Employee Termination in Maryland: What You Need to Know
Employee termination is a common aspect of the life of a business. Doing so requires an understanding of state laws and employment contracts. While Maryland is an “at-will” state, employers and employees should be aware of how termination works, and more importantly, what actions could lead to a lawsuit down the line.
Required Steps to Terminate an Employee in Maryland
An employer must follow certain steps when firing an employee. Maryland does not require that an employer give notice prior to terminating an employee unless they lay off 25 or more employees for more than seven days. However, it is customary to give two weeks’ notice, which can be outlined in an employment agreement (Md. Code, Labor and Employment § 3-501).
Maryland law requires that terminated employees be paid all wages due for work performed prior to termination, on or before the date the employee would have been paid had the employment not ended (Md. Code, Labor and Employment § 3-505). Employers are also required to give written notice to employees if they are holding unpaid wages exceeding $100. The unpaid wages are considered abandoned property if unclaimed for three years (Md. Code, Commercial Law § 17-307).
Unused vacation time is only payable to the terminated employee if included in the employer’s written policy (Md. Code, Labor and Employment § 3-505). Sick leave cannot be claimed at termination unless expressly allowed by contract or company policy.
Is Maryland an “At-Will” State?
Maryland is an “at-will” state, meaning that employers do not need a specific reason for terminating an employee, as long as it does not violate public policy or a private agreement (Md. Code, Labor and Employment § 3-302). Employees can be terminated at any time for any reason or no reason at all, provided the termination does not fall under the exceptions to the at-will rule. Employers typically include the at-will doctrine in employee handbooks or employment agreements to clarify this relationship.
Exceptions to At-Will Termination
While Maryland follows the at-will employment doctrine, there are exceptions to this rule:
- Wrongful Discharge: Employees may claim wrongful discharge if they can prove (1) they were terminated, (2) the termination violated a clear mandate of public policy, and (3) there was a connection between the termination and the violation of public policy (Adler v. American Standard Corp., 432 A.2d 464 (Md. 1981)).
- Contracts: If an employment contract, whether express or implied, limits the employer’s ability to terminate the employee, such as by requiring just cause, the at-will doctrine does not apply (Md. Code, Commercial Law § 2-209). Contracts specifying a term of employment override the at-will default.
- Whistleblowing: Employers cannot fire an employee for reporting illegal activities or violations of public safety in the workplace (Md. Code, State Personnel and Pensions § 5-305).
- Jury Duty: Employers must allow employees to take unpaid leave for jury service and cannot terminate or threaten to terminate an employee for missing work due to jury duty (Md. Code, Courts and Judicial Proceedings § 8-105).
- Military Service: Under Maryland law, if a member of an employee’s immediate family departs for or returns from active military duty outside the U.S., the employee is entitled to leave for that day, and termination for taking such leave is prohibited (Md. Code, Labor and Employment § 3-803).
- Workers’ Compensation: Employees who file workers’ compensation claims under the Maryland Workers’ Compensation Act are protected from termination for seeking benefits (Md. Code, Labor and Employment § 9-1105).
- Discrimination/Public Policy: Employees may bring a wrongful discharge claim if they believe they were terminated for reasons related to race, religion, sex, age, gender identity, disability, or other protected characteristics, which would violate public policy (Md. Code, State Government § 20-606).
Severance Pay
Maryland law does not require employers to provide severance pay unless it is stipulated in an employment contract (Md. Code, Labor and Employment § 3-505). Severance pay is considered a discretionary benefit that an employer may offer. If offered, severance agreements often include conditions such as waivers preventing the employee from filing claims against the employer after termination.
Although severance is not legally required, employers must still pay all earned wages at the time of termination. Many employers voluntarily offer severance packages, and if they do, they are required to follow through with them as per the terms outlined in the employment contract.
Contact an Experienced Employment Attorney
Terminating an employee is a complicated task as an employer must do so within the boundaries of state and federal laws. In Maryland, employers generally can fire their employees for any legal reason or no reason at all, subject to a few exceptions. If you are considering terminating an employee, or you have been terminated yourself, it is important to contact a qualified employment attorney to guide you through the process.
Contributions to this blog by Kennedy McKinney.
Cations
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Maryland Code, Labor and Employment § 3-501 – 3-505
Maryland Code, Labor and Employment. (n.d.). § 3-501. Retrieved from https://mgaleg.maryland.gov
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Maryland Code, Commercial Law § 17-302 – 3-307
Maryland Code, Commercial Law. (n.d.). § 17-307. Retrieved from https://mgaleg.maryland.gov
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Adler v. American Standard Corp., 432 A.2d 464 (Md. 1981)
Adler v. American Standard Corp., 432 A.2d 464, 465 (Md. Ct. App. 1981).
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Maryland Code, Commercial Law § 2-209
Maryland Code, Commercial Law. (n.d.). § 2-209. Retrieved from https://mgaleg.maryland.gov
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Maryland Code, Courts and Judicial Proceedings § 8-105
Maryland Code, Courts and Judicial Proceedings. (n.d.). § 8-105. Retrieved from https://mgaleg.maryland.gov
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Maryland Code, Labor and Employment § 3-803
Maryland Code, Labor and Employment. (n.d.). § 3-803. Retrieved from https://mgaleg.maryland.gov
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Maryland Code, Labor and Employment § 9-1105
Maryland Code, Labor and Employment. (n.d.). § 9-1105. Retrieved from https://mgaleg.maryland.gov
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Maryland Code, State Government § 20-606
Maryland Code, State Government. (n.d.). § 20-606. Retrieved from https://mgaleg.maryland.gov
