UPDATED - Maryland's New Prevailing Wage Law

Maryland’s new living wage law becomes effective October 1, 2007. The law applies to all contractors or subcontractors that have state contracts for services valued at $100,000 or more. Nonprofits are exempt. Employers with fewer than 10 employees are also exempt on contracts that do not exceed $500,000.

All contractors covered by the new legislation must post a notice advising their employees of their rights under the new law and the name, address, and telephone number for the Commissioner of Labor and Industry. Failure to post the notice can result in a civil penalty not exceeding $50 per violation.

The law requires government contractors and subcontractors to pay their employees either $11.30 or $8.50 per hour, depending on where the work is performed. In Montgomery, Prince George's, Howard, Anne Arundel and Baltimore Counties as well as Baltimore City (“Tier 1 areas”), employees must be paid an hourly rate of at least $11.30. Employees performing work in all other parts of the state (on government contracts) must be paid an hourly rate of at least $8.50.

If a government contractor provides health insurance to its employees, it may be entitled to a credit against the legally required wage for the hourly cost of its share of the employee’s health insurance premium. Specifically, if a Tier I employer pays $1 per hour for an employee's health insurance, it is entitled to a $1-per-hour credit toward the payment of the mandated $11.30 hourly wage.

Violation of the new law is a misdemeanor punishable by a fine not exceeding $500 or imprisonment not exceeding one year or both. In addition, employers may be required to pay restitution to affected employees along with liquidated damages to the State in the amount of $20 per day for each employee paid in violation of the law. The law also gives employees a private right of action to recover the difference between the amount they were paid and the amount they should have been paid under the law.

Maryland’s new living wage does not apply to state-funded construction projects where workers are paid the prevailing wage for each locality. In addition, it only applies to employees who work at least 13 consecutive weeks on a particular government contract and is at least 18 years old.

For more information contact J. Nicole Windsor at Windsor@bowie-jensen.com or 410-583-2400. Ms. Windsor concentrates her practice on employment law.