Maryland Overtime Laws

June 6th 2023

It is common for employees in numerous industries to have to work beyond their regular hours, exceeding the standard workday or 4 workweek hours. To ensure compliance with labor laws, employers are obligated to compensate these employees appropriately for the extra time worked. Also, understanding the eligibility criteria, consequences of non-compliance, and the proper rates of overtime compensation is crucial. In the state of Maryland, if you work over 40 hours per week, you’re entitled to overtime pay at one and a half times your regular rate of pay. This guide aims to address questions and offers court cases in the state of Maryland to present the right measures to be taken when it comes to the fair execution and payment of overtime.

This article covers:

Maryland Overtime Rates

Maryland follows the Fair Labor Standards Act when it comes to regulating overtime. According to this act, any time an employee works over 40 hours per week is considered overtime.

Employers, in turn, are bound to pay 1.5 times the employee’s regular wage for any overtime work they perform, which in Maryland is $19.87 per hour for minimum wage workters. ($19.20/hr for minimum wage workers if 15> employees; $19.87/hr for minimum wage workers if <15 employees)

It’s important to remember that any hours worked over 8 hours per day are not counted as overtime.

Only the hours that surpass 40 hours per week within Maryland are considered for overtime payment.

Overtime Entitlement in Maryland

Maryland employees who are not exempt from state or federal overtime laws are eligible for overtime pay at a rate of 1.5 times their regular wage when they work more than 40 hours in a seven-day workweek.

In Maryland, there are specific provisions for overtime calculations in certain occupations. For instance, some farm workers are entitled to receive overtime pay for hours worked exceeding 60 in a week.

Further, under the Fair Labor Standards Act (FLSA), all first-responders, such as police officers, paramedics, and firefighters, are specifically covered and provided overtime protection.

Practical nurses and paralegals, who would typically fall under exempt categories, are also specifically protected by overtime laws. This is because these professionals often work long hours and may be vulnerable to exploitation or excessive work demands by their employers if not for the overtime safeguards in place.

It’s important to note that leave hours, such as vacation, sick time, and holidays, are not considered when calculating accumulated hours for overtime purposes. Overtime pay is based on the actual hours worked by the employee.

Impact of Deducting Employee Wages on Overtime Exempt Status in Maryland

In many cases, making deductions to employee pay could potentially impact the employee’s exempt status under the Wage and Hour Law, making them eligible for overtime pay after working more than 40 hours in a week.

In Maryland, employers are generally prohibited from deducting or reducing the wages of Executive, Administrative, and Professional employees who are paid on a salary basis for partial-day absences.

However, employers are allowed to deduct the missed hours from the employee’s accrued leave reserves, such as vacation, sick leave, or compensatory time, without affecting the employee’s exempt status.

This means that employers can use these leave reserves to cover the missed hours without triggering overtime pay requirements.

Refusing to Work Overtime in Maryland

Typically, employers do not violate overtime laws when they mandate employees to work overtime (mandatory time) as long as they compensate them at the legally required premium rate.

However, it is important to note that Maryland state law imposes restrictions on mandatory overtime for nurses in specific circumstances.

Overtime for Salaried Employees in Maryland

Employees who meet the criteria for being classified as “Executive,” “Administrative,” or “Professional” and receive a salary are typically exempt from overtime pay under the law, regardless of the number of hours they are obligated to work in a week.

Overtime Exceptions and Exemptions in Maryland

In Maryland, there are certain exemptions to overtime wage requirements. These include:

  • Salaried employees who earn more than $455 per week
  • Workers at institutions providing on-site care for the elderly, sick, and disabled if they work over 48 hours per week
  • Employees at bowling establishments working over 48 hours per week
  • Workers over the age of 62 who work 25 hours or less per week
  • Taxi drivers
  • Employees at recreational establishments, amusement parks, hotels/motels, and movie theaters
  • Executive positions that involve full-time management of 2 or more employees, administrative work related to business operations, management or administrative training, and professional work requiring advanced education such as artists, certified teachers, and IT professionals
  • Outside salespersons

Misclassifying Employees in Maryland to Avoid Overtime Pay

Misclassification occurs when a business wrongly categorizes its workers as independent contractors or subcontractors instead of employees, aiming to evade legal responsibilities such as social security taxes, worker’s compensation, unemployment insurance, and overtime pay. (note: independent contractors/ subcontractors are generally not entitled to overtime)

While there are legitimate situations where workers genuinely operate their own businesses and can be appropriately treated as independent contractors without entitlement to overtime, employers cannot misrepresent employee roles solely to avoid paying overtime compensation.

The simple labeling of a worker as an independent contractor or having a written agreement is insufficient to circumvent labor laws regarding overtime pay.

Further, in an attempt to evade paying overtime, some employers choose to pay a fixed salary to employees who do not meet the criteria for being classified as “Executive,” “Administrative,” or “Professional” which are categories exempt from overtime pay.

However, this practice does not absolve employers from their obligation to calculate and provide overtime pay based on the employee’s average hourly wage if they are otherwise eligible.

Legal Cases Relating to Overtime Compensation in Maryland

Below, we present law cases relating to fair overtime compensation for employees in Maryland:

1. Dispute Over Overtime Compensation for Correctional Supervisors at Eastern Correctional Institute (ECI), Maryland

In the case, Colburn v. Dept. of Corrections that took place in March 2003, Joseph Colburn and thirty-nine other supervisors employed at the Eastern Correctional Institute (ECI) within the Division of Corrections of the Maryland Department of Public Safety and Correctional Services (DPSCS) filed a complaint with their employer. They sought overtime pay at a rate of one and a half times their regular hourly wage for performing non-supervisory correctional duties beyond their regular forty-hour workweek.

The supervisors argued that by performing these additional duties outside their normal schedule, they should be classified as non-exempt employees under the Fair Labor Standards Act (FLSA) and thus entitled to receive overtime compensation. However, instead of paying overtime, the DPSCS granted them compensatory time off, equivalent to the number of extra hours worked.An Administrative Law Judge (ALJ) was assigned to the case and denied the supervisors’ complaint, stating that they were exempt employees under the FLSA and therefore ineligible for overtime pay. Both the Circuit Court for Somerset County and the Court of Special Appeals upheld this decision.

Key lessons from this case:

  1. The case highlights the importance of correctly classifying employees as exempt or non-exempt under the Fair Labor Standards Act (FLSA) to determine their eligibility for overtime compensation.\
  2. Understanding job duties is crucial to determine if they qualify for overtime pay. In this case, the supervisors argued that their non-supervisory correctional duties made them non-exempt employees eligible for overtime.
  3. The case illustrates the process of pursuing a grievance and the subsequent legal proceedings involved. It demonstrates the importance of understanding the decisions made by administrative law judges and the appellate courts.
2. Poe Sues IESI over Overtime Pay Calculation Method as per Federal and State Law

In the Poe v. IESI MD Corp. case, Leonard Poe, an employee of IESI MD Corp., a trash-hauling company, was paid a “day rate,” a common form of compensation in the trash-hauling industry. 

Both the Maryland Wage and Hour Law and the federal Fair Labor Standards Act required IESI, to provide Poe with overtime pay if he worked more than forty hours per week. However, IESI used a federal regulation to calculate the amount of overtime owed to Poe. 

Poe disagreed with this method and filed a lawsuit against IESI, arguing that the federal regulation contradicted the Maryland Wage and Hour Law and that he had been underpaid for overtime. 

The trial court ruled in favor of IESI and this decision was affirmed by Maryland’s Court of Special Appeals.

The Court of Special Appeals determined that IESI had correctly relied on the federal regulation and had paid Poe the appropriate amount of overtime. Both the federal statute and Maryland state statutes require employers to pay overtime wages at a rate of at least 1.5 times the usual hourly rate for hours worked beyond forty in a workweek. However, neither the federal nor Maryland statutes provide a specific definition or method for determining the “regular rate” or “usual hourly rate.”

Key lessons from this case:

  1. This case demonstrates the significance of being aware of how federal regulations may interact with state laws.
  2. It emphasizes the need for employers to navigate the complexities of overtime calculations and compliance with both federal and state regulations.
  3. The case underscores the importance of court decisions in interpreting and clarifying overtime laws. Employers and employees should stay informed about relevant court rulings to understand how they may impact their rights and obligations.
3. Maryland’s Highest Court Rules Employees Have Right Triple Damages for Unpaid Overtime

In the case of Peters v. Early Healthcare Giver, Inc., Muriel Peters, a certified nursing assistant, worked for Early Healthcare Giver, Inc. (EHCG) and consistently worked 119 hours in each two-week pay period, providing in-home care for an elderly patient. EHCG paid her a flat rate of $12 per hour, including hours worked beyond 40 hours per week. 

After leaving the company, Peters sued EHCG for wrongfully withholding her overtime wages in the Circuit Court for Montgomery County. During the trial, EHCG’s president admitted to not paying Peters overtime, claiming that she was unaware that this was necessary. EHCG argued that federal law governed their payment of home healthcare workers who were under a federal program, exempting them from overtime pay under the “companionship services” exemption of the Fair Labor Standards Act (FLSA).

Despite the trial court denying Peters’s claim and stating that federal law preempted Maryland law and exempted EHCG from paying overtime, Peters appealed asserting unpaid overtime and treble damages and the Court of Special Appeals found that the trial court erred in concluding that federal law preempted state wage laws. 

The Circuit Court awarded Peters $6,201 in unpaid overtime wages (three times the owed amount) but denied enhanced damages.

Key lessons from this case:

  1. The Case strengthens the position of employees seeking unpaid overtime as it showed that they can now claim up to three times the unpaid overtime under the WPCL, making these cases more appealing to plaintiffs’ lawyers.
  2. The case also asserts that employers should ensure compliance with overtime laws or have a valid legal justification for not paying overtime due to the potential for treble damages and the possibility of recovering attorney’s fees.
  3. Employers must ensure they are either paying overtime at the appropriate rate for all hours worked beyond the regular schedule, while maintaining accurate records, or have a legitimate legal justification, supported by law, for not providing overtime pay.

Important Cautionary Note

When making this guide we have tried to make it accurate but we do not give any guarantee that the information provided is correct or up-to-date. We therefore strongly advise you seek advice from qualified professionals before acting on any information provided in this guide. We do not accept any liability for any damages or risks incurred for use of this guide.