Maryland Termination Laws

Maryland termination laws establish clear guidelines on how and when employers can lawfully end an employment relationship. This comprehensive guide explores state and federal regulations, ensuring employers and employees understand the termination process in compliance with the law.

This Guide Covers

Legal Considerations for Termination in Maryland
At-Will Employment in Maryland
Lawful Termination in Maryland
Legal Protections During Termination in Maryland
Terminated Employee Benefits in Maryland
Layoffs in Maryland
Resignations in Maryland
Legal Case Related to Wrongful Termination in Maryland

Legal Considerations for Termination in Maryland

Employment termination in Maryland involves several legal considerations that protect employees from wrongful dismissal. Understanding these regulations helps ensure that terminations are handled fairly and in compliance with the law:

  • Discriminatory Termination: Employees cannot terminate an employee based on race, color, national origin, gender, religion, disability, age, or other protected characteristics under federal and state anti-discrimination laws.
  • Retaliatory Termination: It is illegal for an employer to fire an employee in retaliation for exercising certain rights, such as reporting discrimination, filing a complaint about unsafe working conditions, or participating in whistleblowing activities.
  • Employment Contracts: Employees with a valid employment contract are not subject to at-will termination. Contracts can include specific terms regarding how and when termination can occur, often requiring just cause for dismissal. If an employer terminates an employee that violated the contract terms, the employee could be subject to breach of contract claims.
  • Notification Requirements: For large-scale terminations, employers must comply with the federal and state Worker Adjustment and Retraining Notification (WARN) Act, which requires companies to notify affected employees before closing a facility or implementing mass layoffs.
  • Unemployment Benefits: Employees who are terminated may be eligible for unemployment benefits through the Maryland Department of Labor. Eligibility is typically based on the circumstances of the termination. Employees fired for misconduct may be disqualified from benefits, while those terminated without cause (e.g., due to downsizing) are more likely to qualify.
  • Non-Compete Agreements: Employees who are terminated and are subject to non-compete agreements should carefully review the terms of these agreements. In Maryland, the enforceability of non-compete clauses is restricted, especially for low-wage workers. This means that if you earn less than a certain threshold, the agreement may not be legally binding or could be deemed unreasonable by a court.

At-Will Employment in Maryland

What is At-Will Employment?

At-will employment is a legal doctrine that allows employers to terminate employees at any time, for any reason (except an illegal one), without warning, as long as the reason is not prohibited by law. Similarly, employees are free to express their jobs without reason or notice.

In Maryland, employers follow the at-will employment doctrine unless an employment contract specifies otherwise. Most employees in the state are considered at-will employees unless they are part of a union or have a written contract that stipulates different terms.

What are the Exceptions to At-Will Employment in Maryland?

While at-will employment provides significant flexibility for employers, there are important exceptions that protect employees from wrongful termination. In Maryland, these exceptions include:

  • Public Policy: Employers may not terminate employees if doing so would violate a clear public policy of Maryland. For example, firing an employee for refusing to engage in illegal activities or taking time off to vote or serve on a jury could be considered a violation of public policy.
  • Implied Contracts: If an employer’s policies or employee handbook imply job security or certain employment conditions, courts may recognize an implied contract that supersedes the at-will doctrine. This can include statements that suggest employees will not be terminated without cause or that outline disciplinary procedures.
  • Discriminatory Termination: Employers cannot terminate an employee based on protected characteristics such as race, religion, sexual orientation, disability, gender, or age, as outlined in federal and state anti-discrimination laws.
  • Employer Retaliation: Employees cannot be fired for exercising their rights, such as filing a discrimination complaint, reporting unsafe working conditions, or participating in an investigation regarding workplace misconduct.

Employment Under Contract in Maryland

An employment contract in Maryland is a formal agreement between an employer and an employee that outlines the terms and conditions of employment. This contract typically includes essential elements such as job title, job duties, working hours, salary, benefits, time off and vacation, company policies, and reasons for termination.

Maryland also enforces restrictive employment contracts, such as non-compete agreements, provided they comply with specific requirements outlined in the Maryland Non-Compete and Conflict of Interest Clauses Act. Some key restrictions include:

  • Non-compete agreements cannot apply to employees earning less than $15 per hour or $31,200 annually.
  • The agreement should not create undue hardship for the employee.
  • It should not be imposed on employees lacking unique skills.
  • It must be necessary to protect a legitimate business interest.

Several types of employment contracts are commonly used in Maryland:

  • Permanent Employment Contract: An indefinite contract where employees are employed until they resign or are terminated according to the contract’s terms.
  • Fixed-Term Employment Contract: This type of contract specifies a start and end date for employment, often tied to a particular project or task.
  • Independent Contractor Agreement: Used for contractors and freelancers who are employed but are not classified as employees.

Employment contracts in Maryland may include the following agreements:

  • Confidentiality Agreement: Also known as a non-disclosure agreement (NDA), this restricts the employee from disclosing sensitive business information.
  • Non-Compete Agreement: This agreement limits an employee’s ability to work for competitors or start a competing business for a defined period or within a specific geographical area, subject to legal requirements.
  • Severance Pay Agreement: This agreement outlines the benefits and protections provided to employees upon termination, helping them secure future employment opportunities and clarifying terms related to non-compete clauses.

Lawful Termination in Maryland

Legal Grounds for Termination in Maryland

Although employers can generally terminate employees for any reason or no reason in Maryland, there are legal grounds for termination that are acceptable under state and federal laws. Some scenarios that are lawful to terminate an employee include:

  • Performance-Based: Employers may terminate an employee for poor job performance or failure to meet the company’s standards. This could include missing deadlines, substandard work, or failure to achieve performance goals. Employers should document any performance issues to avoid potential legal disputes.
  • Misconduct: Employees can be lawfully terminated for misconduct, which includes violations of company policies, theft, harassment, fraud, or any other behavior that violates the terms of employment or creates a hostile work environment. Employers must be able to provide evidence of the misconduct if challenged.
  • Violation of Company Policies: Termination is permissible if an employee violates company policies or rules, such as attendance policies or workplace safety regulations leading to property damage or threatening workplace safety. Employees need clear, documented policies, and they need to be made aware of them.
  • Business or Economic Reasons: Employers may terminate employees for business-related reasons, such as downsizing, layoffs, restructuring, or closing a department or location. These decisions must be made on legitimate business needs rather than targeting specific employees for discriminatory reasons.
  • Contractual Termination: If an employee is under an employment contract and violates the terms of that agreement, termination is allowed based on the specific conditions outlined in the contract.

Read our complete guide to firing employees in Maryland for further information.

How Do I File a Wrongful Termination Claim in Maryland?

Employees must first determine if their firing violated applicable state or federal employment laws, such as those protecting against discrimination, retaliation, and contract violations, before they may pursue a wrongful termination claim in Maryland. Employees who believe their termination is discriminatory and retaliatory can file a complaint with the Maryland Commission on Civil Rights (MCCR) or the Equal Employment Opportunity Commission (EEOC).

These state and federal agencies will investigate the claims and try to resolve the issue through mediation or settlement. However, if the case is unresolved, employees may get a “right to sue letter,” allowing employees to sue in state or federal court.

Employees are advised to act quickly when filing a wrongful termination claim. The MCCR statute of limitations is 300 days for MCCR complaints and 180 days to 300 days for EEOC.

Legal Protections During Termination in Maryland

Maryland employees are protected by various state and federal laws that govern termination. These laws protect employees:

  • Title VII of the Civil Rights Act of 1964: Title VII of the Civil Rights Act prohibits employment discrimination based on race, color, religion, sex, or national origin. It also extends protection to termination, meaning employers cannot fire someone due to these protected categories.
  • Maryland Discrimination in Employment: The Maryland Discrimination in Employment mirrors the federal Title VII of the Civil Rights Act, prohibiting employers from terminating employees based on protected characteristics, including race, color, sex, age, religion, national origin, marital status, sexual orientation, gender identity, and disability.
  • Age Discrimination in Employment Act (ADEA): The ADEA is a federal law that protects employees aged 40 and older from discrimination based on age. Employers cannot use age as a factor when deciding to lay off or terminate older workers unless there is a valid, non-discriminatory reason.
  • Americans with Disabilities Act (ADA): The ADA is a federal law that protects employees with disabilities from being terminated due to their disability. Employers are required to provide reasonable accommodations to employees with disabilities and cannot terminate them for requesting or needing such accommodations unless it would cause undue hardship to the business.
  • Family and Medical Leave Act (FMLA): The FMLA is a federal law that provides job protection for eligible employees who take unpaid leave for serious health conditions, family caregiving, or childbirth.

Terminated Employee Benefits in Maryland

Terminated employees in Maryland may be entitled to a range of benefits depending on the circumstances of termination and the terms of their employment. These benefits are:

  • Final Pay: Maryland law mandates terminated employees receive all wages owed by the next payday. This includes salary, commissions, and bonuses stipulated in the employment contract. Employers must pay all wages earned up until the date of termination.
  • Health Insurance Continuation (COBRA): Under federal Consolidated Omnibus Budget Reconciliation Act (COBRA) guidelines, employees who lose their jobs may continue their health insurance coverage for up to 18 months. Maryland Mini-COBRA also allows employees of smaller companies (with fewer than 20 employees) to continue their health insurance coverage. To elect continuation coverage under Maryland Mini-COBRA, employees must submit their notification form at least 45 days after the termination date. Terminated employees must pay the full premium, including the portion the employer previously covered, to maintain their coverage.
  • Unemployment Benefits: Laid-off employees in Maryland are generally eligible for unemployment benefits through the Maryland Department of Labor’s Division of Unemployment Insurance. These benefits provide temporary financial assistance while the individual seeks new employment. To qualify, employees must have been laid off due to no fault of their own and must actively search for new work. Benefits are determined based on the employee’s earnings history during a specific base period (ranging from $50 to $430), and weekly payments are made for up to 26 weeks.
  • Severance Pay: Employers are not required to offer severance pay in Maryland unless outlined in the employment contract or company policy. If severance is offered, it can provide financial support for the employee after termination, which makes the terminated employee ineligible to receive UI benefit payments. The terms of severance agreements, including the amount and duration of payments, are typically negotiated between the employer and the employee.

Layoffs in Maryland

A layoff occurs when an employer terminates employees for reasons unrelated to their performance. It is often driven by economic challenges, company restructuring, or operational downsizing. Layoffs typically affect several employees or entire departments at once. In Maryland, layoffs are subject to federal and state laws protecting employees’ rights.

The Worker Adjustment and Retraining Notification (WARN) Act is a federal law that requires employers with 100 or more employees to provide at least 60 days’ advance notice before executing mass layoffs or plant closures. Under the WARN Act, a mass layoff occurs when 50 or more employees are laid off at a single site, or one-third of the workforce is affected if the number of employees is between 50 and 499.

Maryland has enacted their Mini-WARN Act, the Maryland Economic Stabilization Act. This law covers smaller employers with 50 or more employees. This state law mirrors the federal WARN Act, with its updated provisions, it requires at least 60 days’ notice before large-scale layoffs or plant closings, and it applies to a broader range of businesses.

Resignations in Maryland

In Maryland, resignations can either be voluntary or involuntary. Each type of resignation is handled differently based on the circumstances of the separation.

Voluntary Resignations

A voluntary resignation occurs when an employee decides to leave their job. Under Maryland regulations, employees are generally required to provide at least two weeks’ notice, although a shorter notice period may be acceptable if approved by the employer. Failure to give proper notice results in disqualification from future employment with the same employer.

Additionally, if an employee fails to report to work for five consecutive days without notifying their supervisor, they are considered to have automatically resigned, effective from the last day they worked, which may also impact their eligibility for future employment.

Upon resignation, employers must provide final pay by the next regular payday, ensuring all owed wages are paid. In addition, employees who voluntarily resign are ineligible for unemployment benefits unless they can prove that they had a “good cause” for leaving, such as unsafe working conditions or a significant change in employment terms.

Involuntary Resignations

An involuntary resignation, also known as a constructive discharge, occurs when an employee feels forced to resign due to intolerable working conditions created by the employer. Maryland courts may recognize these resignations as involuntary if the working environment is deemed unbearable, such as in cases of harassment, significant demotion, or unsafe conditions.

In such scenarios, the employee may be eligible for unemployment benefits and can even file a wrongful termination claim if their resignation stems from harassment, significant demotion, or unsafe conditions.

Employees forced to resign under these circumstances may qualify for unemployment benefits by proving that a reasonable person would have felt compelled to quit under the same conditions.

Legal Case Related to Wrongful Termination in Maryland

General Hospital in Maryland Pays Nearly $180,000 to Settle Wrongful Discharge Due to Disability Discrimination

In EEOC v. MedStar Harbor Hospital, the EEOC filed a lawsuit in which MedStar Harbor Hospital paid nearly $180,000 to settle a claim regarding the wrongful termination of respiratory therapist Jerome Alston.

Alston, who requires medication that compromises his immune system due to a kidney transplant he received ten years ago, was fired after the hospital denied his request not to work in “negative pressure” rooms. These rooms use a ventilation system designed to isolate infectious airborne materials, posing a heightened risk for Alston’s health.

The EEOC sued MedStar Harbor Hospital in the U.S. District Court in Baltimore, alleging violations of the Americans with Disabilities Act (ADA). The ADA mandates that employers provide reasonable accommodations for employees with disabilities unless doing so would impose an undue hardship on the company.

The settlement agreement required MedStar to revise and communicate its policies regarding reasonable accommodations for employees with disabilities. The hospital also provided ADA-compliance training to supervisors, human resources personnel, and occupational health department workers. Alston also received a $179,576 settlement and a letter of recommendation.

Key Lessons Learned from this Case:

  • Employers are required to provide reasonable accommodations for employees with disabilities and must engage in an interactive process to determine appropriate measures.
  • Clear communication and training regarding ADA compliance are essential to prevent discrimination and misunderstandings in the workplace.
  • Policies and practices should be regularly reviewed and updated to ensure they align with legal requirements and support employees’ needs.

Explore our comprehensive guide to Maryland Labor Laws to learn more.

Important Cautionary Note

This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.