Maryland is a progressive state in terms of employment legislation. Democratic voters outnumber Republicans almost 2:1 and the state legislative body, the General Assembly, reflects that ratio. Maryland's Governor, however, is a pro-business Republican. This has led to some tension between the General Assembly and the Governor, as evidenced by the minimum wage increase that was passed by the General Assembly in the 2019 session, vetoed by the Governor and then subjected to a veto override. Yet there are still moments of collaboration, such as the sexual harassment bills that arose in the context of the "#MeToo" movement that were unanimously passed by the General Assembly and signed by the Governor in the 2018 and 2019 sessions.
Under the prior Democratic Governor, Maryland was the first state to pass a social media privacy law, raised the minimum wage rate above the federal rate, enacted a worker misclassification statute and was at the forefront of states enacting pregnancy accommodations laws. Recently, the General Assembly has considered – although not yet passed – family and medical leave insurance benefits, a salary history ban, restrictions on confidentiality provisions in sexual harassment settlements and predictive scheduling legislation. We expect to see these bills return in the future.
See above, 1.1 "Gig" Economy and Other Technological Advances; also, 4.1 Restrictive Covenants, below.
Bucking a general national trend in recent years, Maryland has experienced a slight increase in union membership. The percentage of those employed who are union members increased from 10.8% in 2017 to 11% in 2018, the most recent years for which data is available from the U.S. Bureau of Labor Statistics. Notably, however, this data does not break out private v public sector union membership and it is our belief that overall private sector membership has declined while public sector membership has increased.
As a strongly Democratic state, Maryland is friendly to unions. The union-employer relationship in Maryland is generally governed by the federal National Labor Relations Act.
The employment relationship encompasses a number of different types of employment, such as regular full-time and part-time employees, probationary employees, temporary employees, contract employees, seasonal employees and apprentices. Employees are designated as either “exempt” or “non-exempt” from the requirements to pay the minimum wage rate and overtime premiums under the Maryland Wage and Hour Law and the Federal Fair Labor Standards Act (Md. Code Ann. Lab & Empl. § 3-401 et seq.).
Maryland law generally follows the FLSA, but sets a higher state minimum wage, currently USD10.10. This will increase to USD11.00 on 1 January 2020, with further increases over the next several years such that employers with 15 or more employees will be subject to a rate of USD15.00 by 1 January 2025. A longer schedule of increases applies to smaller employers, who will reach that rate by 1 July 2026.
There are also some differences with regard to certain specific provisions, such as travel time and overtime for nurses. Maryland does not recognise the FLSA’s highly-compensated employees’ exemption.
There are special rules for child employees under Maryland law. A child or “minor” is any person under the age of 18. The minimum age for employment varies according to the occupation, and minors are prohibited from working in certain dangerous occupations altogether. In most cases, a minor must be at least 14 years of age in order to work and he or she must obtain a work permit. There are restrictions on the number of hours that minors may work and employers are required to provide a 30-minute break after five consecutive hours of work (Md. Code Ann. Lab. & Empl. §§ 3-201 et seq.).
There are also special rules for retail employees. Non-managerial retail employees may choose either Sunday or the employee’s Sabbath as a day of rest. Certain counties have additional requirements related to this law (Md. Code Ann. Lab. & Empl. § 3-704). In addition, retail employers with more than 50 employees in Maryland must provide shift breaks for non-exempt employees working more than four hours. The number and length of breaks depend on the number of hours worked (Md. Code Ann. Lab. & Empl. § 3-710).
Another employment relationship issue is whether two entities may be considered “joint employers” of a particular employee and thereby are together responsible for ensuring compliance with and liable under the various employment laws. Maryland state courts generally apply a right to control test that reviews various factors, as applicable – if each employer has the ability to control or direct the employee’s performance of the job, then they would be deemed joint employers. However, the U.S. Court of Appeals for the Fourth Circuit, which includes Maryland within its jurisdiction, articulated a more expansive standard for determining if two entities are joint employers under the Fair Labor Standards Act and identified a set of six non-exclusive factors that courts should consider:
The Fourth Circuit emphasized that one factor alone may be sufficient to conclude that two entities are “not completely disassociated” so as to render them joint employers if the facts supporting that factor demonstrate that the entity has a “substantial role” in determining the workers’ terms and conditions of employment: Salinas v Commercial Interiors Inc., 848 F.3d 125 (4th Cir. 2017).
In addition to the employer-employee relationship, Maryland recognises other work-based but non-employee relationships, including interns and independent contractors. Notably, the Maryland Department of Labor Licensing and Regulation (“DLLR”) has a particular interest in the issue of employee misclassification – ie when an employee is incorrectly designated as an independent contractor thereby enabling the employer to avoid paying employment taxes and benefits. New penalties were added in 2016. Where the DLLR finds that an employer has knowingly misclassified workers, a penalty in the amount of no more than USD5,000 per employee is payable for a first violation and USD10,000 per employee for subsequent violations.
Whether an individual is deemed to be an employee or an independent contractor is subject to different tests depending on the law at issue. For example, the Unemployment Insurance Law and the Workplace Fraud Act (which applies only to the landscaping and construction industries) utilize the ABC test, under which a worker is presumed to be an employee unless all of the following are met:
On the other hand, both the Workers’ Compensation Act and the common law apply a “right to control” test under which an employer/employee relationship exists when the employing entity has the right to control and direct the individual performing the services, not only as to the result to be accomplished by the work but also as to the details and means by which that result is accomplished. Many factors are reviewed under the “right to control” test, none of which are individually determinative.
In Maryland, the employment relationship is presumed to be at-will. This means that either the employer or employee may terminate the relationship at any time with or without cause or notice as long as the termination is not prohibited by law, by an individual contract or by a collective bargaining agreement.
In addition to applicable federal laws, numerous Maryland laws contain protections against adverse employment actions, including termination from employment, for exercising rights under those laws. These include the following: the Civil Rights Law (Md. Code Ann. State Govt. §§ 20-601 et seq.); the Civil Air Patrol Leave Statute (Md. Code Ann. Lab. & Empl. §§ 3-1001 et seq.); the Deployment Leave Law (Md. Code Ann. Lab. & Empl. § 3-803); the Day of Rest Statute (Md. Code Ann. Lab. & Empl. § 3-704); the Equal Pay for Equal Work Act (Md. Code Ann. Lab. & Empl. §§ 3-310 et seq.); the Flexible Leave Act (Md. Code Ann. Lab. & Empl. § 3-804); the Health Care Workers Whistleblower Protection Act (Md. Code Ann., Health Occ. 1-501 et seq.); the Healthy Working Families Act (Md. Code Ann. Lab. & Empl. §§ 3-1301); the Jury Duty Statute (Md. Code Ann. Cts. & Jud. Proc. §§ 8-501); the Parental Leave Act (Md. Code Ann. Lab. & Empl. §§ 2-1201 et seq.); the Occupational Safety and Health Act (Md. Code Ann. Lab. & Empl. §§ 5-101 et seq.); the Organ Donation Leave Act (Md. Code Ann. Lab & Empl. §§ 3-1401 et seq.); the User Name and Password Privacy Protection Act (Md. Code Ann. Lab. & Empl. § 3-712); the Victim’s Right Statute (Md. Code Ann. Crim. Proc. § 11-102); the Volunteer Activities Law (civil air patrol, civil defense, volunteer fire department, or volunteer rescue squad) (Md. Code Ann. Lab. & Empl. § 3-703); the Wage and Hour Law (Md. Code Ann. Lab. & Empl. §§ 3-401 et seq.); the Wage Garnishment Statute (Md. Code Ann. Comm. Law § 15-606); the Witness Duty Statute (Md. Code Ann. Cts & Jud. Proc. § 9-205); the Workers’ Compensation Act (Md. Code Ann. Lab. & Empl. §§ 9-101 et seq.); and the Workplace Fraud Act (Md. Code Ann. Lab. & Empl. §§ 3-901 et seq.).
An individual contract that modifies the at-will relationship may be either express or implied and may be based on either verbal statements or written documents, such as offer letters, employee handbooks or employment agreements that provide for a term of employment or termination for cause: Staggs v Blue Cross of Md., Inc., 486 A.2d 798 (Md. 1985). An employer may expressly disclaim the creation of such contracts by placing a clear and conspicuous disclaimer in all such written documents that reiterates the employee’s at-will status and further provides that the document should not be construed as a contract and that statements made by any supervisor or manager will not alter the employee’s at-will status: Bagwell v. Peninsula Reg’l Med. Center, 665 A.2d 297 (Md. App. 1995).
Additionally, although the implied covenant of good faith and fair dealing is an implied term of a contract under state law, Maryland does not recognise this implied covenant in at-will relationships: Adams v. Catalyst Research, 659 F. Supp. 163 (D. Md. 1987).
Maryland recognises a cause of action for “abusive discharge” in violation of public policy as an exception to at-will employment: Makovi v. Sherwin-Williams Co., 561 A.2d 179 (Md. 1989). The public policy must be clearly articulated in law. Thus, employers may not terminate an employee for refusing to engage in conduct that violates the law or for asserting rights protected by law. This cause of action is not available where the law contains a specific statutory procedure and remedy for violations: Id; see also Insignia Residential Corp. v Ashton, 755 A.2d 1080 (Md. 2000). Maryland courts have recognised this public policy exception in the context of reporting suspected criminal activity to law enforcement, refusing to violate clients’ and customers’ constitutional rights to privacy and protecting children from abuse and neglect. In addition, because the state anti-discrimination statute only applies to employers with 15 or more employees, the courts have also recognised the claim with regard to smaller employers, based on the public policy of prohibiting discrimination and harassment set forth in the law: Molesworth v. Brandon, 672 A.2d 608 (Md. 1996).
In a unionized setting, the terms of the employment relationship for bargaining unit employees, including termination for cause, are governed by a collective bargaining agreement. As noted above, federal law generally controls management-union relations in Maryland’s private sector: Vane v. Nocella, 303 Md. 362 (Md. 1985).
Immigration issues and the use of foreign workers is governed by federal law. Maryland has not enacted any legislation that would modify the application of federal law with regard to the verification and hire of eligible foreign workers.
Union-management relations in the private sector are generally governed by federal law. Maryland is not a right-to-work state and therefore all bargaining unit employees may be required to join the union as a condition of employment. Maryland has passed an Anti-Injunction Act, modelled on the federal Norris-LaGuardia Act but containing additional protections, which prohibits injunctive relief for most labour-related disputes and provides strict procedures for obtaining injunctions in the remaining circumstances (Md. Code Ann. Lab. & Empl. § 4-301). Maryland law also contains other pro-union provisions, such as an anti-strikebreaker statute, the right to picket in connection with a labour dispute and confidentiality privileges for certain union communications in the context of an employee grievance.
Whether in an employment application or an interview, Maryland employers must avoid asking questions that elicit information about protected characteristics under federal or state law. In addition, under the Medical Questions Law, Maryland employers may not require an applicant to answer oral or written questions that relate to a physical, psychiatric or psychological disability, illness, handicap or treatment unless that condition has a direct, material and timely relationship to the capacity or fitness of the applicant to perform the job properly. Employers may, however, require a proper medical evaluation by a physician to assess the applicant’s ability to perform the job (Md. Code Ann. Lab & Empl. § 3-701).
Furthermore, applicants and employees may not be required to undergo lie detector testing (Md. Code Ann. Lab & Empl. § 3-702). The law specifies that Maryland applications must contain, in bold-faced, upper case type, the following statement, with a separate signature line:
Under Maryland Law, an Employer May Not Require Or Demand, As A Condition Of Employment, Prospective Employment, Or Continued Employment, That An Individual Submit To Or Take A Lie Detector Or Similar Test. An Employer Who Violates This Law Is Guilty Of A Misdemeanour, And Subject To A Fine Not Exceeding $100.
With regard to other types of testing, Maryland has passed a law that permits employers to conduct drug tests on applicants and employees. The law contains detailed requirements that must be met, including the use of state-approved laboratories, specific notice requirements and restrictions on the type of specimens (blood, urine and saliva – the use of hair samples is permitted only during pre-employment testing) that may be used. If the applicant or employee tests positive, the employer must provide the employee with a copy of the lab results, a copy of the employer’s written substance abuse policy, notice of any intent to take adverse action (failure to hire, discipline, termination or other changed conditions of employment) and a statement or copy of the statutory provisions regarding the employee’s right to request independent testing of the same sample (Md. Code Ann. Health Genl. § 17-214).
There are very few laws related to recruiting. As mentioned above, Maryland is a union-friendly state and one such recruiting law arises in this context. Pursuant to the “anti-strikebreakers’ statute”, Maryland employers may not refer, obtain or recruit for employment individuals who customarily and repeatedly offer to be employed in place of strikers. Violations of this law constitute a criminal misdemeanor and are subject to a fine not exceeding USD1,000 or imprisonment not exceeding three years, or both (Md. Code Ann. Lab. & Empl. § 4-403).
Another law related to recruiting provides that employers in Maryland may grant a preference in hiring or promotion to an eligible veteran, a veteran who has a service-connected disability or, if deceased, the veteran’s spouse without violating state or local equal employment opportunity laws. An “eligible veteran” is one who received an honorable discharge or certificate of satisfactory completion of military service from any branch of the armed forces, the National Guard or the reserves (Md. Code Ann. Lab. & Empl. § 3-714).
A fair number of Maryland laws impact the background check process. Under the Job Applicant Fairness Act, employers are prohibited from using an applicant’s or employee’s credit report or credit history to deny employment, terminate employment or otherwise make decisions about compensation or other terms of employment except where expressly authorised by the law. The law does not apply to employers that are required by federal, state or local law to check an individual’s credit history for employment purposes, nor does it apply to banks, credit unions or entities that are required to register as investment advisors with the SEC.
Employers subject to the law are permitted to procure the credit reports or credit histories of applicants (after a conditional offer of employment is extended) or employees if the employer has a bona fide reason for obtaining the information that is substantially job-related, as defined in the law and the employer discloses in writing that a report is being procured. The Commissioner of Labor and Industry is responsible for receiving complaints under the law and has the power, if the matter is not resolved, to issue penalties of up to USD500 for a first violation and up to USD2,500 for repeat violations (Md. Code Ann. Lab. & Empl. § 3-711).
Another background check law is the User Name and Password Privacy Protection Act, which was the first social media privacy law in the nation. Under this law, Maryland employers are prohibited from requiring employees or applicants to turn over passwords needed to access private websites, including those used for social media. Specifically, the law bars employers from requiring or even requesting that an applicant or employee divulge his or her “user name, password, or other means for accessing a personal account or service through an electronic communication device.” Employers may, however, require employees to divulge passwords for “non-personal accounts or services that provide access to the employer’s internal computer or information systems”. The law does not define what is a “non-personal” account nor does it make any exception to allow employers to demand access to personal accounts that are used to access work accounts. Complaints of violations are made to the Commissioner of Labor and Industry who may mediate the dispute or direct the Attorney General to bring suit on behalf of the employee for damages, injunctive relief or other relief (Md. Code Ann. Lab. & Empl. § 3-712).
As for criminal background checks, the Maryland Second Chance Act permits an individual to petition the court to shield certain specific misdemeanor convictions from public disclosure. Once a conviction is shielded, that means it will not be disclosed as part of a criminal record background check to third parties, including employers, unless one of the exceptions below applies. The law further specifically prohibits employers who conduct a criminal background check from requiring applicants to disclose if they have any such shielded convictions or from discharging or refusing to hire an individual because that person refuses to disclose shielded convictions. (Md. Code Ann. Crim. Proc. §§ 10-301 et seq.)
Of note, during the 2019 legislative session, the Maryland General Assembly passed a statewide “Ban the Box" law that prohibits criminal background inquiries at the initial application stage. This bill was vetoed by the governor, but a veto override is anticipated at the beginning of the 2020 legislative session. In addition, there are several local jurisdictions, including Baltimore City, Prince George’s County and Montgomery County, that have passed ordinances prohibiting inquiries during this stage unless otherwise required or permitted by law.
On the other hand, state law requires certain employers to conduct criminal background checks of applicants. These include schools, childcare centres, day or residential camps and recreation centres (Md. Code Ann. Fam. Law § 5-561) and employers providing adult dependent care services (Md. Code Ann. Health §§ 19-1901 et seq.).
Although Maryland is an at-will employment state, employers and employees can enter into agreements that govern other aspects of the employment relationship.
In 2019, Maryland enacted a law prohibiting employers from including a non-compete or conflict of interest provision in an employment contract with an employee earning USD15 or less per hour or USD31,200 or less annually (Md. Code Ann. Lab. & Emp. § 3-716). According to the law, such provisions, which restrict the ability of the employee to work for a new employer or become self-employed in the same or similar business or trade, are void as against public policy. The law specifically provides that employers may still prohibit such employees from taking client lists or other proprietary client-related information.
With regard to higher-wage employees, restrictive covenants, such as non-compete or non-solicitation agreements, are generally enforceable in Maryland as long as the restrictions as to geographic area and duration are reasonably necessary for the protection of the employer’s business, do not impose an undue hardship on the employee and do not disregard the public interests: Labor Ready, Inc. v Abis, 767 A.2d 936 (Md. 2001). In fact, even a lack of geographic limitation is permitted under certain circumstances: Padco Advisors, Inc. v Omdahl, 175 F. Supp. 2d 600 (D. Md. 2002). Continued employment is considered sufficient consideration to support a non-compete or non-solicitation agreement: Tolman Laundry, Inc. v Walker, 187 A. 836 (Md. 1936). Maryland courts may “blue pencil” or revise such agreements if it deems the original provisions to be too onerous and thereby unenforceable – see Tawney v. Mut. System of Maryland, 47 A.2d 372, 379 (Md. 1946). However, under the blue pencil rule, a court may not rearrange or supplement the language of the restrictive covenant: Fowler v. Printers II, Inc., 598 A.2d 794, 802 (Md. App. 1991).
Arbitration agreements are enforceable in Maryland but must be supported by mutually binding promises to arbitrate. Employment or continued employment is not sufficient consideration for an enforceable agreement: Cheek v. United Healthcare of the Mid-Atlantic, Inc., 835 A.2d 656 (Md. 2003). The waiver of a right to bring a class or collective action in an arbitration agreement has been found to be enforceable by the U.S. Supreme Court; Maryland courts have not weighed in on this issue but would be expected to follow federal law.
In the context of the #MeToo movement, Maryland passed a law relating to sexual harassment claims and agreements. The Disclosing Sexual Harassment in the Workplace Act prohibits an employer from requiring a waiver of future sexual harassment or retaliation claims and prohibits an employer from taking adverse action against an employee for refusing to enter into an agreement with such a waiver. The prohibitions apply to agreements executed, extended or renewed after 1 October 2018. The law also contains a reporting provision by which employers with 50 or more employees must submit an electronic survey on or before 1 July 2020 and on or before 1 July 2022 that provides specific information about sexual harassment settlements (Md. Code Ann. Lab. & Empl. § 3-715).
Maryland employers may protect confidential and proprietary business information, including trade secrets. Maryland has adopted the Model Uniform Trade Secrets Act. Under the Act, a trade secret must (i) have independent economic value because it is not generally known or not readily identifiable by proper means, and (ii) be subject to reasonable efforts to maintain its secrecy. There are two types of trade secrets under the Act: internal operating information and technological developments. Employers may seek injunctive relief for actual or threatened misappropriation of trade secrets, as well as damages for actual loss, unjust enrichment and, if the actions were willful and malicious, attorneys’ fees and exemplary damages. (Md. Code Ann. Comm. Law §§ 11-1201 et seq.) Among the actions that an employer may take to protect its trade secrets is through the use of a confidentiality agreement that specifically identifies the information to be considered a trade secret..
Maryland law also addresses certain employee privacy concerns. The Maryland Personal Information Protection Act was recently amended specifically to provide protections to employees. The law governs the disposal of personal information, including employee data, and provides for notification of the breach of electronically maintained personal information. Of particular interest, the definition of personal data includes biometric data (Md. Code Ann. Comm. Law §§ 14-3501).
The Maryland Wiretap Act prohibits an employer from listening to or recording a confidential communication without the consent of all parties. The law further prohibits the interception of oral, wire or electronic communications and thereby encompasses the monitoring of email. (Md. Code Ann. Cts. & Jud. Proc. §§ 10-401 et seq.) Employers should inform employees through a written policy or a message at the point of logging into the communications system that their communications are not private and may be monitored and that employees consent to such monitoring by using the system.
The Wage Payment and Collection Act prohibits the display of Social Security numbers on employee checks, notices of direct deposit or notice of wage credits to debit cards or card accounts (Md. Code Ann. Lab. & Empl. §3-502).
Maryland also has enacted a Visual Surveillance with Prurient Interest Law that makes it unlawful for any person, including an employer, with prurient intent to conduct visual surveillance of an individual in a private place without that individual’s consent. A private place is a room where an individual may disrobe and has a reasonable expectation of privacy, such as a dressing room or rest room (Md. Code Ann. Crim. Law § 3-902).
The User Name and Password Privacy Act and the Medical Questions Law, discussed previously, also contain protections for employee privacy.
In addition to the statutory protections, Maryland recognises certain tort claims for invasion of privacy. “Intrusion upon seclusion” is an intentional intrusion on the solitude or seclusion of another or his or her private affairs or concerns that would be highly offensive to a reasonable person: Furman v. Sheppard, 744 A.2d 583 (Md. App. 2000). “Appropriation of name or likeness” is the use or benefit, which need not be directly economic, of the name or likeness of another: Lawrence v. A.S. Abell Co., 475 A.2d 448 (Md. 1984). “False light” involves knowingly or recklessly placing an individual before the public in a false light that is highly offensive to a reasonable person: Bagwell v. Peninsula Reg'l Med. Ctr., 665 A.2d 297 (Md. App. 1995). Finally, “publicizing private facts” arises when publicity to a matter concerning an individual’s private life would be highly offensive to a reasonable person and is not of legitimate concern to the public: Klipa v. Bd. of Educ. of Anne Arundel Cty., 460 A.2d 601 (Md. App. 1983).
Maryland law protects employees, independent contractors, and interns from employment discrimination and harassment on the basis of race, colour, religion, sex, age, pregnancy, national origin, marital status, sexual orientation, gender identity, disability, or genetic information or because of the individual’s refusal to submit to a genetic test or make available the results of a genetic test. In addition, individuals are protected from retaliation for asserting rights under the law. The law further requires employers to provide reasonable accommodations for disabilities, specifically including those caused or contributed to by pregnancy. The law applies to employers with 15 or more employees, except that if a harassment claim is involved it applies to employers with a single employee (Md. Code Ann. State Gov’t §§ 20-600 et seq.).
During the 2019 legislative session, Maryland codified a definition of harassment as “includ[ing] harassment based on race, color, religion, ancestry or national origin, sex, age, marital status, sexual orientation, gender identity, or disability, and retains its judicially determined meaning, except to the extent it is expressly or impliedly changed” in the law. Additionally, the law provides that an employer is liable if its negligence led to the harassment or its continuation. The employer is also liable for the actions of an individual who (i) undertakes or recommends tangible employment actions, including hiring, firing, promoting, demoting and reassigning or (ii) directs, supervises or evaluates the work of the employee. We note that the use of the term “recommends” in the definition expands the scope of employees for whom the employer will be held liable beyond just managers and supervisors.
Maryland has also enacted an Equal Pay for Equal Work Statute, which prohibits discriminatory pay practices based on sex or gender identity against employees who work in the same establishment and perform work of comparable character or work on the same operation, in the same business or of the same type. The law also contains pay transparency provisions that protect employees’ rights to discuss their pay (Md. Code Ann. Lab. & Empl. § 3-404.1).
As mentioned previously, employers in Maryland may grant a preference in hiring or promotion to an eligible veteran or, under certain conditions, the veteran’s spouse and the law specifies that this preference does not violate state or local equal employment opportunity laws (Md. Code Ann. Lab. & Empl. § 3-714). Other military-type protections are provided by the National Guard Employment and Reemployment Rights Act, which grant additional employment and reemployment rights to National Guard members (Md. Code Ann. Pub. Safety § 13-704).
Also noted previously, effective 1 October 2018, an employer is prohibited from requiring employees to waive future sexual harassment or retaliation claims and are required to comply with certain reporting obligations concerning sexual harassment settlements (Md. Code Ann. Lab. & Empl. § 3-715).
Like the Federal Occupational Safety and Health Administration, the Maryland Occupational Safety and Health Administration has promulgated rules and regulations on workplace safety. The MOSH Act adopts OSHA standards in most respects, including record-keeping, requiring safety training for employees and investigations into workplace injuries and illnesses. In addition to notifying OSHA of any serious injury or death, employers must also notify MOSH (Md. Code Ann. Lab. & Empl. §§ 5-101 et seq.).
The payment of wages is governed by the Maryland Wage Payment and Collection Law (Md. Code Ann. Lab & Empl. § 3-501 et seq.). Employers must provide notice of the pay days, leave benefits and rate of pay at the time of hiring. With each pay check, employers must also provide a statement of gross earnings and deductions as well as the amount of earned sick and safe leave available to the employee (Id.; Md. Code Ann. Lab & Empl. § 3-1301 et seq.). Employers must pay an employee’s wages at least every two weeks or twice a month. Payment must be made by cash or check and, with the employee’s consent, may be made by direct deposit or to a debit card. Upon termination of employment, the final pay check must be issued by the next regular payday following the termination.
Only certain deductions may be made from employees’ pay checks under Maryland law. These are as follows:
As a practical matter, there is no process for obtaining the Commissioner’s approval for a deduction; the Commissioner’s office has informally stated that it will not pursue any claim in which the employee has clearly been given or taken a thing of value for which the deduction is being made.
Maryland law places restrictions on the amount that may be garnished from an employee’s wages. This varies, depending on the county in which the employee is located (Md. Code Ann., CL § 15-601.1). In Marshall v. Safeway, 437 A.2d 542 (Md. 2014), the Court of Appeals ruled that if the amount subject to garnishment based on the Maryland statue exceeds the amount that may be garnished under federal law, the federal law preempts the state law. The court further held that the aggrieved employee could pursue a claim for the over-garnishment of his or her wages under the Wage Payment and Collection Act.
Maryland employers are required to provide certain leave benefits to employees by law. In 2018, the Maryland Healthy Working Families Act was enacted, requiring employers to provide earned sick and safe leave to their eligible employees. Employers with 15 or more employees are required to provide paid leave accrued at a rate of one hour for every 30 hours worked to a maximum of 40 hours a year. Employers with fewer than 15 employees, however, need only provide unpaid leave. Eligible employees are those who regularly work 12 hours or more a week.
Employees may use the leave for personal or family illness or injury, preventive medical care, maternity or paternity leave or to address domestic violence against the employee or a family member. A broad definition of family members includes the employee’s spouse, children, parents and parents-in-law, grandparents, grandchildren and siblings (Md. Code Ann. Lab & Empl. §§ 3-1301 et seq.). Employers in Montgomery County must also comply with that jurisdiction’s paid sick and safe leave law, which differs in some significant respects from the state law, including the amount of leave that must be provided.
Another law that predates the enactment of the Maryland Healthy Working Families Act, the Flexible Leave Act, applies to all Maryland employers with 15 or more employees and entitles employees to use any accrued paid leave for an illness of an immediate family member. It does not require an employer to provide leave with pay, but if any form of paid leave (eg vacation, sick, paid time off, floating holidays, etc) is provided by policy or according to a collective bargaining agreement, the employee is entitled to use such leave to care for an immediate family member (Md. Code Ann. Lab. & Empl. § 3-802).
Employers with 50 or more employees are subject to the Federal Family and Medical Leave Act. Maryland does not have a co-extensive general family and medical leave statute but has enacted several laws relating specifically to parental leave. The Parental Leave Act applies to those Maryland employers with 15-49 employees and provides eligible employees with up to six weeks of unpaid leave for the birth, adoption or foster care placement of a child. To be eligible, the employee must have worked at least 12 months and for at least 1,250 hours in the previous 12-month period (Md. Code Ann. Lab. & Empl. §§ 3-1201 et seq.). In addition, an adoption leave statute requires employers who provide paid leave to biological parents following the birth of a child to provide the same paid leave to adoptive parents (Md. Code Ann. Lab. & Empl. § 3-801).
In 2019, Maryland enacted an organ and bone marrow donation leave law. Employers with 15 or more employees must provide eligible employees with up to 60 business days of unpaid leave during any 12-month period to serve as an organ donor and up to 30 business days to serve as a bone marrow donor. In order to be eligible, the employee must have been employed for at least a 12-month period and have worked 1,250 hours during the previous 12 months. Of particular note, this leave does not run concurrently with any leave under the Family and Medical Leave Act (Md. Code Ann. Lab. & Empl. §§ 3-1401 et seq.).
Other medical leaves may be required as reasonable accommodations under the disability and pregnancy accommodations provisions of the Maryland Civil Rights Act (Md. Code Ann. State Gov’t §§ 20-601 et seq.).
Maryland has a Deployment Leave Law that overlaps part of the FMLA by requiring employers with 50 or more employees to provide unpaid leave to employees on the day that a covered family member, who is a member of the U.S. armed forces, is leaving for or returning from active duty outside the United States. To be eligible, the employee must have worked at least 12 months and for at least 1,250 hours in the previous 12-month period (Md. Code Ann. Lab. & Empl. § 3-803).
There are several leaves associated with the judicial or political process. Employers must provide leave for jury service and, further, may not require an employee who appeared for jury service for four or more hours including travel time to work a shift that begins on or after 5 p.m. on the day of jury service or before 3 a.m. on the day following service (Md. Code Ann. Cts. & Jud. Proc. § 8-501). Employers must also provide leave for employees to serve as witnesses pursuant to a subpoena for any civil or criminal proceeding, including depositions (Md. Code Ann. Cts. & Jud. Proc. § 9-205). In addition, an employee who is a victim of a crime or a victim’s representative is entitled to leave to attend any legal proceedings (Md. Code Ann. Crim. Proc. § 11-102). Finally, employers must provide up to two hours of paid leave for voting, if the employee does not have sufficient time either before or after work in which to vote (Md. Code Ann. Elec. Law § 10-315). This last leave has become less relevant with the implementation of early voting throughout the state.
Maryland also provides leave for certain volunteer activities – civil air patrol, civil defense, volunteer fire department or volunteer rescue squad – in response to a governor-declared emergency or the request of the local government (Md. Code Ann. Lab. & Empl. § 3-703). A separate law additionally (and somewhat redundantly) provides that employees may take up to 15 days of unpaid leave to respond to an emergency mission of the Maryland Wing of the Civil Air Patrol (Md. Code Ann. Lab. & Empl. §§ 3-1001 et seq.).
Maryland employers are not required to provide paid vacation or paid time off. If they choose to do so, they should state in the policy document whether accrued, unused vacation or PTO will be paid out upon termination or not; the failure expressly to state that vacation or PTO will not be paid out will make such payment mandatory. The policy must be in writing and communicated to the employee at the time of hire (Md. Code Ann. Lab. & Empl. § 3-505(b)).
With regard to retirement benefits, Maryland has created the Maryland Small Business Retirement Savings Program and Trust for smaller employers, which is to be established and administered by the new Maryland Small Business Retirement Savings Board. All employers that use an automatic payroll system and do not have an employer-sponsored retirement plan will be required to participate in this programme. If the employer participates in the programme or has an employer-sponsored retirement plan, its annual state business filing fee (required by corporate law) will be waived. The Board will adopt regulations to implement this programme. It will be issuing information about the programme to employers and employees before enrolment begins (Md. Code Ann. Lab. & Empl. §§ 12-101 et seq.).
Maryland does not require employees to provide healthcare insurance to employees, but those who choose or are required by federal law to do so should be aware of state coverage requirements. Examples of required coverage include but are not limited to, mammograms, in vitro fertilisation, home healthcare services and hospice benefits. (Md. Code Ann. Ins. §§ 15-801 et seq.)
Employers are required to provide workers’ compensation insurance, which provides compensation and healthcare benefits for employees who suffer an on-the-job injury or illness (Md. Code Ann. Lab. & Empl. §§ 9-101 et seq.). In addition, employers must participate in the State Unemployment Insurance programme, which provides benefits to unemployed individuals. (Md. Code Ann. Lab. § Empl. §§ 8-101 et seq.).
As discussed above, Maryland is an at-will employment state and termination of at-will employees may take place at any time, with or without cause or notice. If the employee has a contract for a specific period or that provides for termination only for cause, then the terms of the contract must be followed. Similarly, if the employee is subject to a collective bargaining agreement, termination must comply with the terms of the CBA.
Maryland law does not require the payment of severance. If an employer chooses to pay severance and obtain a release of claims, the release must contain certain language to comply with Federal law (eg Age Discrimination in Employment Act language, carve-out for filing of charges with the Equal Employment Opportunity Commission, whistleblower language, etc), but there are no specific state requirements.
As for benefits upon termination, employers must comply with their notice obligations under the Federal Consolidated Omnibus Budget Reconciliation Act (COBRA) for continued healthcare coverage. Maryland also has a healthcare continuation law that is similar to COBRA, applicable to all employers regardless of size. Employees are entitled to up to 18 months of continuation coverage if they are a resident of Maryland, they have been covered by the employer’s plan for three months and they resign or are involuntarily terminated not for cause. This coverage also extends to the employee’s spouse or dependent child in the case of the death of the employee (Md. Code Ann. Ins. §§ 15-401 et seq.).
With regard to mass or group layoffs, Maryland has a similar law to the Federal Worker Adjustment and Retraining Notification (WARN) Act. Unlike WARN, the state law is voluntary. It requests employers with at least 50 employees to provide 60 days’ advance notice to employees of a reduction in operations, which is defined as (i) the relocation of a part of the employer’s business from one workplace to another existing or proposed site or (ii) shutting down a workplace that reduced the number of employees by at least 25% or 15 employees, whichever is greater, over a three-month period (Md. Code Ann. Lab. & Empl. § 11-304).
In addition, the Economic Stabilization Act is intended to provide assistance to employers and employees to mitigate the impact of a reduction. Through its “Quick Response Program,” the Department of Economic and Employment Development provides services such as on-site registration for mass unemployment claims, job placement and referrals for job training opportunities (Md. Code Ann. Lab. & Empl. §§ 11-301).
Claims based on contracts and torts may be brought before Maryland district courts or circuit courts. Maryland district courts hear civil cases involving claims up to USD30,000; circuit courts hear more significant cases. In addition, state contract and tort claims may be asserted in a lawsuit in federal court as pendant claims to a federal claim, or if there is federal diversity jurisdiction between the parties.
There is a one-year statute of limitations for assault, libel and slander claims (Md. Code Ann. Cts. & Jud. Proc. § 5-105); all other tort claims, such as for abusive discharge, negligent misrepresentation, negligent hiring or supervision or tortious interference with contractual relations, etc, are subject to a three-year statute of limitations (Md. Code Ann. Cts. & Jud. Proc. § 5-101). Contract claims are also subject to a three-year statute of limitations (Id).
In a contract claim, a plaintiff may obtain actual damages arising from the breach of contract. Liquidated damages are not available unless the contract provides for their recovery. As for tort claims, a plaintiff may receive compensatory damages and, if actual malice is shown by clear and convincing evidence, punitive damages: Bowen v Caldor, Inc., 710 A.2d 267 (Md. 1998). There is no cap on economic compensatory damages; however, for 2018, there is a USD800,000 cap on non-economic compensatory damages such as pain and suffering (Md. Code Ann. Cts. & Jud. Proc. § 3-2A-09).
Other Statutory Claims
All of the various employment laws in Maryland provide for complaints to the Commissioner of Labor and Industry who may mediate the dispute or direct the Attorney General to bring suit on behalf of the employee for damages, injunctive relief or other relief. The employer may also be liable for administrative or civil penalties. In addition, some but not all of the laws also provide a private right of action for violations of those laws and specify the damages that may be obtained. These laws include the following.
Under the Parental Leave Act, the employee may also bring his or her own lawsuit and a court may award wages, salary, employment benefits and other compensation denied or lost, as well as attorneys’ fees and costs (Md. Code Ann. Lab. & Empl. §§ 3-1207 et seq.).
The Healthy Retail Employment Act permits employees to file suit if the employer fails to comply with an order from the Commissioner of Labor and Industry compelling compliance with the law issued for a subsequent violation against the same employee within three years of the first violation. If there are further violations, the court may award up to three times the value of the employee’s hourly wage for each additional shift break violation, attorneys’ fees, and costs (Md. Code Ann. Lab. & Empl. § 3-710).
Employees may also bring suit under the Workplace Fraud Act (which applies to the construction and landscaping industries). The employee may file within three years of the date of the misclassification of the employee as an independent contractor, and a court may award actual damages, an additional amount of up to three times the damages, attorneys’ fees, and costs (Md. Code Ann. Lab. & Empl. § 3-911).
Employees may pursue claims for violations of the Healthy Working Family Act by the following process. The employee must first file a written complaint of violation with the Commissioner of the DLLR. The DLLR will investigate within 90 days and attempt to resolve any issues informally through mediation. If the Commissioner finds a violation and is unable to reach an informal resolution, the Commissioner will issue an order that describes the violation and directs payment for the leave and economic damages. The Commissioner may also direct the payment of up to three times the value of the employee’s unpaid ESS leave and may also assess a civil penalty of up to USD1,000 for each employee for whom the employer is non-compliant. If the employer does not comply with the Commissioner’s order within 30 days, the Commissioner may bring an action against the employer on behalf of the employee and may also bring an action to seek enforcement of any civil penalty order. In addition, the employee may bring a civil action in court to enforce the Commissioner’s order within three years after the date of the order. If the employee’s court action is successful, the court may award three times the value of the unpaid ESS leave, punitive damages, attorneys’ fees and costs, and may order injunctive relief or other relief as deemed appropriate (Md. Code Ann., Lab. & Empl. § 3-1308).
The Civil Air Patrol Leave Act also gives employees the right to bring an action to enforce the law, but only injunctive or equitable relief is available (Md. Code Ann. Lab. & Empl. § 3-1007).
If an employee, intern or independent contractor believes that he or she has been subjected to discrimination, harassment or retaliation in violation of the state’s anti-discrimination law, they must first file a complaint of discrimination with the Maryland Commission on Civil Rights (“MCCR”). Any complaint filed with the MCCR is deemed to be “dual filed” with the Equal Employment Opportunity Commission. Discrimination complaints must be filed with the MCCR within six months of the alleged incident (or 300 days if cross-filed with the EEOC), while harassment complaints must be filed within two years. The MCCR will then conduct an investigation, which typically involves an in-person fact-finding conference. If the MCCR concludes that discrimination has occurred, it will seek to conciliate the matter. If the complainant is an intern, he or she is entitled only to non-monetary relief. If conciliation fails, the case may be certified for a public hearing where a Commission attorney will prosecute the matter. If the MCCR finds no evidence of discrimination, it will dismiss the matter. The EEOC typically adopts the findings of the MCCR.
Regardless of the MCCR’s findings and/or after 180 days have passed since the filing of the MCCR complaint, an employee (but not an intern) may then bring a private lawsuit before the state circuit court. Discrimination lawsuits must be filed within two years of the alleged incident, while harassment lawsuits are subject to a three-year statute of limitations. The damages available generally mirror those under Title VII: back pay, reinstatement, compensatory damages, attorneys’ fees, expert witness fees and costs. The amount of compensatory fees, like those under Title VII, range from USD50,000 to USD300,000 depending on the size of the employer (Md. Code Ann. State Gov’t §§ 20-1001 et seq.).
Under the Equal Pay Act, an employee may file a complaint with the Commissioner of Labor and Industry, who may mediate the dispute or direct the Attorney General to bring suit on behalf of the employee for damages, injunctive relief or other relief. Moreover, if an employer is found to have violated the law two or more times within a three-year period, either the Commissioner of Labor and Industry or a court may assess a civil penalty equal to 10% of the damages owed by the employer. If the employer hinders the Commissioner’s investigation into the complaint, it may be found to be guilty of a misdemeanor and subject to a fine not exceeding USD300. The employee may also bring his or her own lawsuit and a court may award the wage differential and an additional equal amount as liquidated damages, as well as injunctive relief, attorneys’ fees, costs and prejudgment interest. Any such lawsuit must be filed within three years of the employee’s final pay check (Md. Code Ann. Lab. & Empl. §§ 3-306.1 et seq.).
Under the Maryland Wage and Hour Law (Md. Code Ann. Lab. & Empl. §§ 3-423 et seq.), an employee who failed to receive either the minimum wage rate or overtime premiums can bring a claim before the state circuit court for the amount that was underpaid. The court may award the difference in wages, attorneys’ fees and costs. In addition, the court may award an equal amount of the wage differential as liquidated damages, unless the employer can show that it acted in good faith and reasonably believed it was in compliance with the law, in which case the court may either waive or reduce the liquidated damages amount. An employee may also request the Commissioner to take an assignment of the claim in trust for the employee and the Commissioner may then direct the Attorney General to bring an action on behalf of the employee. In addition, any violations of the law, including the employer’s failure to cooperate with the Commissioner’s investigation into a complaint or retaliatory action against an employee who asserts rights under this law, will result in the employer being found guilty of a misdemeanor and subject to a fine not exceeding USD1,000.
Under the Maryland Wage Payment and Collection Law (Md. Code Ann. Lab. & Empl. §§ 3-507 et seq.), if wages are not timely paid, the employee may file a complaint with the Commissioner of Labor and Industry. If the Commissioner finds a violation, the Commissioner may attempt to mediate the dispute or may direct the Attorney General to bring suit on behalf of the employee. If the amount in dispute is less than USD3,000, the Commission may issue an order to pay the wages, in response to which the employer may request an administrative hearing. The Commissioner may seek enforcement of a wage order in district court. Additionally, violations will be considered a misdemeanor and subject the employer to a fine not exceeding USD1,000.
If the failure to pay lasts longer than two weeks, an employee also has the option to file a private lawsuit with the circuit court. If a court or jury finds a violation, the employer will be liable for the amount of the withheld wages and, if the withholding was not the result of a bona fide dispute, up to three times the amount of the lost wages, in addition to attorney’s fees and costs. Notably, an individual owner or supervisor with the power to hire and fire, supervise and control terms and conditions of employment, determine the rate and method of payment and maintain employment records can be held individually liable under the law.
In addition, Maryland has enacted a wage lien law providing a mechanism for an employee or the Commission to obtain a lien on an employer’s personal or real property in order to secure an amount of unpaid wages and penalties allegedly due before any judgment has been entered (Md. Code Ann. Lab. & Empl. §§ 3-1101 et seq.; COMAR §§ 09.12.39.01 et seq.). If the employer disputes that the wages are due, the employer must respond by filing a complaint concerning the dispute within 30 days of receiving notice of the lien (3-1103). If the employee proves by a preponderance of the evidence that the lien should be established to secure unpaid wages, the employee may be awarded costs and reasonable attorneys’ fees incurred. However, if the court finds that the attempt to establish the lien was frivolous or made in bad faith, the court may award the employer costs and reasonable attorneys’ fees (Id).
See also 6.1 Contractual Claims, above.
Maryland has enacted several statutes that provide whistleblower protections for private sector employees. Under these statutes, employees are protected from adverse employment action for reporting certain kinds of wrongdoing or legal violations to state governmental agencies.
The Maryland Occupational Safety and Health Act protects employees who file complaints about safety violations. Employees must make such written and signed complaints to the Commissioner of Labor and Industry within 30 days of the adverse employment action (Md. Code Ann. Lab. & Empl. §§ 5-103 et seq.). The State Contractor Employees’ Whistleblower Protection Act protects contractors and subcontractors of Maryland’s executive branch agencies who report abuse of authority, gross mismanagement, gross waste of money, a substantial and specific danger to public health or safety or a violation of law. Employees must bring such claims within one year of the adverse employment action (Md. Code Abb. State Fin. & Proc. § 11-301 et seq.). In addition, the Health Care Worker Whistleblower Protection Act protects licensed or board-certified health care workers who make written reports to management of legal violations that pose a danger to public health or safety (Md. Code Ann. Health Occ). Claims must be brought within one year of the adverse employment action (§§ 1-501 et seq.).
Maryland employers may set up internal grievance or appeal procedures, but there are no state laws that govern such internal procedures. Unionized employers are required to follow the grievance procedures contained in a collective bargaining agreement.
In addition to filing suit in court, the parties to a dispute may agree to mediation or arbitration. There are no specific Maryland laws that govern the choice of these alternative dispute resolution options. However, as was explained earlier, under the Maryland Court of Appeals’ construction of arbitration agreements, the obligation will not be enforceable in the absence of some additional consideration beyond continued employment: Cheek v United Healthcare of the Mid-Atlantic, Inc., 835 A.2d 656 (Md. 2003).
Jury trial waivers, in which the employee retains the right to go to court but waives the right to have a jury hear his or her claims, are enforceable in Maryland. Although Article 23 of the Maryland Declaration of Rights guarantees the right to a jury trial in civil cases in state court, the Maryland courts have found that this right may be waived, as long as the waiver is knowing and intelligent: see for example, Walther v. Sovereign Bank, 386 Md. 412 (2005). The jury trial waiver should be drafted and positioned in a conspicuous manner. Suggestions for achieving this include titling the provision, placing it in a separate paragraph and using all capitals or bold font.
Maryland Rule of Civil Procedure 2-231 expressly provides for the ability to bring a class action. The rules set forth specific prerequisites to bringing a class action:
As long as the conditions set forth in the rule are met, any employment claim may be asserted as a class action.
As noted previously, Maryland employers may require employees to waive the right to assert a class action or a collective action under the Federal Fair Labor Standards Act in an enforceable arbitration agreement.
See above, 6.1 Contractual Claims; 6.2 Discrimination, Harassment and Retaliation Claims; 6.3 Wage and Hour Claims; and 6.4 Whistleblower/Retaliation Claims.
Generally, Maryland employment laws apply to employers, whether located in-state or out-of-state, that have employees who perform a certain amount of work within the state. The laws cover only those Maryland employees. The amount of work required to trigger coverage may depend on the definition of a “covered employee” under a specific statute. For example, the Workers’ Compensation Act requires the employee to be “regularly employed” in Maryland, therefore incidental work does not result in coverage for the employee. On the other hand, the Maryland Wage Payment and Collection Act covers an employee who has been “instruct[ed] ... to be present at a work site” in Maryland no matter how brief the stint of work but does not cover an employee who performs work in another state, even if that employee was hired in Maryland.