Friday, February 21, 2020

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.

Thursday, September 12, 2019

Two Maryland Non-Compete Clauses And A Magic Blue Pencil.

Aerotek filed suit in Maryland against a former employee alleging she violated a non-compete agreement.  Aerotek v. Obercian, 377 F. Supp. 3d 539 (D. Md. 2019).  The employee had significant customer contact while working for Aerotek.  The agreement contains two non-compete clauses that generally prohibit this employee, for 1 year post-termination, from:  (1) performing business similar to that which she performed at Aerotek and (2) working for any business that is engaging in a business similar to Aerotek's.

Can you guess which clause the Court found enforceable and which it found was not?

The Court found Clause 1 facially enforceable because it is plausibly directed at a legally protectable interest.  That interest, according to the Court, is ensuring that a departing employee does not steal the employer's customers.  

The Court found Clause 2 facially unenforceable because it prohibited Aerotek's former employee from working for a competitor, even if she was not doing competitive work.  This is sometimes called the, "janitor test."  Clause 2 is unenforceable because it prevents Aerotek's former employee from working as a janitor for a competitor.  

When a non-compete agreement contains two or more divisible clauses, the Court use a magic "Blue Pencil."   That means, the Court can re-write the Agreement to excise unenforceable clauses and keep the enforceable ones.  And, that is what the Court did.

But the Court also ruled that it was not clear whether the employee's work at her new job is competitive to the work she performed for Aerotek or whether she stole any Aerotek customers.  As such, the Court denied Aerotek.'s motion for summary judgment.  A jury will now decide the dispute.    (A jury will also decide whether this employee violated a non-solicitation clause and whether she is entitled to damages on a counter-claim she filed for a bonus).

(Updated to note:  this case settled before trial).

Thursday, June 13, 2019

New Maryland Law Broadens Protections Against Workplace Harrassment

A new law, that takes effect October 1, 2019, expands the protections Marylanders have against workplace harassment.  The new law:

  • Allows independent contractors to claim workplace harassment.
  • Extends the time for individuals to file administrative claims for workplace harassment to two years (up from 180 days).  
  • Expands the scope of our State's anti-discrimination law to employers with one or more employees (down from 15 employees).    
  • Clarifies that harassment based on the following is prohibited: race, color, religion, ancestry or national origin, sex, age, marital status, sexual orientation, gender identity, or disability.
Facing workplace harassment?  Consult a Maryland Employment attorney.

Thursday, May 23, 2019

Law Limiting Non-Compete Agreements in Maryland to Take Effect October 1, 2019

The Maryland General Assembly passed a law rendering unenforceable non-compete agreement as applied to certain lower wage employees.  The law renders void non-compete agreements that attempt to restrict competition by employees earning equal to or less than $15.00 per hour or $31,200 annually.    The new law, for the most part, codifies the existing state of affairs in Maryland under decision law.  That law makes clear that only a narrow class of employees may lawfully be covered by such an agreement. 

Monday, January 28, 2019

Varying Independent Contractor Tests Apply to Maryland Employees

Employees in Maryland enjoy our broad array of worker protection statutes.  Employees may qualify for sick leave and parental leave.  They can sue for overtime and lost wages (and may be eligible for triple damages).  They may be eligible for unemployment.  Employers, of course, are required to withhold income and payroll taxes for their employees.

Independent contractors get bupkis (nothing).  They likely have to pay self-employment tax.

This disparity in rights creates an incentive for employer to push individuals toward being classified as independent contractors. 

But, could you be an employee for one purpose and an independent contractor for another?   The answer is, "yes."  That is because there are different independent contractor tests for different statutes.

The broadest test is called the "ABC" test because all three prongs of the test must be met.  It applies to claims for unemployment and the Maryland Workplace Fraud Act (which only applies in the construction and landscaping industries).  To be an independent contractor under this test the employee must be:
  • free from control and direction;
  • performing work in his or own business or occupation; and
  • either (i) performing work that is different than the business of the person for whom the work is performed; or (ii) performing the work in a different location than the person for whom the work is performed.

A narrower "economic realities" test applies to most other Maryland statutes.  This flexible approach focuses on whether the worker is economically dependent on the business to which he renders.  It looks at 

  • the degree of control that the employer has over the manner in which the work is performed;
  • the worker's opportunities for profit or loss dependent on his managerial skill;
  • the worker's investment in equipment or material, or his employment of other workers;
  • the degree of skill required for the work;
  • the permanence of the working relationship; and
  • the degree to which the services rendered are an integral part of the putative employer's business.
Though similar to the economic realities test, the IRS and the NLRB have their own tests as well.  What should one do to navigate this forest of varying and multi-factored tests?  Of course, my advice on this is to seek some professional advice.  You might be surprised that you qualify as an employee for one purpose but not another.


Friday, January 18, 2019

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.   

Tuesday, January 15, 2019

Maryland's “Disclosing Sexual Harassment in the Workplace Act of 2018"

Maryland has a new law effective October 1, 2018, called the Disclosing Sexual Harassment in the Workplace Act.  One of the Act's main provisions says this:
Except as prohibited by federal law, a provision in an employment contract, policy, or agreement that waives any substantive or procedural right or remedy to a claim that accrues in the future of sexual harassment or retaliation for reporting or asserting a right or remedy based on sexual harassment is null and void as being against the public policy of the State.
What does this mean?  Some employers require that employees sign employments agreements that limit the employees' ability to pursue their legal claims.  One example is a provision waiving an employee's right to a trial by jury in any future claim against his or her employer.  Such a provision "waives" a "procedural right" for "asserting" a claims "based on sexual harassment.   Under this new law, the provision is void. 

Employment agreements and employee handbooks attempt to limit employment claims in all kinds of different ways, including ways that may appear neutral on their face.  For example, a provision in an agreement might select a different State's law to apply to employment-based claims. Such a choice-of-law provision could well be viewed as waiving a Maryland claim (as is the case for claims under the Maryland Wage Payment and Collection Law).

One issue that will likely arise soon is whether a mandatory arbitration clause is void under this new law.  Such clauses are generally governed by the Federal Arbitration Act.  The meaning of the new law's introductory phrase, "except as prohibited by federal," could be put to the test.  A Court would have to determine whether Federal law prevails and preempts the effect of the new Maryland law.