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Maryland and District of Columbia Employers Alert: New Legislation on Wages

Author: admin Date: 12/04/2013

Categories: Corporate and Business Law, Employment Law & Litigation

On October 1, 2013, both Maryland and District of Columbia employees were given powerful tools to collect unpaid wages from their employers. These new remedies have the potential to cause significant problems for employers. If you are a business owner, it is imperative that you understand these new laws and take steps to minimize your risk now.

Maryland: Lien for Unpaid Wages

Employees in Maryland may establish and enforce a lien on their employers’ real and personal property in order to collect unpaid wages, excluding commissions. These are similar to mechanic’s and tax liens. Once a lien is established, an employee can foreclose on the lien and sell the employer’s property.

To establish a lien, an employee only needs to give you written notice of the claim for unpaid wages. If you fail to dispute the claim within 30 days by filing a complaint with the circuit court, the lien will be established. If your complaint is filed on time, the circuit court will determine whether to order a lien within 45 days. Either party may request an evidentiary hearing. Once the circuit court orders the establishment of the lien, the employee must record it and then can enforce it to recover the unpaid wages from you.

In addition, the statute gives the circuit court the authority to require you to pay for the employee’s court costs and reasonable attorneys’ fees. However, if the circuit court determines that the claim for unpaid wages was frivolous or in bad faith, it can order the employee to pay your court costs and reasonable attorneys’ fees.

District of Columbia: Wage Theft Prevention Amendment Act of 2013

With the Wage Theft Prevention Amendment Act of 2013 (the “Act”), District of Columbia employees also have new protections to strengthen their ability to collect wages. Employees have the right to bring an action against you as the employer for failing to properly pay them either on time or at all.

Before the Act, employees could only bring an action for their salary or hourly pay. The new Act expanded the definition of wages to include bonuses, commissions, fringe benefits paid in cash, overtime premiums and other compensation promised. This is significant because now employees may be able to recover higher damages, if an employer fails to pay commission or bonuses.

In addition, the new Act substantially increases the amount of damages that an employee may collect from an employer. Previously, the court could award an employee the amount of unpaid wages plus damages up to the amount of the unpaid wages. Now, the damages could be up to three times the amount of unpaid wages. This means that an employee could receive four times their unpaid wages! If such wages include bonuses, commissions or benefits, your business could be seriously damaged by this verdict.

It is important to note that the D.C. law does not apply to any person who is exempt from overtime and minimum wage laws (i.e., executive, administrative or professional positions). However, this does not minimize the potential liability for businesses.

What should you do now?

As you can see, these new statutes are of real concern to you as a business owner because, if you are caught unaware, a lien can be enforced against your real and personal property or you could end up paying quadruple damages to your employee. You should be proactive and take precautions now to prevent a claim of unpaid wages. We recommend that you:

  • Respond immediately to any employee’s notice of unpaid wages.
  • In your Employment Manual, require that your employees bring any complaints about unpaid wages to their manager or management and educate your employees regularly on such policy.
  • Resolve employee complaints about unpaid wages one way or another immediately and do not allow complaints to linger. Put the solution in writing.

In addition, you also need to anticipate any issues with wages and ensure that your current policies and practices comply with the relevant laws. We recommend that you:

  • Audit your current wage and payment process to ensure compliance with both state and federal wage laws.
  • Conduct a review of your employees’ job descriptions to ensure that you have properly exempted employees from overtime requirements.
  • Establish a company policy about overtime that ensures that it is appropriately approved, recorded and paid.
  • Institute a process to accurately record your employees’ time spent working.

If you have any questions or would like advice regarding these new laws, please contact Ginny Cascio at (240) 778-2308 or gcascio@mcmillanmetro.com.