Unpaid Wages: Can I Sue if My Maryland Employer Does Not Pay Me?
Employers in Maryland may have varying perspectives on workplace performance they deem most important: productivity, timeliness, or professionalism. Employees may have other criteria they deem most significant: benefits, workplace conditions or flexible work hours. I think it is a safe be to say that, for most employees, Rule 1 of the employer-employee relationship is the timely payment of wages. “If I’m not getting paid, I’m not working”. And rightfully so. But what happens where hours are worked, and, in fact, earned wages are not paid? What recourse does an employee have in these circumstances? Can they file a lawsuit for their unpaid wages? Significantly, can they hire an attorney to pursue an action for unpaid wages, and who pays their litigation fees and costs?
What Are My Employer’s Obligations For Paying Wages in Maryland?
Maryland law imposes certain statutory requirements on employers. Section 3-502 of the labor and employment Article provides
(1) Each employer:
(i) shall set regular pay periods; and
(ii) … shall pay each employee at least once in every 2 weeks or twice in each month.
An exception is carved out for “administrative, executive, or professional employees”, who may be paid on a different schedule.
Moreover, and presumably to avoid confusion, or potentially litigation, Maryland employers are required to provide certain specifics of the terms and conditions of employment to each employee. Section 3-502 of the Labor and Employment Article provides:
"An employer shall give to each employee:
(1) at the time of hiring, notice of:
(i) the rate of pay of the employee;
(ii) the regular paydays that the employer sets; and
(iii) leave benefits;
(2) for each pay period, a statement of the gross earnings of the employee and deductions from those gross earnings; and
(3) at least 1 pay period in advance, notice of any change in a payday or wage."
Finally, Maryland employers are prohibited from taking deductions from the wages of their employees, except in four specifically defined circumstances:
Section 3-503 of the Labor and Employment Article provides:
"An employer may not make a deduction from the wage of an employee unless the deduction is:
(1) ordered by a court of competent jurisdiction;
(2) authorized expressly in writing by the employee;
(3) allowed by the Commissioner because the employee has received full consideration for the deduction; or
(4) otherwise made in accordance with any law or any rule or regulation issued by a governmental unit."
An example of a deduction authorized by a court of competent jurisdiction would be a wage withholding order for child support, or a garnishment or restitution order. Deductions mandated by law would include federal and state tax and related withholdings.
Am I Entitled to Overtime If I Work More than 40 Hours?
Most people have a sense that overtime is paid at a rate of 1.5 times the normal wage. This is actually, rather than a custom, or benefit of employment, a solid a requirement of Maryland law, which provides:
“[E]ach employer shall pay an overtime wage of at least 1.5 times the usual hourly wage”
-Section 3-415 of the Labor and Employment Article
The overtime requirement is riddled with exceptions so that many classes of employers are not obligated to pay, and many classes of employees are not entitled to receive, overtime. These include but are not limited to:
“ a nonprofit concert promoter, legitimate theater, music festival, music pavilion, or theatrical show;
an amusement or recreational establishment, including a swimming pool, if the establishment: operates for no more than 7 months in a calendar year; or for any 6 months during the preceding calendar year, has average receipts that do not exceed one-third of the average receipts for the other 6 months.
(c) Exceptions for employees. -- This section does not apply to an employer with respect to:
(1) an employee for whom the United States Secretary of Transportation may set qualifications and maximum hours of service under 49 U.S.C. § 31502;
a mechanic, partsperson, or salesperson who primarily sells or services automobiles, farm equipment, trailers, or trucks, if the employer is engaged primarily in selling those vehicles to ultimate buyers and is not a manufacturer;
a driver if the employer is engaged in the business of operating taxicabs”
-Section 3-415 of the Labor and Employment Article
What Are My options to Recover Unpaid Wages?
There are generally two choices available to the unpaid Maryland worker: they may pursue a private action in a court of appropriate jurisdiction or they may file a wage claim form with the Maryland Department of Labor, Division of Labor and Industry, Employment Standards Service (ESS). With respect to a claim prosecuted by the State on your behalf, the Commissioner may, following an investigation of your claim, “determine whether the MWHL and/or the MWPCL have been violated.” If so, “the Commissioner may try to resolve your claim in one of three ways:
1) Informally through mediation;
2) for claims that do not exceed $5,000, by issuing an administrative order directing your employer to pay the unpaid wages the Commissioner has determined are due to you; or
3) by asking the Office of the Attorney General (OAG) to bring a lawsuit for unpaid wages on behalf of the Commissioner to your use and benefit against your employer in a Maryland court.”
Can I Sue In Maryland To Recover My Unpaid Wages?
The Department of Labor advises “[a]lternatively, instead of filing a wage claim with ESS, an employee may choose to bring a lawsuit against an employer for unpaid wages under the MWHL and/or the MWPCL with or without the assistance of a private attorney in a Maryland court.” https://www.dllr.state.md.us/forms/essclaimform.pdf. The wages must be overdue by at least two weeks, but the claim is subject to Maryland’s general 3 years statute of limitations.
Who Pays Attorney Fees and Costs in a Maryland Unpaid Wage Lawsuit?
The payment of litigation-related expenses such as attorney’s fees, court costs, and ancillary service costs such as deposition costs and expert witness fees is obviously a significant consideration for anyone contemplating initiating legal action. Indeed, if the amount in controversy is relatively small, it may well be that the costs of pursuing litigation outweighs the amount that would be recovered if the litigation was successful. In some instances, the anticipated costs might be such that would consume the proceeds of a successful suit to the extent that it makes little financial sense to pursue litigation, even where the aggrieved party is clearly entitled to recover. A long-standing principle in our system of jurisprudence- known as the “America Rule” [as opposed to the rule in some other countries] is that each side pays their own litigation-related expenses. The application of this rule frequently has the effect of dissuading those who have suffered a demonstrable legal wrong from pursuing legal recourse, for the aforementioned reasons. An exception to the general rule exists where a contract or statute provides for what is commonly called “fee-shifting” or “prevailing party attorney’s fees” In other words, if the aggrieved person is successful in pursuing their claim, they may be entitled to have the other side- the losing side- cover their litigation costs. Luckily, for the unpaid worker in Maryland, the Labor and Employment Article contains such a provision for the successful prosecution of such claims.
Section 3-507.2[b] Action to recover unpaid wages, provides:
“ Award and costs. -- If, in an action under subsection (a) of this section, a court finds that an employer withheld the wage of an employee in violation of this subtitle and not as a result of a bona fide dispute, the court may award the employee an amount not exceeding 3 times the wage, and reasonable counsel fees and other costs.”
The provision actually provides not one but two powerful incentives for employers to closely adhere to the wage and hour laws. As discussed above, the specter of paying the other side’s attorney, plus reimbursing any litigation expenditures, can be a powerful financial tool in obtaining compliance. The other provision that may be exploited to gain additional leverage is what is known as a “treble damages” clause. Here, the successful unpaid worker not only is entitled to recoup his or her expenses, and lost wages, but may also be entitled to three times the amount of actual unpaid wages. Note the proviso here though that both of these “hammers” are available only where the employer has wrongfully withheld pay. If there is a legitimate dispute about the wages, or the hours, these multiplier provisions are not operative.
The standard to determine the presence, or absence of legitimate, bona fide disputes is a frequently litigated issue. The standard was discussed by Maryland’s intermediate appellate court, which in Himes v. Anderson 178 Md. App. 504 (Md. Ct. Spec. App. 2008), noted [t]he Court of Appeals has read the MWPCL's bona fide dispute provision to require that, to recover treble damages and other costs, the employee present "sufficient evidence . . . to permit a trier of fact to determine that [the employer] did not act in good faith when it refused to pay" the wages due. Admiral Mortgage Inc. v. Cooper, 357 Md. 533, 543, 745 A.2d 1026 (2000).” What constitutes good faith or its absence, is typically an extremely fact intensive inquiry resolved by the jury.