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Recent Employment Law Developments Offer a Mixed Bag for Maryland Employers

Below are some of the latest developments in employment law affecting federal and state contractors.

Limits to enhanced damages under Maryland’s wage law 

A terminated employee’s attempt to expand eligibility for enhanced damages under Maryland’s Wage Payment and Collection Law (“WPCL”) was rejected by the Maryland Court of Appeals. The law provides that a court may impose enhanced damages – specifically, triple the amount of withheld wages plus attorneys’ fees – in a successful employee wage claim, provided the wages were not withheld on account of a “bona fide dispute”. The terminated employee had argued for two expansive interpretations of the law to the effect that: (i) enhanced damages should be granted regardless of any dispute over them; and (ii) other than attorneys’ fees, enhanced damages should be calculated as the amount of wages withheld, plus three times the amount, effectively, quadruple damages. In rejecting these arguments, the court held that a trial court must first determine that a bona fide dispute exists before it can award enhanced damages, and even then, the award is within the court’s discretion, not mandatory. The court also determined that any award of enhanced damages is limited to three times the withheld amount, plus attorneys’ fees.

Recovering for employee theft through fidelity insurance

In addition to developments in the law, employers should be aware of current trends where the law can help. Among these is a recent increase in employee theft and fraud, all of which have potentially devastating consequences for businesses. According to the Association of Certified Fraud Examiners, U.S. organizations lose about 7% of annual revenue to fraud. The median occupational fraud loss is $175,000, and more than one in four frauds involves losses of $1 million or more. Small businesses – those having fewer than 100 employees – are especially vulnerable to occupational fraud, suffering median losses of $200,000.

These trends highlight the importance of acquiring fidelity insurance. Businesses should also ensure that the insurance offers coverage and limits adequate to respond to this growing threat. Fidelity coverage can be written to cover not only theft of money, securities and other property by employees, but also crimes committed by third parties, such as forgery, robbery, computer fraud and funds transfer fraud, and theft of money and securities inside the premises.

Fidelity insurance does not need to be expensive, and it is widely available. Each business should begin by examining its level of exposure to employee and non-employee theft, and then purchase an insurance plan adequate to address that threat.

Baltimore City Adopts “Ban the Box”

Earlier this year, the City of Baltimore passed “ban the box” legislation restricting private employers from inquiring into the criminal history of job applicants. (The “box” refers to the criminal history check-box on employment applications). The new law forbids employers from making inquiries into a job applicant’s criminal history before making a conditional offer of employment. The law does not, however, require that employers provide any notices in addition to those required by the Fair Credit Reporting Act when obtaining criminal history information from a background check vendor. Moreover, the law does not impose any additional restrictions on the criminal history that an employer can consider when making an employment decision. 

The new law applies to businesses employing 10 or more full-time employees in Baltimore City. Additionally, certain exceptions apply. For instance, the law does not affect employers that serve children or adults lacking physical or mental capacity (e.g., hospitals and nursing homes). The law also allows employers to investigate criminal history when expressly authorized by another law (e.g., under federal regulations, transportation companies must ask applicant drivers whether they have been convicted for driving under the influence of drugs or alcohol). These employers can continue to screen out such applicants at the initial stages of the hiring process instead of waiting until after the conditional offer of employment.

Any violation of the law is a misdemeanor with potential penalties of a $500 fine and 90 days imprisonment. In addition, the Baltimore Community Relations Commission may award a complainant back pay, reinstatement, attorneys’ fees and compensatory damages, including damages for emotional distress and expenses incurred in seeking other employment.

Maryland’s new parental leave law

Small employers in Maryland (those employing 15-49 employees) must provide employees with unpaid leave for the birth or adoption of a child under the Maryland Parental Leave Act (“MPLA”), which took effect October 1. Pursuant to the MPLA, eligible employees are entitled to six workweeks of unpaid parental leave during any 12-month period for the birth of the employee’s child or the placement of a child with the employee for adoption or foster care.

To be eligible, an employee must have been employed for at least 12 months and have worked 1,250 hours prior to the start of the leave with the current employer. Additionally, the employee must be employed at a worksite where at least 15 employees work within a 75-mile radius in Maryland.

Employees eligible for MPLA leave may also be eligible for leave under the federal Family and Medical Leave Act (“FMLA”) when their Maryland worksite is within 75 miles of a work location outside of Maryland, and the FMLA threshold of 50 employees is met between the two locations. Although not expressly addressed in the MPLA, it is likely that the employee’s MPLA leave and FMLA leave for the birth or adoption of a child would run concurrently.

An employer may require that an employee give at least 30 days’ notice of the need for leave; however, such notice is not required in the case of a premature birth or an unexpected adoption or placement for foster care. An employer may deny requested leave only if the denial is necessary to prevent “substantial and grievous economic injury” to its operations, provided that the employer notifies the employee of the denial before the leave begins. 

An employer may require an employee to substitute any accrued, paid time off for unpaid parental leave. At the conclusion of MPLA leave, the employee must be restored to his or her previous position or to an equivalent position with equivalent benefits, pay, and “other terms and conditions of employment.” An employer may deny job restoration rights only if: 

  • the denial is necessary to prevent substantial and grievous economic injury to the operations of the employer 
  • the employer notifies the employee of the intent to deny restoration at the time it determines that economic injury would occur 
  • the leave has already begun and the employee elects not to return to employment after receiving notice. 

Finally, an employer may only terminate an employee on MPLA leave “for cause.”

Contractual Language that can inadvertently destroy “at-will” employment

Please see the discussion of the case on this issue in the article, “Firing Offenses: How Case Law Can Fill the Gap in Employment Provisions.”

For more information please contact Carolyn Mech at 410-583-2400 or mech@bowie-jensen.com.

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