Fourth Circuit Finds Maryland's Wage Payment and Collection Law Not A Fundamental Public Policy

By Steven Kaplan

On December 23, 2011, the U.S. Court of Appeals for the Fourth Circuit in Kunda v. C.R. Bard, Inc. held that employers in Maryland may have their employees execute employment agreements with a choice of law provision other than Maryland, so long as the other jurisdiction has a “substantial relationship” to the parties and the application of the law would not be contrary to a fundamental Maryland public policy. This case settles the issue, at least for now, of whether an employee who works in Maryland has a fundamental right to sue for wages under the Maryland Wage Payment and Collection Law (“MWPCL”) – generally a law favorable to employees.

In Kunda, the plaintiff fervently argued that the MWPCL, not New Jersey’s wage payment and collection law, should apply to her employment agreement because the MWPCL constitutes a fundamental Maryland public policy. The Fourth Circuit disagreed. Citing to two other Maryland laws that contain express language concerning whether those laws contain a strong public policy, the court noted that “by contrast, the MWPCL contains no express language of legislative intent that the law is a fundamental Maryland public policy.”

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Maryland Court of Appeals Holds Unvested Stock Options Are Not Wages

Employers who conduct business in Maryland recently received good news when the Maryland court of appeals overturned the lower court decision in Catalyst Health Solutions, Inc. v. Magill (pdf) and held that unvested stock options are not wages under the Maryland Wage Payment and Collection law. The court reasoned that the unvested stock options at issue were not wages because the employee “did not fulfill the continued service condition,” as set forth in the stock option agreement.

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New Maryland Law Requires Shift Breaks for Retail Employees

State Flag of MarylandEffective March 1, 2011, retailers who conduct business in Maryland must provide their employees with mandatory shift breaks or be subject to substantial fines of up to $300 per employee for a first offense. The Healthy Retail Employee Act (the "Act"), was signed into law by Governor Martin O'Malley on May 20, 2010. To continue reading about the new law and its implications for employers, see Littler's ASAP Maryland Enacts "The Healthy Retail Employee Act" and Amends Its Wage Payment and Collection Law by H. Tor Christensen and Steven E. Kaplan.

Maryland Amends Wage Payment and Collection Law

State Flag of MarylandThe Maryland General Assembly recently amended the Maryland Wage Payment and Collection Law (MWP&CL) in two significant ways. The MWP&CL governs the timing of payment and payment of wages (such as salary, bonus or commissions) upon the termination of employment.

First, the General Assembly added “overtime wages” to the definition of “wage.” Accordingly, if a court now finds that an employer withheld overtime wages, other than as a result of a bona fide dispute, the employee may be entitled to treble damages. This represents a change from existing court precedent, which provided that an employee could sue for overtime wages only under the Fair Labor Standards Act and the Maryland Wage and Hour Law, but not under the MWP&CL. Notably, the new law fails to provide any guidance to courts about how the conflicting penalty sections of these statutes should be reconciled.

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Newly Enacted Wage and Hour Legislation

Several new wage and hour bills made it through various state legislatures during the second quarter of the year. Below is a wrap up of new developments (including regulatory updates) from April 1, 2009 through June 30, 2009.

Alabama House Bill 144, Effective 5/19/2009. Modifying several aspects of the state child labor laws.

Colorado House Bill 1108, Effective 8/5/2009. Provides that an employer under specified circumstances is subject to penalties if an employee's paycheck is not paid because the employer's bank does not honor the paycheck.

Connecticut House Bill 6185, Effective 10/1/2009. Concerns equal pay discrimination.

Florida House Bill 569, Effective 7/1/2009. Allows wages to be paid by a payroll debit card.

Indiana Senate Bill 465, Effective 7/1/2009. Requires an employer to provide a pay stub to employees and post a notice regarding the state's minimum wage law. The notice must include an employee's basic rights and who to contact for information, questions or complaints.

Iowa House Bill 618, Effective 7/1/2009. Update to civil and criminal penalties, including increase of maximum penalty to $10,000 for the illegal use of child labor, and provides that wage discrimination is an unfair employment practice under the state civil rights act.

Kansas Senate Bill 160, Effective 1/1/2010. Increases the minimum wage from $2.65 an hour to $7.25 an hour.

Maine House Bill 280, Effective 9/18/2009. Requires break time for nursing mothers in the workplace and requires an employer to provide a sanitary space, which must be close to the work area and may not be a bathroom, for nursing mothers to express milk in privacy.

Maryland Code of Administrative Rules 09.12.02.01 -.02, Effective 6/19/2009. Amends rules relating to equal pay for equal work. Requires employers to collect certain employee data, such as the gender and racial classification of their employees and records must be maintained by the employer for 3 years.

Montana House Bill 133, Effective 10/1/2009. Amends the definition of “income” with respect to garnishments to exclude mandatory retirement and disability contributions and union dues.

Nevada Assembly Bill 84, Effective 7/1/2009. Expands exemption for salespersons to any employee in a retail or service business. In order to qualify for the exemption, the employee must earn at least half of his/her compensation through commissions and be paid more than 1½ times the minimum wage.

New Mexico House Bill 489, Effective 6/19/2009. Allows workers to collect treble damages against employers that violate the state's $7.50-an-hour minimum wage law.

North Dakota Senate Bill 2344, Effective 8/1/2009. Exempts the act of breastfeeding from the offense of indecent exposure. An employer may use the designation "infant friendly" on its promotional materials if the employer adopts a workplace breastfeeding policy that includes specific criteria.

Oklahoma Administrative Code sections 380:30-1-7, -3-4, -5, Effective 7/1/2009. Amends rules to clarify the requirements for a valid payroll deduction agreement.

Oklahoma Senate Bill 527, Effective 11/1/2009. Provides that if an employer pays an employee with a check that is subsequently returned by reason of the refusal of the bank to honor the check due to insufficient funds or a stop payment notice, the employer must reimburse the employee for any fees or costs incurred by the employee within 14 days.  Additionally requires employers to post a notice describing the pertinent provisions of the Oklahoma Minimum Wage Act. The notice must be not less than 8 1/2 by 11 inches and must be displayed and accessible to all employees in each establishment under the control of the employer.

Oregon House Bill 2826, Effective 1/1/2010. Increases the hours of the day during which children under 16 years of age may work; provides for additional hours of work during summer.

Oregon House Bill 3474, Effective 1/1/2010. Increases processing fee chargeable to employee by employer for garnishments of employee's wages.

Oregon Senate Bill 373, Effective 1/1/2010. Provides that an obligor and obligee under a support order may bring a civil action for damages against an employer or other person who withholds money under an order to withhold, but who fails to pay the withheld amounts within the time allowed by law.

Vermont House Bill 313, Effective 6/1/2009. Amends the state minimum wage law to clarify that annual adjustments to the state minimum wage are not to result in a decrease in the minimum hourly wage rate.

Washington House Bill 1596, Effective 7/26/2009. Protects a woman's right to breastfeed in a place of public resort, accommodation, assemblage, or amusement.
 

Minimum Wage Increases Set For July

The federal minimum wage is set to increase to $7.25 on July 24, 2009. Additionally, 23 states will also increase the minimum wage for employers subject to state wage and hour laws. The majority of these increases take effect on July 24, 2009, but three states raise their minimum wage effective July 1, 2009.

In addition to noting the wage increase, employers should ensure that they are properly displaying a copy of the state’s current minimum wage poster in a conspicuous location in the workplace that notes the wage increase, even if the increase will not affect hourly employees at any particular workplace.

The following states have increased their state minimum wage:

Delaware
• $7.25/hr. effective 7/24/09

District of Columbia
• $8.25/hr. effective 7/24/09

Federal
• $7.25/hr. effective 7/24/09

Florida
• $7.25/hr. effective 7/24/2009

Idaho
• $7.25/hr. effective 7/24/09

Illinois
• $8.00/hr. effective 7/1/09

Indiana
• $7.25/hr. effective 7/24/09

Kentucky
• $7.25/hr. effective 7/1/09

Maryland
• $7.25/hr. effective 7/24/09

Missouri
• $7.25/hr. effective 7/24/09

Montana
• $7.25/hr. effective 7/24/09

Nebraska
• $7.25/hr. effective 7/24/09

Nevada
• If health benefits are available:
Effective 7/1/09 $6.55/hr (employers subject to the FLSA should see federal requirements)
• If the employer does not provide qualified health benefits:
Effective 7/1/09 $7.55/hr

New Jersey
• $7.25/hr. effective 7/24/09

New York
• $7.25/hr. effective 7/24/2009

North Carolina
• $7.25/hr. effective 7/24/09

North Dakota
• $7.25/hr. effective 7/24/09

Oklahoma
• $7.25/hr. effective 7/24/09

Pennsylvania
• $7.25/hr. (large employers) effective 7/24/09
• $7.25/hr. (small employers) effective 7/24/09

South Dakota
• $7.25/hr. effective 7/24/09

Texas
• $7.25/hr. effective 7/24/09

Utah
• $7.25/hr. effective 7/24/09

Virginia
• $7.25/hr. effective 7/24/09

Wisconsin
• $7.25/hr effective 7/24/09