BONUS FOR FORMER EMPLOYEES UNDER MARYLYAND’S WAGE AND COLLECTION ACT

The Maryland Wage Payment and Collection Act requires that an employer pay a former employee all wages due for the work the employee completed prior to termination. Section 3-501(c) of the Act defines "wages" as "all compensation that is due to an employee for employment," which includes bonuses, commissions, fringe benefits, or any other remuneration promised for service. In October, 2001, this section of the Act was interpreted by the Maryland Court of Appeals in Whiting-Turner Contracting Co. v. Fitzpatrick.

Fitzpatrick was an employee of Whiting-Turner Contracting Company, whose promised compensation package included a weekly salary and after two years of employment, depending on the financial situation of the company, profit sharing. Prior to completing his first two years of employment, Fitzpatrick approached his project manager and told him that he might be leaving the company. He also asked about receiving a bonus check that several other members in his group had received. The project manager told Fitzpatrick that he had his check in his pocket and all Fitzpatrick had to do was to stay with the company. Despite this, Fitzpatrick decided to leave the company. The company then refused to pay Fitzpatrick his bonus, and Fitzpatrick sued under the Act.

While the two lower courts decided in Fitzpatrick's favor, the Maryland Court of Appeals reversed based on its interpretation of the statute. The Court held that the Act required the payment of bonuses only if they had been promised to the employee as compensation for work performed. In this case, Fitzpatrick was promised profit sharing bonuses only after completing two years of employment, which he failed to do. Despite the project manager's statement that he had a check for Fitzpatrick, any bonus given to Fitzpatrick prior to two years of employment was entirely discretionary and could be revoked at any time prior to delivery. However, if an employee has been promised a bonus and has performed all the requirements to receive the bonus, an employer must pay the employee the bonus or risk being held liable under the Act.

The decision is clear that if the conditions for a bonus are met the bonus must be paid.