Maryland Unpaid Wages Law Act Goes Into Effect

 In Featured, Overtime Law, Wage Law

The Maryland Unpaid Wages Law punishes employers who fail to pay workers on time are now at risk of being required to pay three times the amount of wages owed as well as costs and fees for legal counsel. Employees are able to initiate lawsuits concerning late or unpaid wages within three years of the date that the failure to pay occurs. This arrangement is about to change significantly, however.

What the New Maryland Law Means

Previously, if a subcontractor failed to pay a worker, a general contractor would not be found liable for this wage violation. Effective October 1, 2018, the General Contractor Liability for Unpaid Wages Act will become effective. Under the terms of this new law, a general contractor will be considered jointly and severally liable for the failure of subcontractors to pay workers. It is important to note that this law applies to anyone in an indirect relationship with the employee and not just the general contractor.

Potential Limits to the New Law

There are some limitations, however, that are created by this law. For example, a subcontractor in Maryland who fails to pay a worker in accordance with wage and hour laws is not able to later obtain compensation for attorney’s fees, damages, interest, and wages in connection with the violation. A general contractor or other indirectly related party, however, might still have to pay these amounts if such an agreement is made in a contract.

What the Law Means for General Contractors and Subcontractors

This change in Maryland’s wage and hour law will have significant repercussions for how general contractors and subcontractors in the state must treat workers. As a result, it is important that general contractors and subcontractors consider obtaining bonds and insurance to protect against wage claims and review contract provisions to make sure that these new laws are taken into consideration. For workers, this law is a helpful step forward in wage and hour rights because it offers another avenue for workers who have not received payment to seek compensation.

California’s New Similar Law

Maryland is not the only state that has imposed wage and hour laws of this nature recently. On January 1, 2018, AB 1701 became effective in California. This law makes general contractors jointly liable for the unpaid wages, fringe benefits, or other benefits that would have been paid by a subcontractor. Much like Maryland’s law, a general contractor or indirectly involved party can still end up responsible for wages that are due a worker even if the general contractor is not responsible for the lack of payment. Also, similar to Maryland’s law, AB 1701 lets general contractors protect themselves through the use of indemnification, which makes it important for companies to define these terms in contracts.

Speak with an Experienced Wage and Hour Lawyer

If you believe that your employer has violated wage and hour laws, it is important to quickly obtain the assistance of an experienced attorney. Contact Herrmann Law today to schedule an initial free consultation.

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