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Legislative Roundup: New Maryland Laws Affecting Employers

This year, in addition to the Pregnancy Disability Leave Act and the Military Deployment Leave Law (which are discussed elsewhere in the blog), Governor Martin O’Malley signed into law two bills affecting employees’ rights.  The first bill provided even more force to the Maryland Wage Payment and Collection Law, while the second introduced a new protection for tipped employees.

Lien for Unpaid Wages

The Maryland Wage Payment and Collection Law (“WPCL”) enables employees to collect owed compensation and to recover liquidated damages and attorney’s fees if the employee prevails at trial.  This year, Maryland enacted legislation that adds another weapon to the remedial arsenal available to such employees.

Specifically, the new law permits employees to place liens on their employers’ real and personal property for wages, other than commissions, allegedly owed for their services.  An employee may record the lien: (1) with the clerk of the Circuit Court in the county where any part of the property is located; or (2) in the same manner that financing statements are filed under commercial law.  An employee must record the lien within 180 days after serving the employer with notice of it.

Within 30 days after receiving the notice, the employer may challenge the validity of the lien by filing a complaint in the Circuit Court and requesting an evidentiary hearing (the employee may also request a hearing).  Yet, as a word of caution to employers, if the court rules against the employer, the employee will not only be entitled to the lien, but also to an award of attorney’s fees.  The same does not apply in the reverse situation, however, as the employer is only entitled to its attorneys’ fees if the employee’s claim was frivolous or made in bad faith—a showing which is normally impossible to make.

If enforced by the court, the lien becomes a secured claim against the employer’s property and subsequent purchasers are considered to have notice of it.  An employee may enforce the lien in the same way judgments are enforced, including by attaching and forcing a sale of the subject property.  The lien is valid for 12 years after the recordation date. 

Before the new law was enacted, an employee carried the initial burden and cost of filing a lawsuit against the employer under the WPCL.  Consequently, the primary effect of the new law is to shift that burden to the employer if the employer wants to contest the employee’s entitlement to the wages at issue.  By doing so, the law will up the ante for an employer who refuses to pay wages rightfully owed in the hope that an employee will not follow through on suing under the WPCL.  In that regard, the law may also reduce the caseload of those courts that handle such lawsuits.

Tipped Employees

Some restaurants have a policy that requires the wait staff to shoulder the financial burden of revenues lost when customers skip out without paying their checks by making deductions from the staff’s wages or tips.  Accordingly, coming out of this year’s legislative session was a new law that prohibits employers from making such deductions.  The law, however, apparently does not preclude employers from suspending wait staff without pay in such situations, so complete protection has not been provided to employees.  An employee may use the remedial scheme provided by the Wage Payment & Collection Law to pursue a claim for improper deductions.

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