Preparing for new labor laws in Maryland

By: Shawe Rosenthal LLP

The 2019 Maryland General Assembly session ended at midnight on Monday, April 8, with the passage of a number of bills of significance to employers, including minimum wage increases, expanded workplace harassment protections, new leave rights for organ donation, new restrictions on criminal background checks, new limitations on non-compete agreements, additional Equal Pay civil penalties, and reporting requirements for gender diversity on boards. As was widely reported in the press and covered by the Maryland Chamber, the General Assembly voted to override Governor Hogan’s veto of the minimum wage bill. The remaining bills await further action by Governor Hogan, who could sign them into law, veto them, or allow them to become law without his signature. At this time, we do not anticipate any other vetoes. Assuming that they become law, all but the minimum wage and ban the box bills will take effect on October 1, 2019. For more details about each of these bills and information about our upcoming webinar to provide guidance on compliance, click here.

Minimum Wage – Fight for Fifteen (HB166/SB280) This law increases the minimum wage in increments from the current hourly rate of $10.10 to $15.00. For employers with 15 or more employees, the schedule of hourly rate increases is as follows:

In recognition of the impact on small employers, meaning those with 14 or fewer employees, the law provides a longer schedule of increases:

The Board of Public Works may temporarily suspend a scheduled increase on a one-time basis if the current employment statistics from the US. Bureau of Labor Statistics show a negative trend. This would push the schedule of increases off by one year.

The law also permits an employer to pay a training wage at 85% of the State minimum wage rate for employees under the age of 18 years. The law does not change the required tipped wage for tipped employees (currently $3.63 per hour, with the employer able to take a tip credit for the difference between the tipped wage and the required minimum wage). The law does, however, provide that the Commissioner of Labor and Industry will adopt regulations to require employers to provide tipped employees with a written or electronic wage statement for each pay period showing the employee’s effective hourly tip rate,

Workplace Harassment (HB679/SB872) This bill makes several significant changes to Maryland’s antidiscrimination law that will vastly expand the liability of employers under State law:

The bill also imposes new training requirements for State employees, not applicable to private employers.

Organ Donation Leave (HB1284/SB705) 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. The employer may require written verification from a physician about the employee’s donor status and the medical necessity for the donation.

The leave may not be considered a break in service for purposes of the employee’s right to salary adjustments, sick leave, vacation, paid time off, annual leave or seniority. In addition, the employee is entitled to job reinstatement to the same or an equivalent position at the end of leave, unless the employee is being terminated for reasons unrelated to the leave. The employee is also entitled to continuation of group health coverage during the leave. During the leave, commissioned employees must receive any commissions earned because of work performed before taking leave.

Of particular note, this leave does not run concurrently with any leave under the Family and Medical Leave Act.

Employers are prohibited from denying leave rights under this bill, as well as discharging or otherwise discriminating against employees for taking leave, making a complaint or participating in an action or proceeding under this bill. If it becomes law, the Commissioner of Labor and Industry will adopt regulations implementing the law, and may attempt to mediate any violations. It may also ask the Attorney General to bring suit against an employer on behalf of the employee.

Ban the Box (HB994/SB839) The “box” refers to the box contained on many employment applications, which must be checked if the applicant has a criminal record. This bill is intended to give those with criminal records a better chance at employment by prohibiting employers with 15 or more employees from asking about an applicant’s criminal record prior to the first in-person interview. During that interview, however, such information may be required to be disclosed.

“Criminal record” is defined as: an arrest; a plea or verdict of guilty; a plea of nolo contendere (i.e. no contest); the marking of a charge “STET” on the docket (i.e. no further prosecution); a disposition of probation before judgment; or a disposition of not criminally responsible.

The bill provides for exceptions to the prohibition where an employer is required to seek such information by law or where an employer provides programs, services, or direct care to minors or vulnerable adults. In these cases, the employer may require the disclosure of a criminal record upon application.

Employers are also prohibited from retaliating or discriminating against an applicant or employee for claiming a violation of this law. The Commissioner of Labor and Industry may assess a civil penalty of up to $300 for each applicant or employee as to whom there was a violation.

Of note, the bill specifically does not preempt any local ban-the-box laws, such as those previously enacted by Baltimore City, Prince George’s County, and Montgomery County. Those local laws impose greater restrictions on employers than this bill.

This bill, if it becomes law, will take effect on January 1, 2020.

Noncompete and Conflict of Interest Clauses (HB38/SB328) Employers are prohibited from including a noncompete or conflict of interest provision in an employment contract with an employee earning $15 or less per hour or $31,200 or less annually. According to the bill, 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 bill specifically provides that employers may still prohibit such employees from taking client lists or other proprietary client-related information.

Civil Penalties for Equal Pay Violations (HB790) The penalties for violations of the Equal Pay for Equal Work law are increased. Thus, 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, to be paid into the General Fund of the State.

Gender Diversity in the Boardroom (HB1116/SB911) This bill requires tax-exempt domestic nonstock corporations with an operating budget exceeding $5 million and domestic stock corporations with sales exceeding $5 million to include new information on its required annual reports to the State: the total number of members on the Board of Directors and the total number of female Board members.

The stated purpose of this bill is to promote Board gender diversity. Although not a statutory requirement, in the preamble to the bill, the General Assembly “urge[s] that by December 31, 2022, all nonprofit, privately held, and publicly traded institutions and companies doing business in the state of Maryland have a minimum of 30% of women directors and measure their progress toward a goal of equal representation of men and women in leadership positions on an annual basis…”

If enacted into law, there is a sunset provision of ten years, after which the law will no longer be in effect.

Webinar: Complying with Maryland’s New Employment Laws. We will be holding a complimentary webinar on Thursday, May 9, 2019 at 1 p.m. Eastern to explain further the obligations and requirements of these new laws, and to provide guidance on compliance. You may register for the webinar here.

 

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