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Personal Liability for Violation of Wage Payment and Collection Law

In Campusano v. Lusitano Construction LLC, the Court of Special Appeals has held that that a “four-factor economic reality test for ‘control’” governs whether a corporate officer can be held personally liable for a company’s failure to pay wages in accordance with Maryland’s Wage Payment and Collection Law. The four factors considered under this test include whether the officer (1) had the power to hire and fire the employees, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and method of wage payment, and (4) maintained employment records. These factors, the Court explained, focus on the degree of control exercised by the corporate officer in causing the corporation to under-compensate employees. The Court added that other factors relevant to the control issue may include whether the officer exercises operational influence over significant aspects of the business or has an ownership interest in the business. Applying these factors, the Court determined that the corporate officer in the case before it could not be held personally liable, because “[a]lthough [he] supervised and controlled [the employees’] work schedules and conditions of employment, and although he maintained their work logs, these supervisory tasks [we]re not sufficient to make him personally liable for [their] wages, particularly where he had no ownership, control, or investment in the” company.