• New Process Allows Maryland Employees to File Liens for Unpaid Wages
  • May 27, 2013
  • Law Firm: Gordon Feinblatt LLC - Baltimore Office
  • Effective October 1, 2013, a new law enacted by the Maryland General Assembly will provide an expedited process that allows an employee to obtain a lien on the personal or real property of an employer in the amount of any wages owed to the employee. For the purposes of the lien law, an “employer” includes a person who acts directly or indirectly with an employee on behalf of the employer. Accordingly, payroll officers and other employees responsible for making wage payment decisions may be personally subject to imposition of a lien under the law.

    To establish a lien, the employee must serve notice on the employer in accordance with the rules for the service of legal process in a court action. The notice must provide the employer with adequate information about the wages claimed and the identity of the property against which the lien is sought. The Commissioner of the Department of Labor, Licensing and Regulation (DLLR) is expected to issue regulations that will establish the required content of the notice.

    An employer may dispute the lien by filing a complaint in circuit court within 30 days after the notice of the lien is served and state any defenses it has to the claim. The employee has the burden of proof to establish that the lien should issue and either party may request an evidentiary hearing. The court must determine whether to issue an order establishing the lien within 45 days after the complaint is filed. If the court issues an order establishing the lien, the employee will be entitled to court costs and reasonable attorney’s fees. The employer may also be entitled to its costs and fees, but only if the court determines that the employee’s attempt to assert the lien was frivolous or made in bad faith.

    Alternatively, a lien may be established without court order if the employer fails to file a complaint disputing the lien within the required 30 day period. The law does not provide any mechanism for an employer to challenge a lien once it is established, so it is important that employers file a complaint within the 30-day period after notice of the lien is served.

    An employee may not contractually waive the right to seek a lien for unpaid wages. As a result, employers should carefully draft any release of claims to include an affirmation by the employee that he/she has been paid an amount equal to or greater than all wages due for worked performed through the date of the agreement. While such an agreement will not release a claim under the wage lien law, it may provide the employer with useful evidence if the employee subsequently seeks a lien for unpaid wages.

    The lien for unpaid wages law was modeled on the Maryland Contract Lien Act. Under that law, however, a lien on property may be created only if the parties’ contract expressly provides for the creation of a lien in the event of a breach and expressly describes the property against which the lien may be imposed. By contrast, the new unpaid wage lien law requires no prior agreement and may be asserted against any real or personal property of the “employer.”

    Finally, the new lien law does not preempt other remedies already available to an employee under applicable law. Accordingly, the employee may also file a traditional lawsuit seeking unpaid wages, overtime, and, if applicable, treble damages.