by Steve LewickyLocal government ordered to pay attorneys’ fees for failing to adequately respond to request for access to public records
The town of Chevy Chase, Maryland, was recently ordered to pay $92,000 in attorneys’ fees to parties that sued the town seeking access to public records under the Maryland Public Information Act (“MPIA”). This litigation demonstrates both the breadth of public access rights under the MPIA and the danger to political subdivisions of being hostile to such requests.
The controversial Purple Line light rail system planned for the Maryland suburbs of Washington, if constructed, will extend from Bethesda to New Carrolton. Plans call for part of the Purple Line to run along a former railroad right-of-way through Chevy Chase, along what is now the Capital Crescent Trail. Local groups have organized in opposition to the project, and the Town of Chevy Chase has been active in opposition. As part of its opposition to the construction of the Purple Line, the town retained the law firm of Sidley Austin to review the Maryland Transit Administration’s Draft Environmental Impact Statement. The town thereafter also retained another law firm, which in turn contracted with two lobbying firms. In early 2014, the Washington Post and other news organizations published articles about the town’s relationship with these firms, and fees the town paid for these services. After reading these articles, an organization that supports public transportation, along with a local blogger, sought access to town records pertaining to the town’s relationship with the firms under the MPIA. For some of these MPIA requests, they requested a fee waiver under the Act. The town denied this waiver of fees.
The MPIA was enacted in 1970, four years after Congress enacted the federal Freedom of Information Act. Its principal purpose is to provide the public a right to inspect records of state or local governments. The Act states that it is to be construed in favor of allowing inspection of public records, with the least cost and least delay to the person that requests the inspection. Under the Act, the government entity that is the custodian of a record is ordinarily entitled to charge a reasonable fee to cover its costs in searching and compiling records. The government may not charge a fee for the first two hours that are needed to search public records in response to a request, however, and it may waive all fees if the applicant and is indigent, or if the government determines that a waiver would be in the public interest.
In early 2015, the blogger and the organization filed a complaint in the Circuit Court for Montgomery County, challenging the town’s denial of their fee waiver requests. The town argued that the organization and the blogger had a prior “history of attacks on the town,” and that previous requests by the organization and the blogger “demonstrated that Plaintiffs sought the fee waiver for their own personal interests in retaliating against the town for its opposition to the Purple Line project.” The town further alleged that they had “engaged in a smear campaign…to retaliate against the town for its position on the proposed Purple Line project.” The Circuit Court ruled in favor of the town and rejected the challenge to the town’s denial of the fee request. The organization and the blogger appealed.
In a decision handed down in September 2016 (Action Committee for Transit v. Town of Chevy Chase), the Maryland Court of Special Appeals overturned the decision of the Circuit Court, ruling that when presented with a waiver request, a government custodian of records must consider the ability of the applicant to pay the fee, and other relevant factors, in deciding whether the fee waiver would be in the public interest. On appeal from a denial of such a request, the appellate court needs to have sufficient information to satisfy it that the government custodian’s decision was not arbitrary and capricious. In this case, the town informed the applicants of its denial of the fee request without providing any explanation for the basis of its denial. The appellate court found that this type of a bald and conclusory statement provides no insight into the actual considerations that motivated the town to deny the request, thereby preventing the appellate court from adequately considering the actual decision-making process followed, and considering whether the custodian gave appropriate consideration to all factors that it was required to consider under the statute. Even though the town failed to set forth its reasoning in its written denial, the court held that the town still could have done so before the Circuit Court, but its submissions to the court also did not satisfy its burden. Based on the town’s submissions to the Circuit Court, the appellate court found that a significant factor, if not the primary factor, in the town’s decision to deny the fee waiver was that the applicants previously criticized town officials for their opposition to the Purple Line. The appellate court found that the First Amendment’s guarantee of free expression of speech protects persons from the imposition of financial burdens based upon the content of their speech. Therefore, a government custodian cannot deny a fee waiver request under the MPIA simply because the government is upset that the requesters made life difficult for town officials, or because the officials would have preferred the requesters not oppose government policies.
The appellate court remanded the case back to the Circuit Court, with instructions that the court direct the town to respond to the information requests without charge to the requestors, and further directing the Circuit Court to reconsider the request for attorneys’ fees under MPIA. On remand, the Circuit Court in September 2017 awarded the organization and the blogger $92,000 in attorneys’ fees, which was less than the total amount of attorneys’ fees incurred.
The case is interesting because the appellate court took what appears to be a broad statutory grant of discretion to government officials in determining whether a fee waiver is in the public interest, and limited that discretion by requiring the government to clearly articulate reasons for denial of a fee request. The articulated reasons must be unrelated to the content of the applicant’s motivation in asking for access to public records. The 2016 Court of Special Appeals opinion provides guidance to government officials on how to properly support a denial of a fee request, but it also articulates a clear bias toward allowing public access to government records, and toward waiving fees if the request can be seen as supporting a public interest. The subsequent award of $92,000 by the Circuit Court illustrates the perils of local governments failing to be cooperative in responding to public record access requests.
by Steve LewickyMaryland appeals court clarifies when an employee expressing fear of being harmed by a co-worker is protected from being held liable for defamation
We often hear of situations in which an employee is feared by others to pose a threat to co-workers in a workplace. It is not uncommon for HR directors to learn of employees’ concern about perceived threats posed by a co-worker. In July 2017, the Maryland Court of Special Appeals issued a decision addressing the complex legal questions that arise when one employee tells another that he or she has safety concerns about a co-worker.
In Lindenmuth v. McCreer, the plaintiff was employed as a mechanic, and the defendant was the lead mechanic in the same shop, with supervisory authority over Lindenmuth’s work. Lindenmuth’s manager and supervisors brought several performance mistakes to Lindenmuth’s attention. His manager advised him to take time off from work due to his stress level. Another mechanic in the same shop heard rumors from co-workers that Lindenmuth was going to return to work, and had a concealed carry firearms permit. He expressed concern to the defendant that Lindenmuth was going to shoot someone at work upon his return. It was common knowledge within the mechanic shop that Lindenmuth owned firearms, and that he had a concealed carry permit. Defendant McCreer went to company management and relayed the employee’s concerns about Lindenmuth, and described prior conversations in which employees alleged that Lindenmuth described wanting to commit violent acts, including the shooting of police officers. Lindenmuth thereafter returned to work and saw that his photograph had been placed in the guard shack, with a note indicating that he was not allowed access to the facility.
Lindenmuth filed a lawsuit for defamation, “invasion of privacy-unreasonable publicity given to private life,” “invasion of privacy-false light,” and intentional infliction of emotional distress. During the course of the litigation process prior to trial, the trial court granted summary judgment in favor of the defendant, finding that Lindenmuth had not brought forth facts sufficient to allow him to prevail at trial, even if all facts were as he alleged them to be. On appeal, the Court of Special Appeals provided a detailed analysis of the evidence that a plaintiff needs to bring forward to state an actionable claim under each of the causes of action asserted by Lindenmuth. The appellate court upheld the trial court and found that Lindenmuth could not prevail on the facts brought forth in the litigation discovery process.
Defamation is often more difficult to prove than is generally understood by the public. Under Maryland law, it is not sufficient to simply show that a false statement was made about someone. To establish an actionable claim for defamation, a plaintiff must allege and show that: (1) the defendant made a defamatory statement to a third person, (2) the statement was false, (3) the defendant was legally at fault in making the statement, and (4) the plaintiff suffered harm as a result of the statement. A defamatory statement is one which tends to expose a person to public scorn, hatred, contempt or ridicule, thereby discouraging others in the community from having a good opinion of, or from associating or dealing with, that person. It is the plaintiff’s burden to prove that a particular statement at issue was false.
If a plaintiff meets his or her burden of proving all the above elements, the defendant can escape liability if he or she proves that a recognized privilege existed at the time of the statement, which excused the defamatory statement. A privilege allows a person to make a defamatory statement in furtherance of some interest of social importance that is entitled to protection. Some privileges are absolute, and others are qualified. A qualified privilege (also known as a conditional privilege) may defeat a claim of defamation as long as the defendant did not abuse the privilege. Maryland courts have recognized four common-law privileges against defamation: (1) a “public interest” privilege to publish material to public officers on matters within their public responsibility, (2) a privilege to publish to someone who shares a common interest, or to publish in defense of oneself or in the interest of others, (3) a “fair comment” privilege, and (4) a privilege to make a fair and accurate report of public proceedings.
The court found that Lindenmuth’s defamation claim had to fail because he could not demonstrate that McCreer’s statements were false. It was undisputed by the parties that McCreer accurately relayed to his supervisor what a co-worker told him about Lindenmuth. There appears not to have been a dispute over whether the employee was concerned about Lindenmuth coming to the workplace to shoot someone, or over whether this employee shared his concerns with McCreer. Without evidence that McCreer’s statements were false, the defamation claim could not succeed.
In a more interesting part of the decision, the court went on to opine that, even if Lindenmuth could have proven all four elements of his defamation claim, the defendant still would not have been liable if he established that a privilege applied – and the appellate court agreed with the trial court that a conditional privilege would have been applicable here. Specifically, the court found that McCreer’s statements to management were protected by the common interest privilege because they were made in furtherance of the common interests shared among McCreer and other employees. The communication between McCreer and management arose out of the employer-employee relationship, between people engaged in a common enterprise or activity. The court found that a supervisory employee has an interest in the safety of other employees as well as himself, and McCreer shared this interest with the person to whom he spoke. The court provided a detailed explanation of the standard of proof necessary to show that a qualified privilege has been abused, and found that no facts were present in this case from which a court could find that abuse negated the conditional privilege.
The court also discussed the elements of the two invasions of privacy torts and of the intentional infliction of emotional distress claim and found that the trial court did not err in ruling against the plaintiff on these claims, either.
The Lindenmuth decision gives some comfort to companies wrestling with how to address employee concerns about personal safety and provides further clarity on what must be established by a plaintiff, under Maryland law, to successfully assert a defamation claim or a privacy tort claim when the statements in question relate to workplace safety.
For assistance with claims asserted by employees or former employees against companies or co-workers for defamation or invasion of privacy, contact the Law Office of Steven J. Lewicky.
by Steve LewickyMaryland condominium associations may not use condominium amenities to enforce condominium assessment payment
The Maryland Court of Appeals issued a decision on June 23, 2017, discussing the extent to which a condominium association may impose restrictions on a unit owner’s right to access common amenities of the condominium. In Elvation Towne Condominium Regime II, Inc. v. Rose, the court looked at a condominium association with a “suspension-of-privileges” rule, by which the association prohibited unit owners from parking overnight on the property or using the pool during periods when the owner was delinquent in paying condominium fees. The unit owners bringing this case were alleged to be in arrears in making require payments of assessments, so the association not only sued the owners for the amount owed in the District Court of Maryland but also barred them from overnight parking or use of the pool. The owners brought their own suit against the condominium association in Circuit Court, seeking a declaratory judgment striking down the prohibition against the use of common amenities.
The Court of Appeals held that a Maryland condominium association may restrict access to common areas and amenities as a means to enforce payment of condominium fees, but only if this enforcement mechanism is expressly provided for in the condominium’s declaration. This was not the case here, because the action was taken based only on a rule enacted by the condominium’s board. Therefore, the court would not allow this enforcement mechanism against these particular owners.
In making this decision, the court wrestled with whether a “suspension-of-privileges” rule constitutes a taking of property, requiring more than a rule-making under the Maryland Condominium Act. The court held that, when a rule disparately affects a portion of unit owners by revoking a property interest they acquired when they purchased their units, without affecting the rights of other unit owners, there is a taking of property. The court went on to find that restricting a condominium owner’s access to the community-held property is a significant infringement of the owner’s property rights, which may only be authorized by a provision in the condominium’s declaration, and not be a rulemaking.
by Steve LewickyMaryland employers may need to provide accommodation to employees with disabilities by offering alternative job postings
The Maryland Fair Employment Practices Act (“MFEPA”) makes it unlawful for an employer to refuse to make reasonable accommodation for an employee that has a disability known to the employer. Regulations implementing the Act provide that an employer may not deny an employment opportunity to an employee with a disability, if the basis for the denial is a need to accommodate the individual’s physical or mental limitations, and the accommodation would be reasonable.
Earlier this year, in Townes v. Md. Dept. of Juvenile Services, the U.S. District Court in Maryland had an opportunity to apply this law to a government employee who was diagnosed with bipolar disorder. The employee’s treating psychiatrist recommended that she work from a different office location within the state-wide department, in order to reduce travel. The employee contended that there were open positions within the department that would require her to engage in less travel, but the department declined to consider her for any of those jobs when she returned from disability leave. She further alleged that her employer failed to perform an individual assessment to determine whether she was qualified for another job, beyond her current position. The employer filed a motion for summary judgment, arguing that it was entitled to a favorable judgment as a matter of law on the facts as alleged by the employee, without need to proceed to trial on those facts.
The employee argued that the MFEPA is similar to the Americans with Disabilities Act (“ADA”) in requiring an interactive process by which an employer conducts an individualized assessment for an employee with a disability. She pointed to an earlier decision by the Maryland Court of Appeals, in which that court broadly interpreted the phrase “job in question.” The court also looked to a Maryland state regulation that requires an employer to consider an employee’s request for another job position if she becomes disabled.
The question in the summary judgment motion came down to whether a Maryland employer is required by the MFEPA to assess whether an employee with a disability can perform the essential functions of any job opening within the organization, or only those that are located in the employee’s existing work location. While the employer did not dispute that it was required to perform a review to determine whether a reasonable accommodation was available to allow the disabled employee to perform essential job duties, it questioned whether it had to assess whether the employee can perform job functions at any job posting within a multi-site organization. In ruling on this pre-trial motion, the court found that the MFEPA statute does not preclude a jury from finding that there is such an obligation, and therefore the court allowed the case to proceed toward trial.
This ongoing case suggests that federal courts in Maryland may be inclined to interpret the MFEPA in a similar manner as the Americans With Disabilities Act (“ADA”) and the Rehabilitation Act. If so, then upon learning of an employee’s request for a transfer to another job location due to a claim of disability, an employer should engage in good faith interactions with the employee (and an individualized assessment), and try to find an appropriate job posting for the employee elsewhere within the organization. As noted, this case has not yet reached trial, and the plaintiff still must prove her case to a jury in order to prevail on her theory.
For information about employment law claims, please contact the Law Office of Steven J. Lewicky.
by Steve LewickyPrevailing parties in Maryland breach of contract lawsuits may be awarded compensation for time spent supporting litigation efforts, if the contract provides for reimbursement of business losses.
As a general rule in American jurisprudence, each party to a lawsuit pays its own attorneys’ fees and costs of litigation, regardless of which party prevails. A well-established exception to this rule provides that parties to a contract may agree that the prevailing party in any lawsuit arising out of the contract is to be awarded its attorneys’ fees and court costs as part of the judgment, to the extent the court finds such fees and costs to have been reasonable. In the recent case of Under Armour, Inc. v. Ziger/Snead, LLP, however, Maryland’s intermediate appellate court interpreted a contract between two parties to also permit reimbursement of business costs incurred due to litigation, beyond attorneys’ fees and typical court costs. This potentially expands the exposure of losing parties to paying substantial additional amounts to prevailing parties.
The contract, in this case, was between a property owner and an architecture firm. The contract provided that, if the architecture firm employed attorneys to gain enforcement of the agreement, the property owner would have to reimburse the architecture firm for its attorneys’ fees, costs, and expenses arising in litigation. That portion of the contract was typical of a fee-shifting provision, but the contract went on to also provide for reimbursement of “losses” incurred by the prevailing party.
At trial, the jury awarded $58,940 in compensatory damages to the architecture firm, and after post-trial motions, the court also awarded the architecture firm $182,735 in attorneys’ fees, $155 in court costs, $42,830 in litigation expenses, and another $62,190 to compensate it for business “losses.” These recovered losses were the value of time expended by one of the principals in the architecture firm, and several employees of the firm, on the investigation of the dispute and in performing litigation-related tasks at the request of its attorneys. To prove the amount of its losses, the firm presented evidence of the number of hours spent by its principal and other employees on litigation matters, multiplied by their hourly billing rates typically charged to firm clients – on a theory that the time expended on litigation matters was time they otherwise would have been billing to clients for their usual services. The court decided to compensate the firm for 79 ½ hours of employee time spent evaluating the case and preparing for and attending mediation, 154 ½ hours investigating the facts, dealing with discovery, and preparing for and attending depositions, and 69 ½ hours preparing for and attending the trial.
The award of business losses, in this case, will be a surprise to many attorneys, because there has been a well-established practice of limiting the scope of most fee-shifting contract provisions to reasonable attorneys’ and court costs. Opening the door to compensating a prevailing party for the value of its employees’ time preparing for and participating in litigation will cause careful contract drafters to include “losses” among the items that can be awarded to a prevailing party, should a dispute arise under the contract. The result could be substantially larger awards in contract actions. This outcome probably feels fair to the prevailing party and may be considered outrageous by the losing party, but the practical result will be that contract litigation may now become even more financially risky. In this case, the amount of compensatory damages was $58,940, but additional fees and costs that were awarded totaled about $230,000, of which $62,190 were to compensate for “losses.” Litigating parties will face pressure to negotiate a settlement prior to trial, in light of increased financial exposure in the event of a loss a trial. Placing increased financial pressure on all parties effective benefits the party having greater financial resources, since that party can better withstand a negative result at trial.
by Steve LewickyFederal contractors now must provide training to their employees on protection of Personally Identifiable Information
New requirements were placed on Federal contractors this year, to train their employees on the protection of personally identifiable information (known as “PII”). Under a new rule that went into effect in January 2017, all federal contractors that handle or have access to the personally identifiable information of others must provide training to their employees. The rule applies not only to large government contractors, but also to contractors “at or below the simplified acquisition threshold (SAT), and to contracts and subcontracts for commercial items, including contracts and subcontracts for commercially available off-the-shelf (COTS) items.” The rule requires prime contractors to flow down these privacy training requirements to their subcontractors. Personal identifiable information (“PPI”) is any type of information that may be used to trace or distinguish an individual’s identity.7
Government contractors and subcontractors must ensure that their employees complete an initial privacy training course, and thereafter undergo annual refresher training. An employee must receive training if they:
- Have access to any system of records
- Design, maintain, develop, or operate the contractor’s system of records
- Store, collect, create, use, maintain, or dispose of personal identifiable information on behalf of the contractor.
The training is to include:
- Explanation of the authorized and official use of personal identifiable information, and of records containing such information
- How to appropriately safeguard and handle private information
- Applicable restrictions of the use, collection, access, disclosure, and disposal of personal identifiable information
- Procedures to be followed during a suspected or confirmed breach of security for personal identifiable information
Contractors are required to customize their privacy training to fit particular employee’s duties, and the training must include foundational levels of privacy training, as well as advanced privacy training where appropriate. Employees must be tested to ensure they have the level of knowledge necessary to keep personal identifiable information private. Contractors are required to keep records of training to show what type of training particular employees received, and these records are subject to audit by the government.
Federal contractors and subcontractors need to consider which of their employees (if any) handle or have access to the personally identifiable information of others, and prime contractors need to ensure that their subcontractors comply with these new training requirements. In addition to providing the required training, contractors and subcontractors also must comply with the record-keeping requirements in the new rule.
by Steve LewickyA new, less expensive alternative to special needs trusts will become available in late 2017
Persons with disabilities often confront substantial financial difficulties — especially as adults — because ownership of more than $2,000 in assets will make them ineligible for government benefits that are critical for their care and support. Families with the resources necessary to create special needs trusts have used these trusts to hold assets for the benefit of disabled persons without those assets affecting eligibility for government benefits or programs.
At the end of 2014, President Obama signed the federal ABLE Act, modeled after Section 529 of the Tax Code governing college savings plans. The ABLE Act allows states to establish programs whereby disabled people may save money in tax-deferred accounts that may be used to pay for qualified disability expenses, without losing eligibility public benefits as a result of owning assets held in these accounts. Withdrawals from ABLE accounts will be tax-free, as long as they are used for qualified disability expenses. States also may choose to offer a state tax deduction for contributions to these accounts.
Unlike 529 college savings accounts, only the disabled individual or a legal guardian (or someone holding a power of attorney) may open an ABLE account, and each disabled person may only have a single ABLE account. Accounts cannot be opened by other people on behalf of a disabled person. Multiple individuals can contribute to a disabled person’s ABLE account, but the total contributions in a particular year may not exceed the federal gift limit, which is currently $14,000. Total lifetime contributions may not exceed $350,000. When the beneficiary passes away, and if that person used Medicaid, the Medicaid program can be reimbursed out of funds remaining in the account.
Assets in an ABLE account are disregarded for purposes of determining Medicaid eligibility. For purposes of determining eligibility for Supplemental Security Income (SSI), however, only the first $100,000 in ABLE account assets are disregarded. SSI payments of monthly cash benefits will be suspended if the beneficiary’s ABLE account balance exceeds $102,000. In other words – unlike the current situation, in which a disabled person may hold no more than $2,000 in personal assets without losing government benefits – a disabled person may now hold up to $102,000 in an ABLE account without losing SSI benefits.
The Maryland Legislature has established a Maryland ABLE program, and the program is in the process of being set up. Maryland has decided to make the first $2,500 per year in contributions to an ABLE account deductible from state taxes (in addition to all earnings on the accounts being tax-free). Maryland plans to decide, by the end of this summer, which investment company will serve as the program manager, and Maryland ABLE accounts are scheduled to become available to the public by approximately November 1, 2017.
While ABLE accounts perform many of the same functions as a special needs trust, costs for an ABLE account are far lower than the cost to establish and maintain a special needs trust. While there still will be some situations in which a special needs trust is needed, for many families an ABLE account will meet all of their needs at a substantially lower cost. Individuals can maintain both an ABLE and account and a special needs trust, if necessary.
More information about ABLE accounts may be found at Maryland529.org/MDABLE.
by Steve LewickyNew District of Columbia Requirements for Paid Leave, and Barring Credit Checks
Two new employment laws went into effect in the District of Columbia in April — The District of Columbia Universal Paid Leave Amendment Act and the District of Columbia Fair Credit in Employment Amendment Act of 2016. Both laws will have a significant impact on businesses in D.C., and also on Maryland companies that have D.C. employees.
D.C. employers must give employees eight weeks of family leave
The Paid Leave Act requires employers to provide their employees with eight weeks of family leave, and it applies not only to employers based in D.C. but also to any business outside of the District that pays D.C. unemployment insurance. This brings within the scope of the law an employee that spends more than 50% of his or her work hours within the District of Columbia and has worked for at least a 12-month period prior to the leave request. The law applies to an employee that lives outside the District if he or she works within the District.
A covered employee is entitled to:
- Up to eight weeks or parental leave
- Up to six weeks of family leave to care for a relative, and
- Up to two weeks leave for a serious health condition
Leave is capped at a maximum of eight weeks in any 52-week period.
D.C. employers can no longer use credit ratings in hiring decisions
The new Fair Credit in Employment Amendment Act prohibits an employer from using or investigating credit information during the hiring process. A D.C. employer cannot request, require, or suggest that any current or prospective employee submit any type of credit information through job applications, credit history checks, or interviews. The law also covers interns. There is an exclusion from the law’s prohibitions for applicants for positions requiring a security clearance. The law is enforced by the complaint process through the D.C. Commission on Human Rights, and penalties range from $1,000 to $5,000 per violation.
Employers in the District of Columbia should review their employment policies and:
- Remove questions pertaining to credit information
- Include in their employee handbooks a statement that the company no longer requires information from applicants regarding credit
- Remove all credit information, such as credit background checks, from pre-employment background checks.
by Steve LewickyNew mandatory paid leave requirements are expected to take effect in early 2018
On March 15, 2017, the Maryland Senate passed the Maryland Healthy Working Families Act (S.B. 230) (often referred to as the “Paid Leave Act”). The Act was previously passed by the House of Delegates as H.B. 1. Time ran out on the annual legislative session before the governor acted on the bill, but Governor Hogan is expected to veto the Act prior to the beginning of the 2018 legislative session, setting up an override vote at the beginning of that session. The Act appears to have veto-proof support in the Legislature, however. Therefore, it is likely that the Act will take effect in early 2018.
If the Act becomes law, Maryland employers will need to update their employee handbooks and policies to reflect these new leave mandates. The Act would require all Maryland employers with 15 or more employees to provide paid leave to their employees, up to 40 hours per year. Maryland employers with 14 or fewer employees will be required to provide unpaid leave to their employees, up to 40 hours per year. Employees that work more than 12 hours per week will be entitled to leave. Leave may be used by an employee to care for or treat his or her physical or mental illness or injury, to obtain preventative medical care for the employee or for a member of the employee’s family, to care for a family, or for maternity or paternity leave.
The Act will not apply to employees that work fewer than 12 hours per week, to some on-call employees in the health or human services industries, to temporary workers, or to construction workers that are covered by a collective bargaining agreement in which the requirements of the Act are expressly waived.
If an employer grants leave on an accrual basis throughout the year, it must allow employees to carry over up to forty hours of their accrued but unused leave into the following year. If leave is granted in a lump sum at the beginning of the year, however, the employer need not allow carry-over of accrued but unused leave at the end of the year. Employers are not required to pay employees for unused leave upon termination.
The Act carries significant penalties for those employers that fail to comply. Available penalties include awards equal to three times the value of unpaid earned leave, punitive damages, reimbursement of attorneys’ fees, and injunctive relief. Before filing suit, however, an employee must file a written complaint with the Maryland Department of Labor, Licensing and Regulation, which may issue an order directing payment of the monetary value of the unpaid earned leave, and potentially other penalties. Only if the employer fails to comply with the Department’s order may the employee then file suit in court.
While advocates believe that provision of family leave will be beneficial to workers and their families, many business groups fear that extending required paid leave to businesses with as few as 15 employees may have a substantial adverse effect on the economy. Regardless of the law’s economic impact, it is important that all Maryland employees be aware of these likely changes to leave requirements, beginning in early 2018, and adjust their policies and employee manuals to reflect these anticipated changes.
by Steve LewickyFederal court expands definition of “joint employment” for wage and hour compliance purposes.
The U.S. Court of Appeals for the Fourth Circuit, which makes decisions that are binding on federal courts in Maryland, issued a ruling on January 25, 2017, that will have a significant impact on industries where subcontractors provide labor on projects.
The Fair Labor Standards Act (FLSA) establishes a federal minimum wage and requires employers to pay “time and a half” overtime to employees that work more than forty hours in a single workweek. The Department of Labor has long maintained regulations recognizing that it is possible for a single worker to serve in the role of an employee to two or more employers at the same time, for purposes of the FLSA. The regulations make a distinction between “separate and distinct employment” of a worker and “joint employment” of a worker by two companies. An employment relationship is “separate and distinct” when two employers act entirely independently of each other and are completely disassociated from each other with respect to a worker’s employment. Joint employers, on the other hand, are responsible (individually and jointly) for compliance with overtime laws and regulations. The hours that an employee works for each of two joint employers in a single workweek must be aggregated to determine whether, and to what extent, the worker is to be paid overtime. When there is “joint employment,” a worker’s employment by the joint employers is treated as “one employment” for purposes of determining compliance with wage and hour requirements, and the joint employers are held jointly and severally liable for violations.
In the case that was recently reviewed by the Fourth Circuit, several workers were employed by a small subcontractor as framing and drywall installers, and that subcontractor did almost all of its work for a single general contractor. While the subcontractor was responsible for hiring and firing, on a few occasions workers received paychecks directly from the general contractor. The general contractor played a role in determining the workers’ daily and weekly schedules, and the general contractor regularly communicated its site staffing needs to the subcontractor. The workers wore hardhats and vests bearing the general contractor’s name and logo and were required to sign in on timesheets provided by the general contractor. The general contractor’s foremen continually supervised the workers and owned nearly all the tools and materials used by the workers.
Applying a previously-applicable legal test to determine whether these facts constituted “joint employment,” the trial court ruled that it did not. On appeal, however, the Fourth Circuit has now established a broader test than was applied by the trial court. Going forward, federal courts in the Fourth Circuit (including the federal courts in Maryland) will consider six factors in determining whether two or more employers are “not completely disassociated” with respect to a worker, for purposes of determining joint employment:
- Whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate the power to direct, control, or supervise the worker, whether by direct or indirect means;
- Whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate the power to – directly or indirectly – hire or fire the worker or modify the terms or conditions of the worker’s employment;
- The degree of permanency and duration of the relationship between the putative joint employers;
- Whether, through shared management or a direct or indirect ownership interest, one putative joint employer controls, is controlled by, or is under common control with the other putative joint employer;
- Whether the work is performed on premises owned or controlled by one or more of the putative joint employers, independently or in connection with another; and
- Whether, formally or as a matter of practice, the putative joint employers jointly determine, share or allocate responsibility over functions ordinarily carried out by an employer, such as handling payroll, providing workers’ compensation insurance, paying payroll taxes, or providing the facilities, equipment, tools, or materials necessary to complete the work.
These six factors are not an exhaustive list of all potentially relevant considerations for a court to review. Ultimately, the determination of “joint employment” will be based upon the circumstances of the entire activity. The appeals court expressly held that the fact that there is a legitimate contractor-subcontractor relationship between the putative joint employers is not relevant, nor is liability predicated on any bad faith by the two companies in seeking to avoid compliance with wage and hour laws.
This broader standard is likely to expose many companies to joint liability for payment of minimum wages to the employees of their subcontractors. Companies that retain subcontractors would be well-advised to closely examine particulars of their relationships with employees of subcontractors, to avoid the consequences of being found to be the “joint employer” of employees for purposes of complying with the FLSA.
