Maryland Extends Personal Liability to Individuals Under State Wage Payment Law

Kollman & Saucier
Kollman & Saucier
11/30/2012

In Campusano v. Lusitano Construction, LLC, et al., No. 1529 (Md. Ct. Spec. App. Nov. 21, 2012) (Matricciani, J.), the Maryland Court of Special Appeals concluded that individuals may be “employers” and therefore be liable under Maryland’s Wage Payment and Collection Law (MWCPL).

Francisco de Oliveria worked for his son’s business, Lusitano Construction, LLC.  As a supervisor of a construction project, Francisco “set [employees’] work schedules, assigned their tasks, managed supplies, maintained work logs, and ‘occasionally’ distributed paychecks drafted by [his son] or Lusitano Construction.”  He did not hire employees or determine wages.

In 2010, four employees filed suit against Lusitano Construction, its owner, and Francisco alleging violations of the FLSA and the MWPCL.  The Circuit Court for Montgomery County entered judgment against the owner and the company, but not Francisco.  By its terms, the MWPCL applies to employers and Francisco was not an employer.

On appeal, the employees argued that Francisco was an employer under both the FLSA and the MWPCL under the “economic reality” test used to determine “control” for purposes of the FLSA.  The Maryland Court of Appeals applied the economic reality test to the Maryland Wage and Hour Law in Newell v. Runnels in 2009.  In Campusano, the Court of Special Appeals extended the economic reality test further, holding that it applies to the MWPCL.

Under the Court’s reasoning, the MWPCL is “sufficiently similar” to Maryland’s Wage and Hour Law, thereby justifying extension of the test.  In Campusano, the Court applied the four-factor economic reality test for “control.”  This test considers factors such as whether the employer had authority to hire and fire; supervise and control work schedules or conditions; determine pay rates; and maintain employee records.

Francisco did not sufficiently control the employees to be held liable under the Act – he did supervise and control schedules and conditions of employment, but had no ownership or financial investment in the company.  While the Court cautioned against holding individuals liable for conduct of the employer where they do not have an ownership interest, the extension of the economic reality test opens the door to expanded personal liability under the MWPCL.

 

 

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