate.  Forty-five days is fast; a typical court case take months, if not years.  I am curious how the Courts will handle this new expedited procedure.

If the Court issues the lien, it can award attorney's fees to the employee.  It can award attorney's fees to the employer if the wage lien is brought in bad faith.  

The Act's definition of "employer" is broad and includes individuals who work in the employer's interest.  Under recent precedent, owners and some supervisors can be individually liable for unpaid wages.  Wages does not include owed commissions.   

A lien is like a judgment that attaches to property.  If the employer wants to sell his or her solely-owned real estate, if a wage lien is attached, the buyer will usually require the employer to satisfy the lien.  The lien also may give the lien holder priority if the employer declares bankruptcy.

The Maryland Department of Labor is tasked with issuing implementing regulations.   I will be keeping my eye out for them as they could have an important affect on  this new powerful wage collecting tool.   

H/t to the  Public Justice Center which pushed for the Act and published an excellent FAQ.

         

Maryland Employees: Do Not Lose Earned Wages When You Change Jobs

I have written many times about the Maryland Wage Payment and Collection Law, the basic law that protects employee wages.  The Law states that employees are entitled to the wages that they earned. If an employer fails to pay earned wages, it could be liable for triple damages and attorney's fees.

Below are examples of earned wages that can be recovered in Wage Payment and Collection Law cases.

Commissions. A series of favorable Maryland decisions (reviewed here) state that if an employee performs the work necessary to earn a commission, he is entitled to it -- even if he or she has left the company

Bonuses. Did you do everything you could possibly do to earn the bonus? If so, you probably earned it and are owed it.

Severance. If severance is promised to entice an employee to take a job or to reward an employee for years of service, it likely falls under the category of earned wages.

Straight wages.  Did your employer just fail to pay?  You are owed your wages.

Overtime:  A recent amendment  includes overtime in the Law's definition of wages.

The Law can be enforced in three ways:

1.  You can file a lawsuit.  I recommend you consult a Maryland Employment attorney before doing so.

2.  You can file an administrative complaint with the Maryland Department of Labor (DLLR).  Instructions on how to file such a complaint can be found on the DLLR website.  

3. You can file a criminal complaint for a willful violation.  A warning:  I have not yet seen a criminal wage violation prosecuted.   My impression is that such claims are rarely prosecuted (since they are left to the civil process).

NOTE: Beginning in October 2013, Maryland employees can place a lien on their employer's property under the   Maryland Wage Lien Act.