Maryland Noncompete and Conflict of Interest Clause Act
As of October 1, 2019, Maryland joined other states across the nation by enacting the Noncompete and Conflict of Interest Clause Act (NCICA) to prohibit non-compete clauses and conflict of interest clauses for employees who earn equal to or less than $15.00/hour or $31,200 annually. The State of Maryland has deemed non-compete and conflict of interest clauses for lower paid employees to be against public policy and considers them null and void. Significantly, the NCICA prevents enforcement of non-competition clauses even while such employees are still employed. The law does not, however, place any limitations on agreements which restrict the use or possession of proprietary client-related materials and information. The NCICA does not provide any penalty for an employer who compels an employee to enter into a prohibited agreement, nor does it allow employees to sue employers who require them to sign the prohibited agreements. Rather employees will likely rely on the NCICA as a defense to a claim by their employer that they have violated a non-compete provision. If you are a Maryland employer and need assistance with Maryland employment law changes such as NCICA, please contact Luchansky LAW for a consultation.
Navigating the DOL New Overtime Rule
On January 1, 2020, a new U.S. Department of Labor final rule will extend overtime pay thresholds. The rule raises the standard salary level from $455 to $684 a week, the equivalent to $35,548 per year for full time workers. Employees earning less than the new imposed threshold are eligible for overtime pay of at least time and a half. The final rule further raises the annual compensation requirement for highly compensated employees to $107,432 per year. The final rule further allows the use of annual nondiscretionary bonuses, incentive payments and commissions to fulfill up to 10% of the standard salary level. The rule will change the earnings thresholds needed to provide exemption to FSLA’s minimum wage and overtime pay requirements for executive, administrative and professional employees. Employees Who May Qualify for Overtime Under the New Rule Employees receiving a W-2 tax form. Hourly wage employees. Repetitive, manual labor employees. Employees earning less than $35,000 annually Maryland employers will be affected by DOL’s new rule and should devise a strategy to prepare. Some employers may opt to reclassify their employees to avoid the rise in payroll costs. These employers should provide clear communication with their employees and pay close attention to record keeping including tracking of time, overtime and bonuses. If your company is facing an impact from the Fair Labor Standards Act’s newest rule, contact Luchansky Law to schedule an initial consultation.
Impact of Tax Liens on Security Clearance
TIPS TO PREVENT TAX LIENS FROM IMPACTING YOUR SECURITY CLEARANCE Every year, hundreds of thousands of applicants submit for security clearance approval or renewal. Simply completing the Form SF86 – all 127-pages – is a daunting task itself. Applicants do not need any additional hurdles interfering with receiving their successful approval. Yet, the existence of an outstanding tax debt is a frequent basis for security clearance denial. If an applicant has a tax lien, follow these steps to increase your likelihood of a favorable outcome. Resolve Your Delinquent Taxes Prior to Submitting Your Application Many applicants believe that they can submit their security clearance application and then resolve their tax delinquency afterward. They mistakenly assume that they need only resolve the tax lien prior to a decision being issued on the application. Wrong! Once the application is submitted, the research into the applicant’s background can commence promptly and any outstanding tax debts may quickly result in a negative assessment. While this requires advance planning, applicants must do everything in their power to resolve all outstanding tax debt prior to submitting the application. Doing so will give a person a much better chance of having the application approved. After a security clearance application is denied, you are typically issued a “statement of reasons” advising as to the basis for the decision. From there, the applicant typically has appeal rights. However, once you are this far along, you are way behind the curve. You want to start out this process as a “Winner”; not forced into filing an appeal with the hope of mounting a come-from-behind rally. To put yourself in the best place position, resolve your delinquent tax issues prior to submitting your application or renewal. Mitigation, Mitigation, Mitigation! The reality is, most applicants simply are not in a position to quickly resolve their tax lien prior to the due date for their application or renewal. Fortunately, the laws that govern security clearance issuances allow tax liens and other debts to be viewed less critically when the applicant has initiated good-faith efforts to repay the debt or when there are clear indications that the problem is being resolved or is under control. So, take action immediately to show your efforts to resolve your tax lien. Equally important – document your actions! Be sure to keep records of all the steps you have taken so that, if the time comes, you can demonstrate your efforts to mitigate and responsibly resolve the debt. Tax Liens Are Treated Just As Any Other Debt. Many applicants make the mistaken assumption that a tax lien will be viewed more favorably than other debts, such as a repossessed car or outstanding credit card debt. No so. The government views tax debt in a very similar manner to how it views many other forms of debt. Ultimately, the guidelines under which applications and renewals are decided look for debts that demonstrate the failure to live within one’s means. From the Government’s perspective, failure to live within your means reflect poor self-control, lack of judgment, or unwillingness to abide by rules and regulations. Not attributes associated with a person handling Classified Information. Accordingly, a tax debt, like most other forms of debt, will have a similar negative impact upon a clearance determination. BONUS – Don’t Go At Alone! If you have already been denied and are now at the appeal stage, you have the option to proceed pro se, which means to represent yourself. This is often a very bad idea. Application appeals are viewed through the prism of a specialized legal analysis, and it is critical that you have an attorney on your side who understands the legal issues being advanced. When an application or renewal has been denied, your career is often in jeopardy. Approach this issue with the seriousness it deserves and consult with an attorney who has experience in security clearance issues to help you through the process.
Maryland’s Non-Compete Ban
On May 25, 2019, Maryland enacted Senate Bill 328, “Labor & Employment – Non-compete and Conflict of Interest Clauses”. The bill essentially prohibits employers from entering into non-compete agreements with employees earning equal to or less than $31,200 annually or $15 per hour. The new bill makes Maryland the latest state to revise its non-compete laws. The statute language is vague in certain areas. It fails to clarify if the law encompasses non-solicitation agreements and other restrictive covenants. However, it should be noted that the statute expressly excludes any employment contracts with respect to taking and using a client list or other private client-related information from its coverage. It also fails to indicate if the statute is applicable only post-employment. Accordingly, by its simple language, the statute would prohibit employers from forming anti-moonlighting agreements with lower wage employees. The non-compete ban will go into effect on October 1, 2019. Employers who employ minimum wage and low-income employees will primarily be affected. Employers with workers earning at or near the minimum wage should pay close attention to Maryland’s new laws and contact Luchansky Law for consultation to assist in amending policies.
The Maryland Commission on Civil Rights – The Basics
The Maryland Commission on Civil Rights (“MCCR”) enforces Maryland’s employment law that guarantees equal opportunity regardless of race, color, religion, ancestry or national origin, sex, age, marital status, sexual orientation, gender identity, disability, or genetic information. Therefore, it is illegal for employers to discriminate in recruiting, interviewing, hiring, setting work conditions, or discharging, based on the above protected categories. Only employers with 15 or more employees are subject to the law. Harassment on the basis of one the protected categories listed above, and retaliation for filing a complaint or being involved in the investigation, are also prohibited under law and enforced by MCCR. A charge of discrimination must be filed with the MCCR within six months of the date the alleged discriminatory act occurred. If you believe that actions have been taken against you based on discrimination in violation of Maryland law, it is imperative that you contact the MCCR immediately to initiate the process of determining whether you have been a victim of illegal employment discrimination. Our experienced employment attorneys can guide you through the MCCR process and help you analyze your situation to determine if the actions taken against you meet the threshold of being considered illegal discrimination.
MCCR and EEOC “Work-Sharing Agreement”
The Maryland Commission on Civil Rights (“MCCR”) is the Maryland state agency equivalent to the United States Equal Employment Opportunity Commission (“EEOC”). Although the MCCR was created to enforce Maryland’s laws against discrimination in employment, the MCCR has a “work-sharing agreement” with the EEOC, which means that, although the EEOC is a federal agency and the MCCR is a state agency, they work together to handle each other’s cases. While some are of the opinion that complaints filed with the MCCR are automatically filed with the EEOC, we believe it is a prudent practice, when filing a claim with either agency, to indicate that you want to “cross-file” the claim with the other agency. The work-sharing agreement means that cases are shared or transferred among the agencies. Sometimes the MCCR transfers cases to the EEOC, such as when the allegation is against a federal agency or the complaint is filed after 180 days of the alleged incident. Additionally, the EEOC will often transfer complaints to MCCR where the agency has jurisdiction in order to conduct the investigation. The MCCR also has the ability to request cases for investigation from the EEOC, and that is a practice the agency engages in, in order to process every allegation of unlawful discrimination in Maryland in a timely manner. Often, the EEOC or MCCR are backlogged with a heavy load of cases and they may enlist the help of another local agency, such as a county office of human rights, to process claims and investigations. This can be very helpful for your case as we have experienced tremendous success with this option. If you are pursuing a discrimination case in Maryland and would like guidance on how to navigate the process, contact our firm to schedule a consultation.
The Test for Classifying Workers as Independent Contractors Just “Evolved” Backward
One of the most confusing areas of labor and employment law is the decision regarding whether a worker may be classified as an independent contractor, or whether the worker must be recognized as an employee. The stakes are high. Employees are entitled to all sorts of protections that independent contractors don’t get – unemployment benefits, leave rights (in Maryland), overtime pay (if non-exempt), protection against unlawful discrimination to name a few. Which explains why employers lean toward misclassifying workers as independent contractors. What makes the issue so confusing is that each of the laws affected by a misclassification decision has a different test for determining whether the worker was properly or improperly classified as an independent contractor. The IRS has its test for income tax purposes. The DLLR has its test for unemployment benefits purposes. The Department of Labor has its test for overtime purposes. And now, the National Labor Relations Board just changed its test for purposes of filing an unfair labor charge (a ULP) with the NLRB – something that employees may do, but which independent contractors may not. Employees can file a ULP against their employer, for example, if they believe they were fired simply for joining with other employees to complain about their working conditions – something called, “concerted activity.” On January 25, 2019, the NLRB decided to go back to a standard that favors independent contractors – and, therefore, favors employers. Under President Obama, the NLRB had changed the test to be stacked against independent contractor classification – a move that favored employees. That decision now has been rejected. The thought of navigating this quagmire makes most attorneys go weak in the knees. At Luchansky Law, we deal with these issues every day. If you are facing a classification issue, give us a call at 410.522.1020.
EEOC versus MCCR: Taking Your Case to Court
The following article will be the first in a series discussing cases filed with the United States Equal Employment Commission (“EEOC”) and the Maryland Commission on Civil Rights (“MCCR”). One interesting difference between the two agencies is the timeline and procedure for taking your case to court. Under the EEOC, if the investigation is ongoing, you can request a Notice of Right to Sue, and, upon receipt, you have 90 days to file in federal court. Similarly, if the EEOC concludes its investigation and does not find probable cause of discrimination, you will typically be issued a Notice of Right to Sue which will enable you file in federal court – within 90 days of receipt of the Notice of Right to Sue. Pretty straight forward. Under the MCCR laws, it gets a little trickier – specifically with respect to filing in state court. In order to bring the case to court, at least 180 days must have elapsed since the filing of the administrative complaint, and the action must be filed in state court within two years after the “unlawful employment practice” occurred. For example, if the “unlawful employment practice” was a termination, that, hypothetically happened almost two years ago – this means that – even if the investigation is still ongoing, the two year deadline from the termination is a hard and fast deadline – regardless of the status of the investigation. Contrast this with the EEOC process: if the EEOC investigation is still ongoing – there is no clock ticking for you to file the claim in federal court – you only need to keep an eye on the EEOC’s progress. If you are pursuing a discrimination case in Maryland and would like guidance on how to navigate this uncertain arena, contact our firm to schedule a consultation.
Case Analysis: Defamation
Our firm receives many inquiries regarding potential defamation claims. A recent case in the United States District Court of Maryland provided a thorough analysis for such claims, which we present below. In Clayton v. Fairnak, No. JKB-18-2134, 2018 BL 455739 (D. Md. Dec. 10, 2018), Plaintiff Cavin Clayton filed suit against his former employer, Enterprise SI Corporation, and Enterprise SI’s owner, Gregory T. Fairnak, alleging defamation for allegedly false statements made by Defendants in conjunction with Clayton’s application for increased government security clearance. Defendants filed a motion to dismiss which the court granted for the reasons explained below. I. Factual Background Plaintiff Clayton is an independent contractor who provides services under contract to various federal agencies. Clayton was employed with Defendants through his corporate entity for some time, but, in August 2016, Defendants informed him that his services would no longer be required. He now competes with Defendants for government contracts. Sometime after parting ways with Defendants, Clayton applied for increased security clearance from the federal government, which involved gathering information from previous companies with which he’d worked, including Enterprise SI. In mid-December 2016, Defendant Fairnak and/or other agents of Defendant Enterprise SI returned a form to the U.S. Office of Personnel Management (OPM) stating that Clayton had been “fired . . . for cause.” According to Clayton, the statement was false, and Defendants made it either knowing it was false or negligently, with “the intent to harm Clayton’s chances” of obtaining federal contracts. Finally, Clayton claimed that Defendants’ statement to OPM harmed “his standing and reputation within his professional community,” caused him “mental anguish and personal humiliation,” and made it “significantly more difficult” for him to “obtain necessary federal government security clearance now and in the future.” Clayton sought compensatory and punitive damages. II. Analysis Defendants argued that Plaintiff failed to sufficiently allege the basic elements of a defamation claim under Maryland law. To state a claim for defamation under Maryland law, a plaintiff must allege (1) that “the defendant made a defamatory statement to a third person,” (2) that “the statement was false,” (3) that “the defendant was legally at fault in making the statement,” and (4) that “the plaintiff suffered harm.” Lindenmuth v. McCreer, 233 Md. App. 343 (Md. Ct. Spec. App. 2017). Failure to plausibly allege any one of these elements warrants dismissal. Although Plaintiff cleared the first hurdle by alleging a potentially defamatory statement, he failed to allege more than speculative harm under the fourth element. A. Defamation Per Se and Defamation Per Quod A defamatory statement is one that “tends to expose a person to public scorn, hatred, contempt or ridicule,” and that “discourages others in the community from having a good opinion of, or from associating or dealing with, that person.” Id. Maryland law distinguishes between statements that are defamatory per se and defamatory per quod. Indep. Newspapers, Inc. v. Brodie, 407 Md. 415 (Md. 2009). “Where the words themselves impute the defamatory character,” without the necessity of innuendo or inferences drawn from context, a statement is defamatory per se. Id. By contrast, defamation per quod requires “extrinsic facts . . . in order to establish the defamatory character of the words” through context or innuendo. Id. To survive a motion to dismiss in a defamation per quod case, the complaint must allege such extrinsic facts. Id . Defamation per quod also requires allegations of special damages. See Metromedia, Inc ., 400 A.2d at 1119. Whether a statement is defamatory per se or per quod is a question of law. Shapiro v. Massengill, 105 Md. App. 743 (Md. Ct. Spec. App. 1995). Plaintiff asserted that Defendants’ statement to OPM that they had terminated him “for cause” was defamation per se, because it is the kind of statement that “may impair or hurt one’s trade or livelihood” and may “adversely affect a plaintiff’s fitness for the proper conduct of business.” However, the very case Plaintiff cites for that definition, Shapiro v. Massengill, also makes clear that not all negative employment references are actionable: This is not to imply . . . that every negative evaluation of an employee’s performance is potentially defamatory. Rather, ‘[t]he words must go so far as to impute to [the plaintiff] some incapacity or lack of due qualification to fill the position.’ In other words, the defamatory statement must be such that[,] ‘if true, [it] would disqualify him or render him less fit properly to fulfill the duties incident to the special character assumed.’ Shapiro, 661 A.2d at 218. The statement that Clayton was fired “for cause” does not similarly impute a defamatory meaning on its face. Reference to a prior termination for cause could give rise to an inference of past misconduct of the sort that would “render him less fit” for his profession, Shapiro, 661 A.2d at 218. However, the vagueness of the words “for cause” could also encompass a wide range of other circumstances that would not disqualify Clayton from adequately performing future government contracts—for example, temporary inability to work because of illness, or breach of a more peripheral contractual provision that does not implicate his skill or professional capacity. The statement in this case is much closer to the one at issue in Leese v. Baltimore Cty ., 64 Md. App. 442 (Md. Ct. Spec. App. 1985). In that case, the Maryland Court of Special Appeals concluded that a statement by a former employer that the plaintiff had “failed to demonstrate ability to assume a professional management role” was not defamatory per se. 497 A.2d at 176 . Only after considering contextual factors, including the plaintiff’s six years’ experience with that employer in such a professional management role, did the court conclude that, in context, the statement suggested termination “for unsatisfactory performance,” and was therefore actionable as defamation per quod. Id. Similarly, the statement that Clayton was terminated “for cause” only becomes potentially defamatory in light of specific contextual facts alleged in the Complaint: that the statement was made in the context of applying for government security clearance, that it was made by a former employer who also worked on government contracts, and that it was made in reference to work Clayton had done for that employer in the context of
MY DAUGHTER IS A HERO
I am proud of the work I do as an employment lawyer. People care deeply about their jobs. Business owners invest their time, sweat, and money to grow their businesses. Employees rightly see their work as an extension of themselves. When I draft an employment agreement or employee handbook, I feel good that I am helping people’s work life go more smoothly. Even on a good day, though, I don’t think I’m a hero. But my daughter is. My oldest daughter, Atara Raizel, is a wife and a mother of three young children. That already elevates her to idealized status. But she also is a doula – a trusted birth coach who assists women in developing their ideal vision of how they want their births to be. Doing this work under the best of circumstances requires all the skill and sensitivity that you imagine it would – and she has all that. But imagine the following. On your way to assist a first-time mother with her birth, you receive a call from a surprisingly calm husband saying that he and his wife are at home, and that his wife’s contractions now are consistently a minute apart and a minute long. He informs you that he is about to put his wife in the car, and he intends to meet you at the hospital. That makes sense, doesn’t it? It would to me. That’s because we’re not heroes. My daughter knew that this did not make sense. Immediately and firmly she instructed the bewildered husband not to even think about putting his wife in the car – unless he wanted to give birth on the side of the highway. You are about to have a baby at home, she informed him. And then my daughter proceeded to calmly talk this young couple through the process of having a baby at home. Call the paramedics. Place a sheet on the floor. Breathe with me. Are the paramedics there yet? Yes, I can hear them. Guys!! Stop talking!! They are about to have a baby! Listen to me and follow my instructions. Got it?? Mom, don’t push; let your body do the work! That’s it. You’ve done it. No, guys – DO NOT clamp the cord! That’s the baby’s oxygen. While driving 65 mph on the way to a birth that she was conducting en route, my daughter conducted the miracle of birth with a room full of EMTs and first-time parents – resulting in a beautiful baby girl. Hearing about my daughter in action, literally saving lives, having newborn babies named after her, I’ve learned two things. First, the world still has heroes. Second, the cape is optional.