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Important to Properly Determine Who is an “Employer” Under Maryland Wage Payment Laws

Important to Properly Determine Who is an “Employer” Under Maryland Wage Payment Laws

If you are owed wages and want to sue your employer, you need to make sure your lawyers sue all the parties who can be liable as an “employer,” including individuals. A case can be dismissed if the wrong “employer” is sued.

Determining who is an “employer” is not always easy. An example is the recent case of Qun Lin v. Cruz, 2020 Md. App. LEXIS 943 (App. Sep. 30, 2020) in which a Rockville, Maryland restaurant, Teppanyaki Grill & Supreme Buffet, had one individual’s name (Mr. Chen) in its articles of incorporation but another individual (Mr. Lin) signed the lease for the restaurant. Teppanyaki Grill, as a business, failed to answer the Complaint, and both Mr. Chen and Mr. Lin denied ownership. Mr. Lin claimed in court that he did not have any interest in the restaurant and only signed the lease as a favor for Mr. Chen. The court found that Mr. Lin was the owner and held him personally liable for the restaurant employees’ unpaid wages.

On Mr. Lin's appeal, the Maryland Court of Special Appeals set out the correct law under a heading “Who is an Employer?” The court stated that Maryland law does not insulate individuals from being an “employer” even if they are a member of a limited liability company. The court noted Maryland and federal courts apply the economic “reality test” to determine whether an individual qualifies as an employer under wage-hour laws.

The economic reality test uses four factors to determine an individual’s level of "control" over an employee: Did the alleged employer (1) have the power to hire and fire the employees; (2) supervise and controll employee work schedules or conditions of employment, (3) determine the rate and method of payment; and (4) maintain employment records. 

The court stressed that the person who is the sole proprietor/owner of a business does not automatically make the person a “employer” under Maryland Wage Payment Law. Instead, the owner must be found liable under the economic reality test, regardless of the form of the business. 

If you are seeking advice, assistance and representation for owed wages against your employer, it is very important for you to choose the right lawyer who can correctly determine who your employer actually is. The attorneys at Lebau & Neuworth are experienced in handling all type of owed wages cases under the federal and state laws, so please contact us at 888-456-2529 or lebauneuworth.com/contact-us.

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