In Maryland this year, spring brings warm weather and new employment laws. The General Assembly passed, and Governor Larry Hogan signed, several new laws regulating the workplace. These laws increase the minimum wage, remove a key overtime exemption, expand liability for “harassment,” restrict noncompete agreements, and prolong the time to file a discrimination charge.
Minimum Wage – (“Fight for $15”)
The Fight for Fifteen law does more than simply increase the state’s minimum wage. Most significantly, the law removes the amusement or recreational establishment overtime exemption, an exemption under the federal Fair Labor Standards Act. This means that, as of June 1, 2019, employers in Maryland relying on this exemption for this summer must immediately make changes in how they pay this group of seasonal employees.
For large employers, defined as employees with 15 or more employees, this law increases the state minimum wage by $0.75 each January 1, until it reaches $15.00 per hour on January 1, 2025. Specifically, the scheduled for the rate increases is, as follows:
- January 1, 2020: $11.00
- January 1, 2021: $11.75
- January 1, 2022: $12.50
- January 1, 2023: $13.25
- January 1, 2024: $14.00
- January 1, 2025: $15.00
For employers with 14 or fewer employees, the schedule for the rate of increase is:
- January 1, 2020: $11.00
- January 1, 2021: $11.60
- January 1, 2022: $12.20
- January 1, 2023: $12.80
- January 1, 2024: $13.40
- January 1, 2025: $14.00
- January 1, 2026: $14.60
For those employers that operate in Montgomery County and Prince George’s County, the minimum wage is $12.00 (50 employees or less) or $12.25 (51 employees or more) and $11.50, respectively. The minimum wage and rate increases in Montgomery County are far quicker for the new Maryland law.
Also, remember that, as the minimum wage increases each year, employers are required to update their labor posters. For additional information on the state’s and county’s minimum wages, the Maryland Department of Labor, Licensing, and Regulation provides frequent updates. Additional information can be found here: https://www.dllr.state.md.us/labor/wages/wagehrfacts.shtml
General Assembly Bars Noncompetes for Lower-Wage Employees
The Noncompete and Conflict of Interest Law, which takes effect on October 1, 2019, eliminates noncompete agreements for low-wage workers (as defined by the new law). Specifically, the law restricts an employer from impeding the “ability of an employee to enter into employment with a new employer or to become self-employed in the same or similar business” and makes such agreements “null and void” whenever the employee earns $15.00 an hour or $31,200 a year or less. This restriction applies even if the parties entered the agreement in a different state. Notably, however, the law continues to expressly permit employers to protect their “client list or other proprietary client-related information.”
The law’s relatively low wage levels should limit its impact. As discussed above, just last month the General Assembly overrode Governor Hogan’s veto to raise the state minimum wage to $15.00 an hour. That increase will be fully implemented in 2025. By then, any full-time employees making more than the minimum wage will earn more than HB 38’s wage levels.
The bill comes as other states are also limiting noncompete agreements for lower-level earners. For example, Massachusetts recently banned noncompete agreements for employees classified as nonexempt under the Fair Labor Standards Act.1 Illinois and New Jersey have taken similar steps.2 At the federal level, Senator Marco Rubio introduced legislation in January that would have the same effect.3 Maryland may therefore be at the leading edge of a nationwide trend toward eliminating noncompetes for lower-wage employees.
Maryland Expands Liability for “Harassment” and other changes to Maryland’s anti-Discrimination Statute
The Maryland General Assembly made several key changes to Maryland’s anti-discrimination statute. First, independent contractors are now counted as “employees,” and may file a claim for discrimination.
Second, for the first time, the law now expressly prohibits “harassment.” Since the Maryland courts already protected employees from harassment, however, it is not clear why the General Assembly believed it was necessary to expressly include harassment under the law. Notably, however, an employer can be now be liable “if the negligence of the employer led to the harassment or continuation of harassment.” It is not clear from the law whether this negligence standard merely codifies a form of the Farragher/Ellerth defense, or whether courts must now have additional measures in place to avoid liability.
Third, the law gives employees more time to file a harassment charge, as compared to any other charge alleging discrimination. Under current law, an employee must file a complaint within six months of the alleged discrimination. This new law, however, gives the employee two years to file a harassment charge—four times as long. Relatedly, the bill also extends the period of time to file a civil action from two years to three years, but, again, only for harassment claims.
Fourth, the law expands the range of liable “employers.” Currently, a company must employ at least 15 employees over the last 20 weeks to qualify. But for harassment complaints only, the law reduces that number to one. So, a company employing at least one person can be held liable for harassment, but not for discrimination.
Claimants Get More Time to File
In a separate law, Maryland extended the deadline to file non-harassment discrimination claims from six months to 300 days. It also allows employees complaining about discriminatory pay practices to file within 300 days of the date they knew or should have known about the alleged discriminatory practice—as opposed to the date of the practice itself.
The Maryland Department of Labor, Licensing, and Regulation (DLLR) gets a Face Lift
As of July 1, 2019, the Maryland Department of Labor, Licensing, and Regulation, or “DLLR” as it is affectionately referred to, will changed its name to the Department of Labor.
Governor Hogan Vetoes Maryland “Ban the Box”
This spring, Governor Hogan vetoed the Criminal Record Screening Practices Act (or “ban-the-box” law), which would have prohibited employers from asking about an applicant’s criminal record until the first in-person interview, with some limited exceptions.
It is still important to remember that Montgomery County and Baltimore City have enacted their own versions of ban-the-box ordinances. Under Montgomery County’s ordinance, an employer may not inquire into an applicant’s criminal record until after the conclusion of a first interview. In Baltimore City, an employer may not inquire into an applicant’s criminal record until after the employer extends a conditional offer of employment to the applicant.
Lactation Accommodation in the Workplace – Baltimore City Only
Employers with two or more full-time employees must provide both a reasonable amount of break time and a location for employees to express breast milk. The local ordinance also requires employers to maintain a formal written policy and, if the employer has an employee handbook, the policy musts be included in the handbook. Moreover, the employer must distribute the policy to all employees “upon their hire” and, again, “within 10 calendar days of any modification to the policy.” If any employee inquires about pregnancy or parental leave, the employer is also required to, once again, offer a copy of the lactation accommodation policy to the employee.
Further, the ordinance requires that employers retain all requests for lactation accommodations for three years from the date of each request, including the name of the employee, the date of the initial request and any update, a copy of all correspondence (written or digital) between the employer and employee regarding the request, and a description of how the request was resolved.
Employers should consider reviewing their hiring practices and employment agreements to ensure they comply with Maryland law, including local ordinances enacted by the various counties. They should also consider revisiting their anti-harassment training to ensure they stay on the right side of Maryland’s new prohibitions.