In a recent decision on whether severance pay constitutes "wages" under the Maryland Wage Payment and Collection Law (MWPCL), Judge Bredar of the Maryland federal court found that a severance pay package offered to a high level employee as an incentive to keep him employed with the company while the company went through difficult financial times, was a "wage" under the MWPCL. This is important because the MWPCL provides penalties of up to treble (3x) damages and can include an award of attorney's fees for prevailing Plaintiff employees. The defendant in this case, Piacquadio v. Vertis, Inc., Case No.: 12-245, argued unsuccessfully that the severance payments were not "wages" within the meaning of that term in the MWPCL. The defendant tried to persuade the court that the severance payments were not "wages", arguing that the promised payments were made as a "quid pro quo" for the plaintiff employee's agreement not to compete with defendant after his employment. The court completely rejected the defendant's arguments, finding that the severance payment promised to the plaintiff was not conditioned on any post-employment conduct by him. That is, the severance agreement payments were in no way dependent on whether or not plaintiff complied with a non-compete agreement that plaintiff signed. Even if the employee later breached the non-compete agreement, there was no provision in the severance pay agreement that rendered the employee disqualified from the severance pay. The court stated that in order for severance payments or other compensation to not be considered "wages" under the MWPCL, the "compensation has to be conditioned on the employer’s actual performance of [ ] post-employment obligations, not just his agreement to them..." Thus, if severance pay is explicitly tied to a former employee complying with a post-employment obligation, such as a non-compete agreement, such promised pay would likely not be considered "wages" under the MWPCL.
