Maryland Governor Signs New Law to Enforce Wage Claims

Last week, Maryland Gov. O’Malley signed into law the “Lien for Unpaid Wages Act.” This new law, SB 758, allows employees to file a lien against their employer’s real or personal property for unpaid wages allegedly due them. Once the employee files a lien, the employer must file a complaint setting forth its defenses in the Circuit Court where the employer’s property is located within 30 days. If the employer fails to do so, the employee will have established the lien.

The new law could dramatically change the way wage payment claims are litigated in Maryland. If the employee files a lien, the employer must promptly file the complaint and raise all  of its defenses. The complaint must include an affidavit containing a statement of facts supporting the defenses. The court is required to decide whether to issue an order establishing a lien within 45 days after the date on which the employer’s complaint is filed.

Although the law provides for an evidentiary hearing, it is not clear whether the parties are allowed to exchange written discovery before the hearing, nor is it clear whether the parties would be permitted to brief legal issues after the hearing. The employee bears the burden of proving that the wages are due, but, in the event the employee prevails, he or she is entitled to recover their fees and costs. The new law cannot be used to recover unpaid commissions, which are excluded from the definition of wages, but seemingly could be used to enforce claims for unpaid wages, leave time, and bonuses.

The Act takes effect on October 1, 2013.  The Maryland Department of Labor, Licensing and Regulation is expected to adopt regulations this summer clarifying the parties’ obligations under the new law. Regardless of what the regulations provide for, employers will now need to be prepared for expedited litigation by employees seeking to recover unpaid compensation allegedly due them.

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