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Employment Law

: Maryland Employment Law

Can Severance Pay Be a "Wage" under the Maryland Wage Payment and Collection Law? Maybe!

By James Rubin, Esq.

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Severance pay falls into two legal baskets under Maryland law.

Severance pay earned for an employee's labor or work.
Severance pay awarded in exchange for something other than work, most commonly in exchange for a covenant not to compete or in exchange for a waiver of claims.

Back in 2003, in Stevenson v. BB&T, the Court of Appeals ruled that severance for labor is a "wage" subject to the Maryland Wage Payment and Collection Law. Severance for a non-compete or waiver is not a wage subject to the Wage Payment and Collection Law.

Does this matter? It sure does. Wages subject to the Maryland Wage Payment and Collection Law can be tripled (if withheld in bad faith).

In Blood v. Columbus U.S. (April 2018) the Maryland Court of Special Appeals recently followed Stevenson: money paid in exchange for a period of non-competition is not a wage ?due for work" and therefore not subject to the Maryland Wage Payment and Collection Law.

Full post as published by Maryland Employment Law on August 16, 2018 (boomark / email).