Maryland's Wage Payment Law

An alarming trend is developing in the Maryland workplace. With increased frequency, employers are refusing to pay wages. Unfortunately, many Maryland employees are unaware of their rights.

Employee v. Independent Contractor:

Maryland's wage payment laws only apply to employees, not to "independent contractors." There are many factors to consider in making the distinction between an employee and an independent contractor, but the most determinative factor is control. Generally, the employer/ employee relationship exists when the person for whom services are performed has the right to control and direct the worker with respect to what is to be done and how it is to be accomplished. For the most part, independent contractors are in business for themselves, and an independent contractor's business is usually different from the business of the person for whom the work is done.

'Wages':

Many employees are unaware of their legal right to promised commissions and bonuses. Notably, in Maryland, "wages" include salary, bonuses, commissions, fringe benefits or any other compensation for services.

Payment Upon Termination:

Maryland employers generally must pay their employees at least once every two weeks or twice per month. In order to keep their employees working, employers generally do pay wages in a timely fashion to current employees.

The more common violation of Maryland's wage payment laws involves the termination scenario. Employers often terminate employees in order to avoid paying commissions or bonuses, or employers refuse to pay wages to employees who quit. The Maryland law, however, is clear: the employer must pay all wages due for work that the employee performed before the termination of employment, on or before the day on which the employee would have been paid the wages if the employment had not been terminated.

In other words, regardless of whether an employee quits or is fired, the employer is responsible for paying the employee all wages due on the next scheduled payday. With respect to commissions, the issue is more complicated. The analysis turns on whether the employee performed all the work required to earn the commissions prior to termination. If so, the employee is entitled to the commissions on or before the date upon which the commissions would have been paid but for the termination of employment.

Damages:

Employees are often surprised to learn about the damages available to them in court if the employer fails to pay wages upon the termination of employment. If there is no "bona fide dispute" regarding the wages owed, then the employee can recover the amount of the wages owed, possibly an additional three times the amount owed ("treble damages"), plus reasonable attorney's fees and costs. However, if there is a "bona fide dispute," meaning a good faith belief on the part of the employer that the wages are not owed, the employee can only recover the amount of the wages and no additional damages.

The employee bears the burden to prove: (1) his/her entitlement to the wages; and (2) a lack of a "bona fide dispute." The issues in this regard can often be complex. Therefore, it is advisable to consult with an attorney who specializes in employment law before moving forward. Litigation can be an attractive option in many cases.