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04/27/17


Can I Be Held Personally Liable for My Employee’s Claim for Unpaid Wages?

By: Darla J. McClure

Media Type: Alert

In Maryland, if you are an owner, officer or even human resource manager, you can be held personally liable for unpaid wages.  The structure of a corporation, LLC or other limited liability entity may no longer protect certain individuals within the company when it comes to complaints made by current or former employees that the company has failed to pay all wages due and owing to them.

The Maryland Wage Payment and Collection Law (MWPCL) defines employer as “any person who employs an individual in the State or a successor of the person.” (See Md. Code Ann., Lab & Empl. §3-501(b)). To determine if an owner, officer or even human resource manager can be deemed an “employer” the Courts have utilized the “economic realities test.” This test states that an employer is someone who:

  • Has the authority to hire and fire employees; 
  • Supervises and controls work schedules or employment conditions; 
  • Determines the rate and method of payment; and 
  • Maintains employment records. 

The totality of the circumstances, and not a single factor, must be reviewed to determine if an individual is an “employer”.

If an individual owner, officer or human resource manager satisfies the economic realities test and is  found to be an employer, courts in Maryland have held that the individual can be personally liable for unpaid wages, including overtime wages.  Furthermore, under the MWPCL an employee can seek up to three times the amount of wages due plus recovery of attorneys’ fees if successful.

To learn more about potential personal liability for your employees’ wages, contact one of Stein Sperling’s employment lawyers who can answer your questions concerning the MWPCL.


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