New legislation enacted April 24, 2008 affects an area of the law that has been in flux over the past year. The legislation amends Maryland's Wage Payment and Collection Law (WPCL) and provides that employers are not required to pay employees for accrued leave under certain circumstances. The legislation effectively overturns an August 2007 decision of the Maryland Court of Special Appeals, Catapult v. Wolf, holding that an employer must pay terminating employees for accrued, unused universal leave despite the employer's policy that it would not pay for such leave when employees did not give sufficient notice prior to resignation.

The new legislation amends sections 3-504 and 3-505 of the Labor and Employment Article, which impose notice obligations on employers and require them to pay employees all wages due for work the employees performed prior to termination of employment. The amendment requires employers to notify employees of leave benefits at the time of hiring (in addition to existing requirements to notify employees of their pay rates and regular paydays). The amendment also provides that an employer is not required to pay accrued leave to a terminating employee if:
• The employer has a policy that limits compensation of accrued leave;
• The employer notifies the employee of leave benefits at the time of hiring; and
• The employee, in fact, is not entitled to payment for accrued leave under the policy.

The amendment provides a grandfathering provision for employers regarding payment for accrued leave. Employees who terminated on or after November 1, 2007 and before enactment of the legislation are not entitled to payment for accrued leave if the employer had a written policy providing that the employee would not be compensated for accrued leave on termination and communicated the policy to the employee prior to termination.

Employers who changed their leave policies in the wake of the Catapult decision now have the option to change those policies once again in order to limit the circumstances under which they will pay terminating employees for accrued leave.

If you have questions regarding the new legislation, please contact Gallagher Employment Law lawyer Anne Fox at 410 951 1418 afox@gejlaw.com or Kathy Hoskins at 410 347 1360 khoskins@gejlaw.com.

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This Legislative Update has been prepared for general informational purposes only and is not intended to offer legal advice or counseling. You should not act upon information contained in this Legislation Update without the advice and counseling of a lawyer familiar with your particular factual situation.

Copyright © 2008 by Gallagher Evelius & Jones LLP