Maryland Business Law Blog

Employers May Be Legally Liable for Unpaid Severance Under Maryland’s Wage Payment and Collection Law

Posted by Edward Sharkey on Wed, 09/12/2012 - 18:22

Pursuant to the Maryland Wage Payment and Collection Law (the “Law”), employees have a right to sue for unpaid wages. If a court finds that an employer has withheld wages in violation of the Law, the employee may recover three times the unpaid wages and attorneys’ fees. A recent opinion by the U.S. District Court for the District of Maryland makes it clear that, in some circumstances, severance pay is a wage that is covered by the Law.

In the case, the employer agreed to pay the employee a severance if the employee (1) remained employed as long as required by the employer, (2) was not terminated for cause, and (3) performed all assigned tasks. When the employment relationship ended, the employer refused to pay the severance. The employee sued, claiming that this violated the Law. The employer asked the court to dismiss the employee’s claim on the ground that severance pay is not a wage covered by the Law. The court rejected the employer’s claim.

To be a wage under the Law, a payment (1) “must have been promised as part of the compensation for the employment arrangement” and (2) all conditions for earning the compensation must have been fulfilled during the employment. In this case, there was evidence that the employer (1) promised the severance as part of the compensation for the employment and (2) the employee had fulfilled the conditions of the severance agreement. For this reason, the Court held that the severance pay at issue was a wage covered by the Law.

The court distinguished the severance payment at issue in the case from severance payments which are conditioned on the employee’s performance of some obligation, such as not competing with the employer, after the employment has ended. Payments that are to be made in exchange for employee conduct after the termination of employment do not satisfy the requirement that all conditions for earning the compensation have been fulfilled.

The lesson for employers: when agreeing to pay severance to an employee, make it clear that the employee’s entitlement to severance is conditioned, at least in part, on the employee's conduct after the employment relationship has terminated.

Do You Have to Print Warning Labels in Spanish?

Posted by Jeanine Gagliardi on Wed, 08/22/2012 - 20:55

A practical concern for businesses that make and sell things is the effect of immigration on their duty to consumers. Manufacturers and sellers have a duty to warn consumers of products that are dangerous if the danger is not obvious. The warning must make the danger apparent. One issue manufacturers and sellers face is whether it an English-only warning is adequate. What about consumers that do not speak English?

The law says you may need to account for that if you direct your marketing efforts at people who do not speak English. In a recent case, the U.S. Court of Appeals for the Eleventh Circuit held that English-only warnings on propane heaters were enough, in that particular situation.

A Hispanic consumer purchased two heaters, used them inside her home, and left a propane valve open while she slept. The consumer’s home caught fire, and she sued the manufacturers and seller, claiming that they failed to provide adequate notice of the danger of using the heaters indoors. The heaters carried English-only warnings.

The trial court recognized that the applicable law does not automatically require bilingual product warnings. Finding the English-only warnings provided by the manufacturers and seller to be accurate, clear, and unambiguous, the trial court summarily rejected the consumer’s claim.

The consumer appealed, claiming that, because the manufacturers and seller marketed the heaters to a Hispanic community, the warnings should also have been written in Spanish. The appellate court recognized that, where a manufacturer or seller regularly and actively markets to people who speak a language other than English, the manufacturer or seller may be required to provide warnings in other languages.

In this case, however, because the consumer produced no evidence that the manufacturers and seller specifically marketed the heaters to Spanish-speakers, the appellate court affirmed the decision of the trial court.

The case is a warning of sorts to manufacturers and sellers: if you are marketing products requiring a warning to consumers who speak another language, a warning in English may not be enough.

Is It Illegal to Use Criminal Background Checks in Hiring?

Posted by Jeanine Gagliardi on Thu, 07/19/2012 - 17:30

Prudent employers try to avoid hiring employees who may cheat, steal, or injure co-workers or customers. For this purpose, some businesses use criminal background checks in the hiring process. While there is no blanket ban on this practice, employers must ensure that their consideration of applicants’ criminal backgrounds in particular circumstances does not violate federal anti-discrimination law.

Title VII of the Civil Rights Act of 1964 precludes discrimination in employment based on, among other things, race. The Act bans facially biased employment practices. It also makes illegal an employment practice which, although neutral on its face, disproportionately impacts groups protected by the Act, unless the practice (1) is job related for the position in question and (2) consistent with business necessity.

Because arrest and incarceration rates for African American and Hispanic men are higher than for other groups, the EEOC deems hiring decisions based on criminal background to have a disparate impact. Accordingly, unless business necessity requires hiring someone with a clean criminal background, such practices violate the Act.

On April 25, 2012, the EEOC issued guidelines for employers who consider criminal records when making employment decisions. The EEOC instructs employers that they will be able to avoid liability for employment discrimination if:

(1) The employer develops a “targeted screen” that considers the nature of the crime, the time elapsed, and the nature of the job; and

(2) The employer provides individuals excluded by the screen with an opportunity for an individualized assessment to determine whether the policy is job related and consistent with business necessity in that individual’s case.

The EEOC recognizes that the individualized assessment, which is costly and time consuming for employers, may not be necessary to avoid liability in every circumstance. Its guidelines, however, do not provide a clear test for employers to determine in which circumstances the assessment is required.

Without such information, employers must be wary of choosing not to undertake an individualized assessment. At this point, the safest bet for any employer would be to provide applicants with the assessment suggested by the EEOC.

The take away: If you plan to make decisions based on criminal background, document whether and why particular background information is relevant to the job. For example, a DUI is different from embezzlement when it comes to screening applicants for the accounting department. Then, be sure to document the individualized assessment made of each candidate when such information is considered. Making such a record will help defend against any lawsuit alleging discrimination.

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