Appellate Court of Maryland Affirms Individual-Owner Liability and Explains Availability of Extra Damages for Overtime Violations

 In Morales v. Bryant Concrete Construction, the Appellate Court of Maryland outlined a roadmap for overtime claims in Maryland.  That roadmap is that Plaintiffs should pursue their remedies against the individual owners of small business and should seek exemplary damages and attorney's fees.   

   The Court first held that a 51% owner of a concrete company could be individually liable for overtime violations.  This owner claimed she only provided "back-office" support, though she admitted she had the power to hire and fire, and set employee pay.  (The Trial Court had dismissed out this owner).   

  Second, the Court found an employer can be liable for double damages under the Maryland Wage and Hour Law.  It can only avoid these additional damages if the employer can prove it acted in good faith and had reasonable grounds for believe its actions did not violate the wage laws.  (The Trial Court had declined to award the additional damages).   In the end, the Appellate Court did not decide whether double damages were appropriate but ordered a re-trial (given its finding that the 51% owner could be on-the-hook)..

  Notably, the overturned trial verdict was for about $14,000.  Now, the case will be re-tried. Undoubtedly, the lawyers for the Plaintiffs will seek to recover their attorney's fees for both trials and the appeal.  Through the appeal, the Plaintiffs' were already claiming $173,461.53 for fees and costs.  

The moral of the story is that it rarely makes sense for an employer to try an overtime claim.  

Hospital May Be Liable for Breaching Settlement Agreement That Required Specific Reporting to the Practitioners' Data Bank

The Maryland Supreme Court recently decided Adventist Health Care v. Behram.  Dr. Berham served as a physician at Shady Grove Hospital.  The Hospital twice suspended his privileges. In lieu of a hearing about his conduct, the Hospital and Dr. Berham reached a settlement agreement.  After  -- and in exchange for  -- the Hospital restoring Dr. Berham's privileges, he agreed to resign from the Hospital.  In addition, the Hospital agreed to submit a carefully negotiated and drafted report to the National Practitioner Data Bank. (A data bank operated by HHS that tracks information about physician malpractice and misconduct.)

Oddly, the Hospital did not just send the Data Bank the agreed report.  It also filled in codes in a report that generated language that suggested that Dr. Berham surrendered his privileges while under investigation, was an immediate threat, and had engaged in substandard care.      

The Court ruled that by entering these codes, which generated the negative language, the Hospital breached its agreement to submit only the negotiated report.  The Court remanded the case to the trial Court, presumably for a trial as to whether the Hospital's breach was material and, if so, a determination as to Dr. Berham's damages.

This cases is interesting to me because the settlement agreement at issue is so similar to the settlement agreement I negotiate every day.  In my experience, the parties usually do what they agreed to do.  This is especially so when it comes to providing non-economic relief (like sending a report).  

Maryland Paid Family and Medical Leave Scheduled to Start on July 1, 2026.

     Maryland has enacted a paid family and medical leave insurance program paid family and medical leave insurance program that will begin paying benefits on July 1, 2026.  The benefit will be up to $1,000 per week.  The program is funded by a tax on employee wages.  The tax is paid by employees and by employers with 15 or more workers.  (Small employers are exempt from paying into the fund).  The benefits are paid by the State or an Insurer and not the employer. 

     The leave can be for up to 12 weeks.  It can be used to (1) welcome a new child; (2) care for the employee's own serious health condition; (3) care a family member’s serious health condition; or (4) make arrangements for a family member’s military deployment.

     This paid family and medical leave will need to be coordinated with  other leave.  Employers cannot require that employees use other paid leave before or during the period covered by this new paid family and medical leave program.      

     The law authorizing the insurance program contains an anti-retaliation provision. It allows an employee to file an administrative claim if the employee is not restored to his or position at the end of their protected leave, or if the employer terminates an employee for taking a protected leave (though there are some exceptions).

  The Maryland Department of Labor has issued a set of draft regulations to implement the new program.   

FTC Rule Banning Non-Competes to Become Effective But is Subject to Legal Challenge

UPDATE: A Federal Court in Texas has enjoined the FTC rule (meaning the rule cannot go into effect).

 

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   I have defended numerous employees accused by their former employers of violating non-competition agreements.  In several recent cases, I have successfully persuaded trial courts to rule that all or part of the at issue agreements be invalidated because they are overbroad.

  On April 23, 2024, the Federal Trade Commission voted to finalize a new rule to prohibit employers from enforcing noncompetes against workers.  The rule is set to become effective 120 days after its publication in the Federal Register.  There have already been several legal challenges seeking to invalidate the rule.  

   The rule defines a non-compete as an agreement that prohibits or prevents a worker from seeking or accepting a subsequent job.  Importantly, this would prohibit restrictive training repayment agreements, that often impose steep training repayment costs if an employee leaves an employer who has provided training.  These are often called "stay or pay" agreements.  The rule exempts a limited number of high level or highly compensated employees (earning over $151,164 annually).  The FTC also did not prohibit non-disclosure or non-solicitation agreements (unless they prevent a worker from subsequent employment).

   Time will tell whether the legal challenges succeed in delaying or enjoining this game-changing new rule. 

New Law Will Require Employers Give Wage Notices To Maryland Employees Every Pay Period

 The Maryland General Assembly passed a new law that requires employers give notice to employees every pay period.  This information provides minimum standards for the information normally placed on a physical or electronic pay stub.  The stub/notice must include the following information:

➤ The employer’s name registered with the State, address, and telephone number; 

➤ The date of payment and the beginning and ending dates of the pay period; 

➤ The number of hours worked during the pay period, unless the employee is exempt; 

➤ The rates of pay

➤ The gross and net pay earned during the pay period

➤ The amount and name of all deductions; 

➤ A list of additional pay, including bonuses, commissions on sales, or other bases; 

➤ The applicable piece rates of pay and the number of pieces completed at each piece rate for each employee paid at a piece rate. 

If signed by the Governor, the Law will go into effect on October 1, 2024.

 

Maryland General Assembly Passes Uniform Anti-Retaliation Provisions to Protect Wage Whistleblowers

    The Maryland General Assembly passed House Bill 1036.   It provides that employers cannot retaliate against employees who complain about violations of Maryland's child labor, equal pay, wage and hour, wage collection, workplace fraud, and living wage laws.  The new Law establishes a uniform enforcement procedure.  Whistleblowers who are retaliated against for making complaints may file with the Maryland Department of Labor.  The Department then has the ability to investigate the claims, collect back pay, and assess fines on a violating employer.  If a violating employer does not comply, the Department can sue the employer in Court and seek a broader array of damages, including triple damages, punitive damages and attorney's fees.  If signed by Governor Moore, the new law will take effect on July 1, 2024.   

The Long Arms of the Maryland Wage Payment and Collection Law

The Maryland Wage Payment and Collection Law is worker protection statute.  It requires the payment of earned wages.  If an employer does not pay, the employee can collect triple damages if he or she can prove the wages are withheld in bad faith.    The Law applies to employees who work in Maryland. 

But how much work must an employee perform in Maryland?  Employees often spend time in more than one jurisdiction here in the "DMV."  That questions was largely answered in Himes Associates v. Anderson.   There, the employee, Mr. Anderson lived in Maryland but worked for a Virginia employer and spent most of his work time in that state.  Mr. Anderson was tasked with overseeing the construction of a building in Virginia, but, as a part of those responsibilities, he was required to present a proposal in Baltimore and attend meetings twice a month in that city. On two other occasions, the employee was asked to visit a work site in Gaithersburg and work on a project in Aberdeen.

As it turns out the Maryland Wage Payment and Collection Law has long arms.  An employer is subject to the Maryland Law if instructs an employee to be present at a work site.  According to the Court, "[t]he plain language . . . covers the situation in which a company outside of Maryland directs its employee to go to a work site in Maryland." Because the employee attended meetings twice a month in Baltimore, the Court concluded that the Virginia employer is subject to the Maryland Wage Payment and Collection Law.

This case, Himes Associates, could well be applied to an employee who works from home in Maryland for an out-of-state employer.  I suspect we will be seeing such a case in the near future.