Maryland’s Wage Laws Do Not Apply to Workers Outside the State.

The U.S. Court of Appeals for the Fourth Circuit has confirmed that only employees performing at least some work in Maryland are covered by Maryland’s wage laws.

The application of a law outside of its jurisdiction is known as extraterritoriality, and there is a presumption against extraterritoriality. In Poudel v. Mid Atlantic Professionals, Inc. dba SSI, two employees worked for a Maryland-based company as interpreters in Afghanistan. After their employment ended, they brought claims for unpaid wages under Maryland’s Wage Payment and Collection Law (MWPCL) and Wage and Hour Law (MWHL). The federal district court dismissed their claims, and they appealed to the Fourth Circuit.

The Fourth Circuit upheld the dismissal of their claims. It confirmed that the presumption against extraterritorial application of Maryland law applies to the wage laws. Although the Fourth Circuit found that the company was an employer within the meaning of the MWPCL, and that there is a strong public policy to ensure the payment of wages lawfully due, it also found that the employees were required to perform at least some work in the state in order for the wage laws to apply. The Fourth Circuit rejected the argument that working for a Maryland company that performed payroll in the state was sufficient to trigger coverage of the wage laws. It also rejected the argument that a choice of Maryland law provision in the employees’ employment agreements is sufficient to defeat the presumption against extraterritoriality, noting that the issue of what law governs the agreement to be separate from the issue of the applicability of state wage laws.

Although this case is helpful in establishing that the wage laws do not apply to workers providing services entirely outside Maryland, there may be a closer question with regard to remote employees who report directly to a Maryland office and whose services are not so clearly tied to another jurisdiction. This is an issue that arises under Maryland unemployment insurance law, as well as under the forthcoming paid Family and Medical Leave Insurance (FAMLI) program, as further detailed in our May 31, 2024 E-Update.