Maryland Wage Law Explained

Maryland’s Labor Laws address many issues relating to the relationship between employer and employee, including the rules for the payment of wages, overtime pay, final wages, the rules for authorized and unauthorized payroll deductions, and recordkeeping requirements. If you believe you’ve been deprived of the compensation to which you’re legally entitled, please contact the Lore Law Firm. Our overtime rights lawyers represent Maryland employees who have been subjected to workplace wage and hour violations and take cases on a contingent fee basis – no fee if no recovery of backpay.

Maryland Wage and Overtime Laws

While Maryland does have certain state labor laws that differ from the federal Fair Labor Standards Act (FLSA), the state law applies only in instances where it provides greater rights or protections than federal law. Whichever law (state or federal) is more favorable to the worker will apply.

Minimum Wage

Maryland minimum wage rates: For employers with 15 or more employees:
  • 1/1/2020:  $11.00 per hour
  • 1/1/2021: $11.75 per hour
  • 1/1/2022: $12.50 per hour
  • 1/1/2023: $13.25 per hour
  • 1/1/2024: $14.00 per hour
  • 1/1/2025: $15.00 per hour
For employers with 14 or fewer employees:
  • 1/1/2020:  $11.00 per hour
  • 1/1/2021: $11.60 per hour
  • 1/1/2022: $12.20 per hour
  • 1/1/2023: $12.80 per hour
  • 1/1/2024: $13.40 per hour
  • 1/1/2025: $14.00 per hour
  • 1/1/2026: $14.60 per hour
  • 7/1/2026: $15.00 per hour
Effective June 1, 2019, amusement and recreational establishments must pay employees the required Minimum Wage Rate. Effective June 1, 2019, employees under 18 years of age must earn at least 85% of the State Minimum Wage Rate. Montgomery County and Prince Georges County have different minimum wage rates. If you work in these counties, you should check the specific minimum wage rate for that county.

Tip Credit

Tipped employees must be paid at least $3.63 per hour.  This amount plus tips must equal at least the Maryland state minimum wage rate.

Overtime Pay

Maryland state labor laws regarding the payment of overtime are largely consistent with the federal overtime laws. As most employers are covered by the FLSA, generally the FLSA will apply and requires employers to pay time and a-half for all hours worked over 40 per workweek, unless an employee is properly classified as exempt.

When Overtime Doesn’t Apply / Overtime Exemptions

Most workers in Maryland are entitled to overtime pay when they work more than 40 hours per week. In certain circumstances, however, there are exemptions. Employees engaged in executive, administrative, or professional capacities (and paid at least $455 per week on a salary basis) are exempt from the overtime requirement. Note that new minimum salary requirements for these overtime exemptions take effect in January 2020 and increase the minimum salary threshold to $684 per week (or $35,568 annually). This change in federal law will also apply to most workers in Maryland when making the determination of whether they are classified as exempt or non-exempt from the overtime pay laws. Exceptions under Maryland overtime law to the 40 hour per week threshold for overtime pay include:
  • Bowling establishments, and on-premise healthcare institutions (other than hospitals) for all work over 48 hrs. per week
  • Agricultural workers for all work over 60 hrs. per week
The overtime pay rate for minimum wage workers in Maryland amounts to $16.50 per hour (1.5 x $11.00). This link gives further exemptions from the Maryland state overtime and minimum wage laws.

Mandatory Overtime

In general, an employer doesn’t violate overtime laws by requiring employees to work overtime, (ie “mandatory overtime”), as long as they are properly compensated at the premium rate required by law. However, Maryland state law does prohibit mandatory overtime for nurses under certain circumstances.

Misclassification of Independent Contractors

Misclassification occurs when a business treats its workers as independent contractors (or subcontractors) rather than employees to avoid legal obligations such as social security taxes, worker’s compensation, unemployment insurance and overtime pay. While there are situations in which workers are legitimately running their own business and properly treated as independent contractors who are not entitled to receive overtime, employers are not allowed to mischaracterize employee roles to avoid paying overtime compensation. Merely labeling a worker as an independent contractor, or even entering into a written agreement, is not enough to avoid the labor laws on overtime pay. There are several factors to be considered in determining if a worker in Maryland is an employee or independent contractor (a/k/a 1099 employee).  This link gives further information about the factors in making the distinction between and employee and independent contractor under Maryland Wage Payment and Employment Standards. If properly classified as an independent contractor under Maryland law, workers are typically eligible for only the specific compensation bargained for in a contract.

Wage Payments

Employees in Maryland must be paid at least once every two weeks or twice in a month. However, Executive, Professional and Administrative employees may be paid less frequently. Generally, an employer must set regular paydays, and pay all earned wages of an employee on time regardless of whether the employee has turned in a time sheet or punch card, quit without notice, or provided any other form or document required by the employer. In addition, earned wages must be paid on time whether or not the employer has received payment from a customer or client for a job on which the employee worked. If payday falls on a nonworking day, such as a weekend or holiday, wages must be paid on the preceding workday. An employer may not keep any part of the wage of an employee, either by withholding an entire paycheck, part of a paycheck, or by way of incremental wage deductions from several paychecks, as security against some future or contingent occurrence. This practice amounts to a confiscation of pay and is a direct violation of the law requiring timely payment of earned wages. Upon separation/termination of employment, employers must pay a worker all wages due for work that the employee performed before the termination of employment, on or before the day on which the employee would have been paid the wages if the employment had not terminated.

Deductions from Wages

Wage deductions under Maryland labor law are prohibited unless:
  • A court has ordered or allowed the employer to make the deduction.
  • The Commissioner of the Maryland Division of Labor and Industry has allowed the deduction to offset or “pay for” something of value the employee has received.
  • Allowed by some law or regulation of the government, such as state and federal taxes.
  • The employee has given express written authorization to the employer to make the deduction in a separate statement, signed by the employee, concerning only the deduction and nothing more. Even with a proper authorization, however, employers must still pay at least the federal minimum wage in the case of a deduction made to offset a loss to the employer due to the admitted or court determined fault or negligence of an employee (for example, careless damage to the employer’s truck). If the deduction is made to offset something the employee received or retained from the employer which had monetary value (for example, personal loan, use of long-distance telephone line, materials, etc.), the deduction may, in that case, reduce the employee’s wages below the minimum wage. Authorized deduction must still be in compliance with other federal or state laws or regulations.

Meals & Breaks

Shift Breaks – Under Maryland’s Healthy Retail Employee Act a/k/a the Maryland “Shift Break law”, employees who work in certain retail establishments (those with 50 or more retail employees) are entitled to a non-working shift break depending on the hours worked.

Vacation / Sick Leave

Flexible Leave Act – allows employees of employers with 15 or more employees to use paid time off for an illness in the employee’s immediate family.

Statute of Limitations

Under Maryland wage and labor law, employers are liable for unpaid overtime wages for a period of 2 years from the date the wages were earned. The deadline for filing an overtime claim under the federal FLSA, requires those seeking to recover unpaid back overtime wages file a lawsuit within two years from the date of the employer’s wage violation. So, a lawsuit filed today would be able to seek recovery of back overtime for only the prior 2 (sometimes 3) years. As an example, suppose you believe that your employer has failed to pay you proper overtime wages since January 1, 2016. Waiting until June 1, 2019, to file your lawsuit means you are only allowed to seek unpaid wages from June 1, 2017, to June 1, 2019. The statute of limitations may be extended to three years if an employer’s violation of the FLSA was willful. An FLSA violation is deemed willful if the employer knew that its conduct was prohibited by the FLSA or showed reckless disregard.

Penalties for Violations

Maryland wage payment law provides that if a court finds that wages were withheld in violation of the Maryland Wage Payment Law and not as a result of a bona fide dispute, the court may award damages of up to three (3) times the amount of the unpaid wage plus attorney fees. The burden of proving a “bona fide dispute” falls on the employer, and not the employee. Under federal law, employers who fail to pay proper overtime wages may be liable for up to double the amount of unpaid back wages plus costs and attorney’s fees incurred by employees. These cases can be brought by overtime pay lawyers on a class or collective basis on behalf of all workers who were subjected to the same illegal pay practices.

Layoffs, Plant Closings and WARN Notices

The Worker Adjustment and Retraining Notification Act (WARN) offers protection to Maryland workers, their families and communities by requiring employers to provide notice 60 days in advance of covered plant closings and covered mass layoffs. This notice must be provided to either affected workers or their representatives (e.g., a labor union). An employer who violates the WARN Act by failing to provide appropriate notice is liable to each employee for an amount up to 60 days back pay and benefits for the period of violation.

Lore Law Firm is On Your Side

At the Lore Law Firm, we represent salaried, hourly, and day-rate workers in an array of employment litigation matters, including unpaid overtime compensation claims in Maryland. Our attorneys, and the Maryland overtime law attorneys we associate with, are passionate about protecting the rights of workers and have helped recover millions of dollars in unpaid overtime wages for our clients. Contact us for a free and confidential review of your situation.