Federal Regulations May Provide Guidance as to Maryland’s Wage-Hour Law

The Maryland Court of Special Appeals held that, where provisions under the federal Fair Labor Standards Act and Maryland’s Wage-Hour Law are substantially similar, the federal regulations interpreting that FLSA provision are “persuasive authority as to the correct interpretation of Maryland law.”

In Poe v. IESI MD Corp., the issue concerned the payment of overtime for an employee paid on a day rate basis, i.e. he was paid a specified amount of money per day rather than per hour. Day rate employees are entitled to overtime pay for all hours worked over 40 in a workweek. By federal regulation, the overtime rate for day rate employees is calculated by totaling the amount received under the day rate in the workweek and dividing by the total hours worked, and then paying extra half-time pay at that rate for all hours worked in excess of 40 (rather than, as is the case for most overtime situations, one-and-a-half times for hours over 40). There is no corresponding state regulation.

The employee argued that the federal regulation should not influence the interpretation of state law. The Court disagreed, noting the similarity between the federal and state statutes and the fact that state claims generally succeed or fail together with FLSA claims. The Court acknowledged that there are situations in which federal and state regulations diverge, however the day rate overtime calculation is not one of them. As the Court noted, nothing in Maryland’s statutory language or regulations prohibits employers from relying on the federal regulation. Nor is it necessary for Maryland to promulgate its own regulation to assist in the interpretation of Maryland law. Thus, the federal day rate overtime regulation is persuasive authority as to the application of Maryland law, which is enhanced by its long-standing existence and the undoubted reliance upon it by numerous Maryland employers over that period.

This case provides some comfort to Maryland employers that they can generally look to federal regulations to provide guidance on analogous provisions under the state’s Wage-Hour Law. Of course, this decision issues from the intermediate appellate court, and it is possible that the highest appellate court – the Maryland Court of Appeals – could arrive at a different conclusion if and when this issue is brought before it.