On May 5, 2014, Maryland Governor Martin O’Malley signed a bill increasing the minimum wage to $10.10, in 5 steps by July 1, 2018. This follows recent legislation in suburban Maryland’s Montgomery and Prince George’s counties that will increase county minimum wages to $11.50 in various steps by October 1, 2017. (See our January 20, 2014 blog post.)

Employers in Maryland now face three different local minimum wage requirements, in addition to those imposed by federal law.

Under the new Maryland law, the general state minimum wage, currently the federal minimum of $7.25, will increase to $8.00 on January 1, 2015; to $8.25 on July 1, 2015; to $8.75 on July 1, 2016; to $9.25 on July 1, 2017; and to $10.10 on July 1, 2018. Note that these rates trail the rates recently set in Montgomery and Prince George’s counties.

The law also provides that the minimum wage for tipped employees will remain at $3.63, so long as tips make up the difference between $3.63 and whatever the current regular minimum wage may be.

In addition, the law increases the penalties for violations. Aside from the unpaid wages, employees are now presumptively entitled to recover an equal amount in liquidated damages, plus attorneys’ fees and costs. If an employer can establish that it acted in good faith and reasonably believed that it paid the required wages, the court may award a lesser amount of liquidated damages, or none at all. 

The law also made a number of other changes in Maryland’s wage and hour laws:

  • It eliminates prior exclusions of individuals 62 and older who worked up to 25 hours per week, and of employees in motion picture theaters.
  • It increases the gross income for coverage of restaurants from $250,000 to $400,000.
  • It eliminates prior exemptions from the obligation to pay overtime for hotels and motels, restaurants, gasoline service stations, private country clubs, and nonprofits engaged primarily in providing temporary at-home care services, such a companionship or delivery or prepared meals, to aged or sick individual, individuals with a disability, or individuals with a mental disorder.
  • It creates new exceptions that (1) allow individuals under 20 to be paid 85% of the state minimum wage for the first six months of employment, and (2) allow employees of certain seasonal amusement or recreational establishments, including swimming pools, to be paid the greater of 85% of the state minimum wage or $7.25

With the various minimums established by state and local law changing at different dates over the next four years, Maryland employers will have to be careful to ensure that each of their employees is being the proper current wage for the area in which he or she works.