September 20, 2018, Vol. 4
by Marc Campsen
The Wage Lien Law – Maryland’s Undercover Wage Remedy
In 2013 Maryland enacted a little-known law permitting employees to obtain a lien on an employer’s property in an amount equal to earned but unpaid wages – the Wage Lien Law. Unfortunately for employers, wage liens can be obtained in a short period of time with relatively minimal legal proceedings and legal fees. Compounding this truncated format, many employers have no idea the Wage Lien Law exists in the first place. Offering some relief to employers, and due in large part to the speed at which the Wage Lien Law permitted employees to obtain a wage lien against an employer, certain changes were enacted in 2018 to introduce more fairness in the lien proceedings and to permit the court to obtain the necessary information to properly resolve the alleged wage issues. Notwithstanding, and five years after the enactment of the Wage Lien Law, many employers still do not know it exists and the recent changes have done little to protect employers.
An employee must navigate a relatively simple three-step process to obtain a wage lien. First, the employee serves a Notice to Employer of Intent to Claim Lien for Unpaid Wages (“Wage Notice”) and a supporting affidavit. The notice is a form that can be obtained from the DLLR’s website making the employee’s first step extremely easy, very low cost and all but eliminates the need to hire an attorney.
Second, the employer must file a Complaint defending against the Wage Notice in the Circuit Court for the county in which the property the employee is trying to lien is located within only 30-days of receiving the Wage Notice. For example, if an employer is located in Baltimore City and its real or personal property is also located in Baltimore City, that is the court in which the employer would file the Complaint. Failure to file a Complaint will result in a lien being automatically entered in the amount sought by the employee in the Wage Notice. Unfortunately, employers often misunderstand the nature of the form Wage Notice because it is not similar to a summons and Complaint generally used to initiate legal proceedings and fail to timely or adequately respond, inevitably resulting in the automatic entry of a wage lien.
Third, assuming the employer files a Complaint, a court will hear the dispute within only 45 days. In other words, an employer may be fighting a wage lien claim in a court proceeding within as few as 75 days after receiving the Wage Notice. To prevail at the hearing, the employee must establish that wages are owed and the amount. If the employee prevails, the court will enter an order to establish a lien and the employee may also obtain his/her attorneys’ fees and court costs from the employer. The employee must then properly record the lien within 180 days for it to become a secured interest. If the employee fails to record the wage lien within 180 days, it will be extinguished without prejudice – meaning the employee can obtain another lien for the same unpaid wages. The only bright spot for employers is that if the employer prevails and the court finds the wage lien claim frivolous or in bad faith – a difficult burden to satisfy – the employer may obtain its attorneys’ fees and costs.
By way of example, I defended a wage lien claim several years ago initiated by a highly-paid physician against a medical practice. The employee sought alleged unpaid wages well into the six-figures. This meant the employer had to file a Complaint defending against the Wage Notice within 30-days or a high six-figure lien would have been automatically entered against its property without a day in court. Notably, the physician was represented by an attorney and clearly pursued this remedy as the fastest and most cost-effective method to recover the alleged unpaid wages. Ultimately, after the medical practice filed a Complaint defending against the Wage Notice, the parties reached a settlement on a significantly reduced amount of alleged unpaid wages and the medical practice avoided paying the employee’s attorneys’ fees or court costs.
In sum, the Wage Lien Law creates significant exposure for employers because many employers are unaware of the law in the first instance, the simplicity of the form Wage Notice and its low cost make it accessible to employees ranging from those earning minimum wage to highly paid professionals without retaining an attorney, and wage lien claims proceed to resolution very quickly.
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About The Author:
Marc A. Campsen is an attorney at Wright, Constable & Skeen, LLP, where he focuses his practice primarily on litigating employment and business law matters. He is recognized as a Maryland Super Lawyer.
DISCLAIMER: The materials available on this blog are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to your particular issue or problem.