On December 23, 2011, the U.S. Court of Appeals for the Fourth Circuit in Kunda v. C.R. Bard, Inc. held that employers in Maryland may have their employees execute employment agreements with a choice of law provision other than Maryland, so long as the other jurisdiction has a “substantial relationship” to the parties and the application of the law would not be contrary to a fundamental Maryland public policy. This case settles the issue, at least for now, of whether an employee who works in Maryland has a fundamental right to sue for wages under the Maryland Wage Payment and Collection Law (“MWPCL”) – generally a law favorable to employees.

In Kunda, the plaintiff fervently argued that the MWPCL, not New Jersey’s wage payment and collection law, should apply to her employment agreement because the MWPCL constitutes a fundamental Maryland public policy. The Fourth Circuit disagreed. Citing to two other Maryland laws that contain express language concerning whether those laws contain a strong public policy, the court noted that “by contrast, the MWPCL contains no express language of legislative intent that the law is a fundamental Maryland public policy.”

The plaintiff’s principal argument was that, in her view, Maryland's highest court, the Court of Appeals, in Medex v. McCabe, 811 A.2d 297 (Md. 2002), held that the MWPCL constituted such a fundamental Maryland public policy. There, the Court of Appeals refused to uphold a provision in an employment agreement between a Maryland company and a Maryland resident requiring continued employment to receive already earned payments, holding that the provision violated the MWPCL. Because the Maryland Court of Appeals struck down the provision at issue, the plaintiff reasoned that the Maryland Court of Appeals would likely strike down any provision in an employment agreement that contradicted or violated the MWPCL. Thus, the plaintiff argued, the Court of Appeals would strike the choice of law provision at issue because the New Jersey wage payment and collection law was more favorable to employers.

The Fourth Circuit easily distinguished Medex. In particular, the court emphasized that the employment agreement at issue was between a Maryland employer and a Maryland employee. Hence, the only issue was whether the provision violated the law, and not whether the MWPCL itself contained a fundamental Maryland public policy. The court then noted that the fact that 42 other states have enacted similar wage payment laws undermines the notion that the MWPCL is a fundamental public policy.

Notably, no Maryland state court has yet evaluated whether the MWPCL embodies a fundamental public policy. However, three Maryland federal district courts, and now the Fourth Circuit, have held that this law does not appear to represent a fundamental policy of the State of Maryland. If it chooses to do so, the Maryland Legislature can of course always amend the MWPCL to expressly state that it does.

Photo credit: Christian Baitg