Friday, July 14, 2006

Court of Appeals Avoids Addressing Forfeiture Issue in Accrued Vacation Pay Case

I have written here and here about whether under the Maryland Wage Payment and Collection Law, an employer can require an employee to forfeit his or her accrued vacation. The Maryland Court of Appeals recently addressed the issue of accrued vacation, but specifically avoided the application of the Wage Payment and Collection Law.

The issue in Board of Education of Talbot County, Maryland V. Heister was whether the State of Maryland could require its teachers to forfeit their vacation if they failed to give proper notice of their termination.

Interestingly, the Circuit Court addressed the question I wrote about in the previous posts and concluded:

[S]ection 3-505 of the Labor and Employment Article [of the Maryland Code (1991, 1999 Repl. Vol.)] . . . appl[ies] to teachers as well as any other employees. And that means that the forfeiture of monies already earned violates that section. And therefore the action of the boards is illegal. (emphasis added)

On appeal, the Maryland Court of Appeals specifically ducked the Maryland Wage Payment issue and rebuked the Circuit Court for raising it, apparently because no lawyer had raised it in preceding administrative hearings. The Court stated:

We . . . need not address the [Wage Payment] question, which, in any event, the Circuit Court interjected in the case on its initiative. We note, however, in Department of Labor V. Boardley, 164 Md. App. 404, 414-15, 883 A.2d 953, 960 (2005), the Court of Special Appeals determined recently that a circuit court erred in "basing its decision to remand the case on excuses [by the claimant for not appearing before an administrative hearing examiner that were] never properly raised before the agency . . . ."

Two conclusions are evident from a review of this active area of the law:

(1) Employers should be very careful about requiring employees to forfeit accrued vacation. Such employers should review their policies and seek the advice of counsel.

(2) Employees who are required to forfeit accrued vacation should also seek counsel because they may have a claim under the Maryland Wage Payment and Collection Law, which provides for triple damages and attorney's fees.

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